Federal prosecutors are preparing to seek indictments against a former top CIA official and a San Diego defense contractor at the center of the bribery scandal that sent former U.S. Rep. Randy "Duke" Cunningham to prison.
Two government officials familiar with the investigation told The Associated Press on Wednesday that prosecutors plan to ask a San Diego grand jury to return charges of honest services fraud and conspiracy against Kyle "Dusty" Foggo and his close friend Brent Wilkes, whose lawyers have said he is one of four unidentified co-conspirators described in the 2005 plea agreement for Cunningham, a San Diego Republican.
Honest services fraud is a combination of mail and wire fraud often used in public corruption cases involving officials who have engaged in a pattern of improper activities, such as accepting gifts, trips or promises of future employment from private individuals.
The officials said a second indictment is being prepared that would charge Wilkes and two of the other Cunningham co-conspirators — New York businessman Thomas Kontogiannis and his nephew John T. Michael — with bribery and several conspiracy counts.
The officials spoke only on condition of anonymity because grand jury proceedings are secret and the charges have not been finalized. Indictments could be returned as early as Thursday, though it's more likely to occur within the next several weeks.
Fourth conspirator cooperating
The fourth co-conspirator, Mitchell Wade, is cooperating with prosecutors after pleading guilty in February 2006 to bribing Cunningham in exchange for more than $150 million in government contracts since 2002. Wade is former president of MZM Inc.
Foggo's attorney, Mark MacDougall, said he had not been contacted by the U.S. attorney's office regarding possible indictments and could not comment.
Mark Geragos, an attorney for Wilkes, said he had not been apprised of any imminent criminal charges. "I've reviewed this case and I don't see anything that merits an indictment," he said.
Messages left for Kontogiannis and Michaels were not immediately returned.
Prosecutors in San Diego would not comment about an ongoing investigation.
The grand jury began hearing evidence in 2005 against Cunningham, at the time an eight-term congressman who served on the House Appropriations Defense Subcommittee and the Intelligence Committee. Cunningham's subcommittee assignment made him a key figure in the awarding of defense contracts.
Cunningham sentenced to more than eight years
Cunningham agreed to a plea bargain and was sentenced in March 2006 to more than eight years in prison for taking $2.4 million in bribes from defense contractors — including payments for a mansion, a used Rolls-Royce and a yacht he named "Duke-stir" — in return for funneling contracts to certain companies.
Prosecutors allege one of the beneficiaries was Wilkes, whose companies won nearly $100 million in federal contracts over the last decade. Prosecutors claim Wilkes paid Cunningham more than $626,000 in bribes between 2000 and 2004.
Wilkes, who heads Poway-based Wilkes Corp., grew up with Foggo in the San Diego suburb of Chula Vista. They remained very close into adulthood, naming their sons after each other.
Foggo was the No. 3 official at the CIA, responsible for the agency's day-to-day operations, until resigning in May after his home and office were raided by FBI agents in connection with the Cunningham probe headed by the U.S. attorney's office in San Diego.
Federal law enforcement agencies and intelligence officials have been investigating whether Foggo improperly awarded contracts to Wilkes' companies, including a multimillion-dollar contract to supply bottled water for CIA operations in Iraq.
A House Intelligence Committee report on Cunningham's activities released last November said he steered $70 million in contracts to Wade and Wilkes. The report also said more investigation is needed into Foggo's dealings with the intelligence panel, given his close relationship with former committee aide Brant Bassett.
House committee documents subpoenaed
The House Intelligence, Appropriations and Armed Services committees were subpoenaed in December by prosecutors for documents relating to the Cunningham investigation. A House aide said Wednesday that House lawyers have asked for more time and are working to negotiate a response that satisfies prosecutors so they can withdraw the subpoenas.
Wilkes' business fortunes have suffered since the investigation opened. Wilkes Corp. defaulted in mid-January on $12.1 million owed on its corporate headquarters.
Wilkes has been linked to several other ongoing corruption probes. He has said in interviews that his first mentor in Washington was Bill Lowery, a former U.S. congressman from San Diego whose lobbying firm is being investigated in connection with contracts approved by U.S. Rep. Jerry Lewis, R-San Bernardino, who chaired the Appropriations Committee until Democrats took power last month.
Investigators also have contacted two Washington, D.C.-based escort services in an effort to determine whether Wilkes supplied Cunningham and potentially other lawmakers with prostitutes at poker parties he hosted at the Watergate hotel.