When last we updated the Duke Cunningham 'Livin' Large Free of Charge' chronicles (DCLLFCC) you'll remember that Duke was trying to offer advice on getting a presidential pardon to one Thomas Kontogiannis, a Long Island real estate developer who'd recently been convicted in a bribery, kickback and contract-rigging scandal and who'd apparently, as part of that scam, arranged pay-offs totaling roughly a million dollars to Queens school superintendent Celestine Miller, including some $80,000 into the coffers of her failed congressional bid in 1998.
Around the time Duke was offering the advice he managed to sell his boat, the Kelly C, to Kontogiannis for what was apparently a vastly inflated price, bagging Duke a quick $400,000 profit. And somehow as part of this deal (we still haven't figured out quite the ins and outs of it) the Kontogiannis family mortgage lending company agreed to fund a series of discount loans that Duke used to buy his new house in Rancho Sante Fe.
But it seems that wasn't the only mortgage Duke got from Coastal Capital, the Kontogiannis family's mortgage company. According to this Friday evening AP report, they also set Duke up with another mortgage -- this one for $150,000 -- for a two-bedroom condo he bought in Arlington, Virginia. (And all this time you thought Duke lived on a boat!) The total purchase price was $350,000 and he resold it in 2004 for $500,000.
But even this isn't all.
Following up on a tip, I did a little poking around myself. And I take it that the condominium sale in question must be that referenced in the April 18th, 2002 real estate section of the Washington Post: "EADS ST. S., 1211, No. 2002-Ratta Joseph M. Della to Nancy D. and Randall H. Cunningham, $ 350,000."
Now, it seems that Joseph M. Della Ratta may be another real estate developer trying to settle some misunderstandings with government prosecutors.
According to this August 2003 Department of Labor bulletin, Della Ratta and a colleague got nailed for raiding an ERISA asset management plan of which they served as trustees. In July 2003, says the bulletin, a federal court "appointed an independent fiduciary to distribute all remaining plan assets of the profit sharing plans of Della Ratta, Inc. and Commercial Management Company in Silver Spring, Maryland. The court further ordered restoration of more than $166,000 to the plans from assets held in a Della Ratta, Inc. corporate account and restitution to be paid by the plans’ trustees."
Said Labor Secretary Elaine Chao of the case: "Corporations and executives who are designated retirement plan fiduciaries have a responsibility to protect the pension assets of its participants. These defendants used the plan assets for their personal gain. The department's action recovers pension assets taken illegally from the workers and their families.”
Della Ratta and his colleague Joseph E. Brimmer were ordered to pay back the money, removed as trustees of the plan in question and barred from ever again overseeing any other plans governed by the Employee Retirement Income Security Act.
The original government suit against Della Ratta was filed in December 2000 -- about a year and a half before Duke bought the condo. And the final resolution of the case came a little more than a year after that. This was of course while the home and boat switcheroos were also afoot.
--Josh Marshall
In response to the question immediately below, a lot of commenters are suggesting the quite logical explanation that Novak's not in trouble because he cooperated and spilled the beans. But if that's true, why didn't that allow Fitzgerald to wrap the whole thing up right then and there? Would he really have allowed Novak off the hook for anything else beside telling him who his sources were, what they said, etc?
Perhaps Novak tried to pass off on <$Ad$>him the convenient lie that the persons in question didn't know or didn't tell him that Plame was covert. But some careful research we did almost two years ago on this point should pretty clearly I think that Novak has been fibbing through his teeth when he says this.
So, like I said, if Novak did cooperate and if that didn't provide enough for Fitzgerald to make some indictments or wrap the whole thing up, that in itself points to some more complex situation than most are considering.
Like I said, we're discussing the question here.
--Josh Marshall
For months people have asked me this question: Why is everyone else in trouble over the Plame story but Robert Novak?
