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Agents Search Cunningham’s Home, MZM’s Offices, Boat

Federal agents on Friday searched the offices of a defense contractor tied to Rep. Duke Cunningham (R-Calif.) as well as the boat Cunningham lived on for more than a year, the latest sign of a growing investigation into the relationship between Cunningham and Mitchell Wade, founder of MZM Inc.

The Associated Press reported Friday that federal agents also searched Cunningham’s San Diego-area home.

A federal task force that includes officials from the U.S. Attorney’s offices in both Washington, D.C, and San Diego, the FBI, Internal Revenue Service and Defense Criminal Investigative Service conducted the searches, according to Debbie Weierman, a spokeswoman for the FBI’s Washington office.

Weierman would not discuss details of the probe, although she confirmed that the FBI has “some operations that are going on today” related to the Cunningham investigation.

Cunningham’s lawyers released a statement late Friday afternoon blasting federal officials for searching the veteran lawmaker’s home.

“Today’s search of Duke Cunningham’s home, based on a secret affidavit, was an appalling abuse of government power,” wrote K. Lee Blalack II and Mark Holscher of O’Melveny and Myers. “We publicly disclosed this week that the government had issued a document subpoena to the Congressman and that he had instructed his staff and lawyers to fully cooperate. Just yesterday, we reiterated privately to the government that Duke was going to fully cooperate and that we would be shortly producing the requested documents. They will apparently not take yes for an answer and have instead opted to use strong arm tactics that were designed to generate headlines. As he has said before, Congressman Cunningham welcomes a fair investigation because he is confident that any such inquiry will eventually clear his good name.”

MZM did not return calls seeking comment on Friday’s search. Wade recently stepped down as head of the company, and two other top officials have also departed. MZM is now being run by James King, a retired Army lieutenant general, and is believed to be for sale. Wade remains the largest shareholder in the firm, according to media reports.

Cunningham sold Wade his San Diego home in November 2003 for $1.675 million, although Wade had never seen the house. Eight months later, Wade sold the house for $700,000 less than he had paid. Wade used a Nevada-based company for the home purchase.

A federal grand jury has already subpoenaed documents from Cunningham related to his home sale. The California Republican has said he will comply with the subpoena.

In a statement released last week, Cunningham said he showed “poor judgement” in his dealings with Wade but denied that he had acted improperly or tried to steer defense contracts to MZM.

Cunningham had been living until two weeks ago on a boat owned by Wade and berthed at the Capitol Yacht Club. On Friday, federal agents were observed searching the “Duke-Stir.” They later hauled away several boxes of documents, but declined to comment to Roll Call.

Federal agents also questioned employees of the yacht club about the rules covering residence on vessels there, according to a source close to the issue. Cunningham, who lived on Wade’s boat from April 2004 until mid-June, said he has paid more than $13,000 in monthly dock fees and maintenance costs during this period. The Duke-Stir has been put up for sale by Wade for more than $130,000, with Cunningham listed on flyers as the contact person for information about the boat.

MZM has received more than $60 million in defense contracts, mainly for supporting classified intelligence operations, although the Pentagon has ordered a halt to additional work for the firm because the contract did not meet the Defense Department’s rules on competitiveness. That action was reportedly unrelated to the Cunningham investigation.

Matthew Murray and Luke Mullins contributed to this story.

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