updated 6/28/2005 7:13:33 PM ET 2005-06-28T23:13:33

A congressman who sold his house to a defense contractor who later took a big loss on it has been issued a subpoena for documents by a federal grand jury, his attorney said Tuesday.

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Prosecutors are investigating Rep. Randy “Duke” Cunningham’s sale at what may have been an inflated price.

His attorney, K. Lee Blalack, disclosed the subpoena in a brief statement but did not specify what documents were being sought. Reached by phone, Blalack declined further comment.

Cunningham has said that he showed poor judgment in selling the house but said he acted honestly and predicted that an investigation would prove that.

The former Navy “Top Gun” fighter pilot and eight-term Republican congressman sold his home in 2003 to Mitchell Wade, a campaign contributor and close friend.

Wade paid $1.7 million in November 2003 for the 3,826-square-foot house in wealthy, seaside Del Mar, just north of San Diego. He put it back on the market soon after and eventually took a $700,000 loss when he resold it in October 2004. During that span, home prices in San Diego County rose an average of nearly 25 percent.

Meanwhile, Wade’s little-known company, Washington, D.C.-based MZM Inc., was increasing its federal contracting business. In 2004, MZM tripled its revenue and nearly quadrupled its staff, according to the company’s Web site.

Cunningham serves on the House Appropriations subcommittee that controls defense contracting dollars.

Meanwhile, MZM said Tuesday it is overhauling its management team amid questions over whether the company will be harmed by the investigation. In a brief statement, MZM said James C. King, a retired three-star Army general, was taking over as president and chief executive. That role was previously held by Wade, who founded the company in 1993.

The statement made no mention of Wade. An MZM spokesman did not return calls seeking comment.

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