Earlier in the progress of the case, I thought I had two good answers. One, prosecutors usually work from the outside of a case in. Thus, it make sense that they'd get to secondary players like Cooper and Miller first. Second, precisely because of his immediate involvement in what happened, I suspected that Novak might be able to invoke the 5th amendment and not testify. Ironically, under this theory, that would put Cooper et al. in more jeopardy precisely because they're not accused of playing a role in the commission of a crime. And thus they've got no plausible 5th amendment claim to hide behind.
Now, clearly, if it ever was, we're way too far into this for my first answer to be correct. And I'm no longer sure my second one is either.
So why is it exactly that Novak is sitting pretty?
We're discussing it over at the TPMCafe politics discussion table.
--Josh Marshall
Ed Kilgore and I are discussing the politics of the seemingly impending Rehnquist retirement over at TPMCafe. Ed seems to be thinking along the same lines I was yesterday evening -- that if President Bush must get to choose Rehnquist's successor, let it be now. Far better politically for the Democrats, far better shot at a better (or at least, a less bad) conclusion.
--Josh Marshall
Can this be true? Says Judd Legum at ThinkProgress: "For the fourth straight time since his lawyer admitted that Rove was one of Matt Cooper’s sources, no member of the White House press corps asked a question about Rove’s role."
--Josh Marshall
Duke-Kontogiannis grudge match plays out!
The North County Times has obtained Coast Guard documents which show that in May Rep. Randy "Duke" Cunningham signed two registration documents attesting that he was the owner of the Kelly C when in fact it was owned by New York real estate developer Thomas Kontogiannis who paid Duke $627,000 not long after he was convicted of price-rigging and bribery back in New York.
After signing the first document he sent a follow-up letter to the Coast Guard in which he wrote: "I am the sole owner of the 'Kelly C.'"
When asked, Duke's lawyer K. Lee Blalack told the paper: "These documents are entirely consistent with your previous reports regarding Duke's attempt to register the Kelly C in his name in anticipation of its resale from Mr. Kontogiannis." So, I guess Blalack is saying the documents confirm the paper's early claim that Duke made false statement on official government documents?
Meanwhile, a San Diego yacht salesman says of the sale price: "It might be worth a couple hundred thousand, maybe ----- but probably not ... I would say that what he sold it for is a gross overestimate of value."
Then there's this: "Kontogiannis said that the bill of sale he received from Cunningham is for $1 plus other valuables. When asked why they agreed to put the sale price so low, when in fact the amount he said he paid Cunningham was $627,000, Kontogiannis said that using a symbolic price of $1 is common in such transactions."
I've never bought or sold a boat. But is that common?
--Josh Marshall
"My first thought when I heard - just on a personal basis, when I heard there had been this attack [i.e., yesterday's terrorist attack in London] and I saw the futures this morning, which were really in the tank, I thought, 'Hmmm, time to buy.'"
Name me the major network news anchor who could survive having made such a comment as his first reaction to a major terrorist attack.
That is, one beside Brit Hume, who said it.
David Sirota has more.
--Josh Marshall
Duke Shaken? Stirred? Or just poured down the drain?
Option number three, says George E. Condon Jr. of Copley News Service.
And this one's lousy with quotes to sate your DukenSchadenfreude.
Charlie Cook: "I don't think Cunningham could be elected in that district anymore. You can make the case that almost any other Republican could, but not Cunningham."
Stu Rothenberg: "People are waiting to see when he gets out -- not if he gets out, but when he gets out."
GOP Consultant/Lobbyist John M. Dadian: "He's dead."
Meanwhile, Molly Ivins also gives Duke a stir.
--Josh Marshall
Perhaps I'm not thinking this through clearly enough. So I'd be obliged to hear from others. But assuming that the rumors are true and that Chief Justice Rehnquist will announce his retirement tomorrow, this seems like a good thing for the Dems, not a bad thing.
Obviously that reasoning is premised on the assumption that Rehnquist will retire at some point in the very near future regardless, certainly before the end of the president's tenure in office and in all likelihood before November 2006. So as long as President Bush will appoint Rehnquist's successor, better, it seems to me, that both nominations take place simultaneously.
Here's my reasoning.
