Defense contractor Mitchell Wade sentenced to 30 months of incarceration
for bribing former Congressman "Duke" Cunningham, corrupting
Department of Defense officials, and election fraud

WASHINGTON - Mitchell Wade, the former owner of MZM, Inc., a major defense contractor based in the District of Columbia, was sentenced today by U.S. District Judge Ricardo M. Urbina to 30 months of imprisonment and a $250,000 fine for bribing former Congressman "Duke" Cunningham, corrupting defense officials, and election fraud, announced U.S. Attorney Jeffrey A. Taylor, Sharon E. Woods, Director, Defense Criminal Investigative Service (DCIS), Joseph Persichini, Jr., Assistant Director in Charge of the FBI's Washington Field Office, and C. André Martin, Special Agent in Charge, Internal Revenue Service, Criminal Investigation.

Wade, 45, of Baltimore, Maryland, previously entered a guilty plea on February 24, 2006, to multiple felony counts related to his wholesale corruption of the defense procurement process. The conduct included Wade's making about $1.8 million in payoffs to then-Congressman Duke Cunningham, providing illegal benefits to Defense Department officials, and attempting to curry favor with two other members of Congress by making illegal campaign contributions. Specifically, Wade pled to a four-count information, including one count of conspiring both to bribe Congressman Randall "Duke" Cunningham and to tax evasion; one count of Use of Interstate Facilities to Promote Bribery; one count of conspiring to deprive the Defense Department of the honest services of its employees; and one count of election fraud.

The charges stem from Wade's ownership of MZM, Inc., which, from 2002-2005, received over $150 million from the Defense Department as a government contractor. MZM's business depended on its receipt of federal defense appropriations. As MZM's owner, Wade's wealth was itself linked to federal appropriations and defense contracts.

Wade sought to enrich MZM and, thus, himself through three criminal means – paying $1.8 million in bribes to Congressman Cunningham; conspiring with Defense Department officials; and making illegal campaign contributions to two Members of Congress who were in a position to assist MZM.

The largest of these schemes was Wade's bribery of Congressman Cunningham. As a member of the Defense Appropriations Subcommittee, Congressman Cunningham had the power to direct vast sums of money to projects and to contractors of his choosing. In or about 2001, Cunningham sought bribes from Wade. The deal was as simple as it was far reaching – Cunningham would use his office to ensure that MZM obtained profitable contracts in exchange for large bribe payments. The Wade-Cunningham relationship was extremely lucrative for both men, and it continued and escalated until the middle of 2005.

The dozens of bribe payments ranged from cash to real estate to a used Rolls Royce to more exotic items, like expensive rugs and antiques. They included:

•Wade's purchase of Cunningham's home at an inflated price;
•Wade's purchase of a yacht for Cunningham's use;
•Wade's purchase of an antique Louis Phillipe period commode, circa 1850;
•Wade's payment for repair work on the Rolls Royce that Wade purchased for Cunningham;
•Wade's payment of more than $500,000 to Cunningham via checks payable to Cunningham's corporation, Top Gun Enterprises; and
•Wade's payment of Cunningham's bills at resorts, hotels, and exclusive restaurants.

In return, Congressman Cunningham fulfilled his end of the bargain. He made recommendations and took other official action that caused the U.S. Congress to appropriate money to benefit MZM and Wade. Congressman Cunningham also used his power to pressure and influence Defense Department officials to award contracts in a manner that would enrich MZM and Wade.

Aside from Congressman Cunningham, Wade also sought the assistance of two other Members of Congress in obtaining taxpayer's money for MZM. He did so by providing their campaigns with almost $80,000 of illegal campaign contributions. Wade thought that the first of these Representatives had the ability to request appropriations for a facility that MZM wanted to open in the Representative's district. Wade believed that the second Representative also would be an advocate for MZM and its facilities. Indeed, a year after giving the second Representative $32,000 in illegal contributions, Wade dined with the Representative and discussed the possibility of MZM's hosting a fundraiser for the Representative and the possibility of obtaining funding and approval for a Navy counterintelligence program in the Representative's district. In total, Wade unlawfully reimbursed $78,000 of campaign contributions, involving 19 straw donors. These donors were MZM employees and their spouses, who were embroiled in Wade's scheme.

Wade's criminal activities extended to his corrupt conspiracy to influence the Defense Department procurement process. For MZM, Wade hired many Defense Department employees with jurisdiction over MZM's projects. He also hired some of these employees' adult children. For example, in 2002, MZM entered into a Blanket Purchase Agreement (BPA), that made it eligible to receive up to $225 million by performing work for Defense Department customers. Under this BPA, MZM received a task order to perform work on the Facilities Infrastructure and Engineering System (FIRES) Program. MZM's continued receipt of task orders under the BPA depended on its performance. A poor evaluation could cost MZM millions of dollars. Wade provided benefits to a government official who was responsible for evaluating MZM's performance and for requesting a statement of work that enabled MZM to act as a prime contractor on the FIRES project.

Wade provided extraordinary cooperation with the government's investigation. From the outset, Wade's cooperation took many forms, and went well beyond the normal debriefings and testimony that many other white-collar defendants give. Wade provided highly probative documents, debriefings, and testimony. His cooperation significantly aided the government in its successful prosecutions of Congressman Cunningham, Brent Wilkes, and MZM employees Richard Berglund and Robert Fromm. He has assisted the government in other investigations, as well.

In imposing sentence, Judge Urbina stated that Wade received a reduced sentence in large part because of his cooperation. In recognition of Wade's cooperation, the government had filed a motion asking Judge Urbina to reduce Wade's sentence.

"Public corruption undermines the faith that citizens have in their government. That is true in every case, but especially this one, involving as it did large amounts of money and the corruption of many different parts of our military procurement process, from Congress's role in appropriating money to the Defense Department's role in overseeing contracts," said U.S. Attorney Taylor. "At the same time, when a defendant steps forward and cooperates extensively with authorities, he or she should receive a reduced sentence."

"The American public expects elected officials and individuals who conduct business with the Department of Defense to operate in an aboveboard manner," said DCIS Director Woods. "Corruption of the variety uncovered throughout the course of this investigation undermines principles of free and open competition our nation was founded upon, and contributes towards erosion of the public trust. The Defense Criminal Investigative Service remains steadfastly committed to working with the Department of Justice to aggressively investigate and prosecute fraudulent activity impacting the Department of Defense."

"The sentence imposed on Mitchell Wade today marks the end of an extremely lengthy and difficult investigation by agents of the FBI," said FBI Assistant Director in Charge Persichini. "The investigation of public corruption remains a criminal priority of the FBI. We remain dedicated to ensure that public officials do not betray the citizens they serve by engaging in illegal activities."

In announcing today's sentence, U.S. Attorney Taylor, Defense Criminal Investigative Service Director Woods, FBI Acting Assistant Director in Charge Persichini, and IRS Special Agent in Charge C. André Martin praised the efforts of FBI Special Agents Matthew Young, Julie Shields and Marc Benjamin and DCIS Special Agent Edward Cassin. Finally, they commended the work of Legal Assistants April Peeler and Teesha Tobias, and Assistant U.S. Attorneys Howard Sklamberg, John Roth and John Carlin, who prosecuted the case. They also thanked Assistant U.S. Attorneys Jason Forge, Phillip Halperin, and Valerie Chu, of the Southern District of California, for their assistance.