Federal prosecutors and lawyers for Rep. Duke Cunningham (R-Calif.) will square off in court Friday over Cunningham’s attempt to sell his home in Rancho Santa Fe, California, a transaction the government has sought to block on the grounds that the GOP lawmaker used funds improperly obtained from a defense contractor to purchase the residence.

Attorneys for Cunningham want federal officials to release their hold on the California Republican’s home, arguing that the government violated federal law by failing to inform Cunningham and his wife, Nancy, that it was filing a civil forfeiture complaint against the couple. Federal officials filed a “notice of lis pendens” in July that prevents the Cunninghams’ from selling the property. The initial filing was not disclosed by the government, and neither the Cunninghams nor their lawyers were notified of the action. Federal prosecutors have since filed an amended complaint and formally told the Cunninghams of its existence.

“Yet, in the instant case, the U.S. Attorney’s Office for the Southern District of California has deprived Duke and Nancy Cunningham, of their lawful right to sell the defendant property by filing a notice of lis pendens based upon a secret, unserved civil forfeiture complaint,” Cunningham’s lawyer stated in a motion filed Tuesday. “By use of this unlawful — and, indeed, unprecedented — tactic, the government successfully restrained the sale of the Cunningham’s home without affording them notice of the factual allegations justifying the pretrial restraint or an opportunity to contest those allegations on the merits.”

The Cunninghams are seeking damages from the government based on its action. They also want permission to sell their present home and place the funds from the transaction in an escrow account, which will be overseen by a federal judge. Cunningham, who is retiring from office at the end of the 109th Congress, wants to purchase a smaller home. The residence in question is valued at between $3 million and $3.5 million.

In a document filed on Aug. 25, federal prosectors allege that Mitchell Wade, former CEO of MZM, Inc., a defense contracting firm, used a Nevada-front company to purchase Cunningham’s previous home in Del Mar, California, for an “inflated price” of $1.675 million, which the government charged was far higher that its real market price. That sale took place in November 2003. Just over eight months later, Wade sold the home for $700,000 less than he had paid for it.

The Cunninghams used part of the money they received from Wade, approximately $1.4 million, to buy their current home in Rancho Santa Fe. According to the government, the new home cost $2.55 million.

“Cunningham demanded and received this money in return for being influenced in the performance of his official acts as a public official,” federal officials charged in their Aug. 25 filing.

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 are conducting a probe into Cunningham’s relationship with Wade. Cunningham’s Rancho Santa Fe home was searched, as was Wade’s home and yacht. Documents have also been subpoenaed from Cunningham’s Congressional office by a federal grand jury in California.

Neither Cunningham nor Wade has been charged in the criminal probe, and federal officials have declined to say when such an action might take place.

MZM received more the $160 million in federal contracts, mainly for classified intelligence activities. Cunningham sits on both the Appropriations and Intelligence committees. Although MZM and Wade steered tens of thousands of dollars in campaign contributions to Cunningham, the GOP lawmaker has vehemently denied an improprieties in his dealings with Wade.

While in Washington, Cunningham lived on a yacht owned by Wade. During the 14 months he resided on the yacht, Cunningham claimed that he paid Wade $13,000 in monthly dock fees and maintenance costs, although he has not publicly released documents that he said would back up that claim, despite his promise to do so.