updated 2/14/2007 2:36:33 PM ET 2007-02-14T19:36:33

The CIA’s former No. 3 official and a defense contractor pleaded not guilty Wednesday to federal charges resulting from an investigation that already has sent former U.S. Rep. Randy “Duke” Cunningham to prison.

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Kyle “Dusty” Foggo used his position as executive director of the CIA to steer business to San Diego defense contractor Brent Wilkes, who offered his lifelong friend a job and lavished him with vacations and other gifts, according to a federal indictment.

“Not guilty, your honor,” each told U.S. District Judge Larry Burns.

Foggo, who wore an American flag pin on his lapel, was released on a $200,000 bond. Wilkes was released on a $2 million bond.

The 11-count indictment returned Tuesday charges the lifelong friends, both 52, with fraud, conspiracy and money laundering, crimes punishable by up to 20 years in prison.

In a separate indictment, Wilkes was charged with 25 counts of conspiracy, bribery, money laundering and unlawful monetary transactions of more than $700,000.

Cunningham pleaded guilty in November 2005 to taking more than $2.4 million in bribes from defense contractors and was sentenced to more than eight years in prison. Wilkes faces up to 20 years in prison if convicted on those charges.

‘An unrelenting campaign’
Mark Geragos, Wilkes’ attorney, said he looked forward to defending his client.

“After 18 months of what has been, for lack of a better word, an unrelenting campaign of leaks, innuendo and unfounded rumors, we welcome the opportunity to be in the courtroom,” Geragos told reporters. Wilkes stood by his side and did not comment.

Foggo and his attorney, Mark MacDougall, did not comment to reporters as they left the courthouse.

Foggo is the highest-ranking CIA officer to be charged with crimes allegedly committed while working for the agency.

Wilkes, whose firms got $100 million in government contracts, showered Foggo with expensive dinners, fancy cigar humidors and extravagant trips to Scotland and Hawaii, prosecutors say. When Wilkes built a new headquarters, he reserved an office for Foggo, and introduced him to employees as a future executive of Wilkes Corp.

In return, Foggo was “corruptly influenced in his performance of his official duties,” the indictment says, steering classified government contracts worth more than $1.7 million to Wilkes’ companies while concealing the depth of their friendship.

The pair grew up in the San Diego suburb of Chula Vista and then roomed together at San Diego State University. In a 2004 e-mail, Foggo wrote Wilkes that he had always been his “partner” and would be as long as he lived.

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