A liberal watchdog group filed a complaint with the Federal Election Commission on Tuesday alleging that a defense contractor caught up in a burgeoning scandal involving Rep. Duke Cunningham (R-Calif.) violated federal law by ordering employees to make contributions to the firm’s political action committee or risk losing their jobs.

Citizens for Responsibility and Ethics in Washington filed a complaint charging that MZM and its president, Mitchell Wade, reportedly broke federal law by forcing employees to donate to the PAC and specific Congressional candidates, as well as making illegal corporate conduit donations to the PAC and those candidates.

CREW also asked the FEC to refer the case to the Justice Department for possible criminal prosecution.

In a statement released by CREW, Melanie Sloan said, “if what MZM’s former employees have alleged is true, Mitchell Wade may find himself in jail.”

In an article on Monday in the San Diego Union-Tribune, three former MZM employees, who were not named, charged that Wade had required them to donate to MZM’s PAC, or else. “By the spring of ’02, [Wade] was twisting employees’ arms to donate to his MZM PAC,” the newspaper quoted one of the employees as saying. “We were called in and told basically either to donate to the MZM PAC or be fired.”

MZM and Wade have come to public attention after the San Diego Union-Tribune reported that Wade, through a Nevada corporation, purchased Cunningham’s home in 2003 and then took a $700,000 loss on the property when he resold it. MZM won more than $65 million in defense contracts in 2004. Cunningham sits on the House Appropriations subcommittee on Defense. The FBI is reportedly looking into the circumstances surrounding Wade’s purchase of the California Republican’s home.

When in Washington, D.C., Cunningham also lives on a boat owned by Wade. Cunningham said he pays market rate for the boat rental, although he has not released any documents to back up that claim.

MZM officials and Wade could not be reached at press time for comment.