TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, November 28, 2005

Rep. Cunningham Pleads Guilty to Tax Evasion, Resigns Congressional Seat

Doj_5The Department of Justice announced yesterday that Congressman Randall “Duke” Cunningham (R-CA) pleaded guilty to conspiring to commit bribery, honest services fraud, and tax evasion pursuant to a plea agreement in U.S. District Court in San Diego  Later yesterday morning, Cunningham resigned his congressional seat:

In the tax evasion count, he admitted filing a 2004 tax return claiming an income of $121,079 when his actual gross income for that year was $1.2 million.

U.S. Attorney Carol Lam, whose office is prosecuting the case, said in a news conference that the facts Cunningham admitted in his plea agreement show "this was a crime of unprecedented magnitude and extraordinary audacity." Cunningham, an eight-term Republican congressman, had been under scrutiny for months for his ties to defense contractors and their officials.

Federal officials launched investigations after The San Diego Union-Tribune and Copley News Service reported in June that a defense contractor who won tens of millions of dollars in Pentagon contracts had taken a $700,000 loss after purchasing Cunningham's Del Mar-area house....Cunningham sold the house for $1.675 million in November 2003, but the buyer, defense contractor Mitchell Wade, never moved in and almost immediately put it back on the market. Wade sold it 261 days later for $975,000. The congressman, who sat on the House defense appropriations subcommittee, used the proceeds of the sale to buy a $2.55 million house in Rancho Santa Fe, which he has since put up for sale.

Lam said the bribes from defense contractors totalled $2.4 million and included:

  • Buying the Del Mar-area home at an inflated price;
  • Paying for the capital gains tax on that sale;
  • Buying and maintaining the yacht in Washington D.C. on which Cunningham lived;
  • Paying for a graduation party for Cunningham's daughter;
  • Buying a Rolls Royce, antique furniture and jewelry, and picking up travel and hotel expenses for Cunningham and his wife;
  • Making a $500,000 mortgage payoff for the house in Rancho Santa Fe

For further details:

Congressional News, News, Political News | Permalink

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