To the extent that there was a logic to kicking the filibuster can down the road until a Supreme Court nomination came up, it was that Democrats would only stand to gain by more public attention, both to the extremism of a potential nominee and the rule-breaking of banning the filibuster using an obviously-phoney constitutional pretext. I think that's a decent theory of the situation. And for better or worse, it's the one they went with. So they might as well play it out.
Secondly, this battle will be played out as much in the nation's newspaper editorial board rooms and among the glitz commentators as anywhere else. The best argument that the Dems can make is that President Bush is in a loose sense trying to pack the Court, trying to push the Court decisively to the right by appointing an activist and an ideologue. It seems to me that that argument is much stronger if he's appointing two of nine than one of nine.
Perhaps another way to put this is that I think it would be much easier for President Bush to push through one hard-right nominee now and another next spring or next summer than it will be for him to push twice at once.
That's my initial take. Tell me what you think. I've set up a discussion thread here at TPMCafe.
--Josh Marshall
You may well have read it already. But if not I want to call your attention to the statement today of Ken Livingstone, the Mayor of London. It ripples with all the unadorned democratic resolution and humanity the moment calls for, with none of the puffery and obfuscation and lies that will drag us all, eventually, into the pit. It has a particular potency and force in this moment of manufactured division since Livingstone comes from the most leftward part of the British party political spectrum.
It's lengthy. But I think it's worth reprinting in its entirety ...
“This was a cowardly attack, which has resulted in injury and loss of life. Our thoughts are with everyone who has been injured, or lost loved ones. I want to thank the emergency services for the way they have responded.Following the al-Qaeda attacks on September 11 in America we conducted a series of exercises in London in order to be prepared for just such an attack. One of the exercises undertaken by the government, my office and the emergency and security services was based on the possibility of multiple explosions on the transport system during the Friday rush hour. The plan that came out of that exercise is being executed today, with remarkable efficiency and courage, and I praise those staff who are involved.
I’d like to thank Londoners for the calm way in which they have responded to this cowardly attack and echo the advice of the Metropolitan Police Commissioner Sir Ian Blair - do everything possible to assist the police and take the advice of the police about getting home today.
I have no doubt whatsoever that this is a terrorist attack. We did hope in the first few minutes after hearing about the events on the Underground that it might simply be a maintenance tragedy. That was not the case. I have been able to stay in touch through the very excellent communications that were established for the eventuality that I might be out of the city at the time of a terrorist attack and they have worked with remarkable effectiveness. I will be in continual contact until I am back in London.
I want to say one thing specifically to the world today. This was not a terrorist attack against the mighty and the powerful. It was not aimed at Presidents or Prime Ministers. It was aimed at ordinary, working-class Londoners, black and white, Muslim and Christian, Hindu and Jew, young and old. It was an indiscriminate attempt to slaughter, irrespective of any considerations for age, for class, for religion, or whatever.
That isn’t an ideology, it isn’t even a perverted faith - it is just an indiscriminate attempt at mass murder and we know what the objective is. They seek to divide Londoners. They seek to turn Londoners against each other. I said yesterday to the International Olympic Committee, that the city of London is the greatest in the world, because everybody lives side by side in harmony. Londoners will not be divided by this cowardly attack. They will stand together in solidarity alongside those who have been injured and those who have been bereaved and that is why I’m proud to be the mayor of that city.
Finally, I wish to speak directly to those who came to London today to take life.
I know that you personally do not fear giving up your own life in order to take others - that is why you are so dangerous. But I know you fear that you may fail in your long-term objective to destroy our free society and I can show you why you will fail.
In the days that follow look at our airports, look at our sea ports and look at our railway stations and, even after your cowardly attack, you will see that people from the rest of Britain, people from around the world will arrive in London to become Londoners and to fulfil their dreams and achieve their potential.
They choose to come to London, as so many have come before because they come to be free, they come to live the life they choose, they come to be able to be themselves. They flee you because you tell them how they should live. They don’t want that and nothing you do, however many of us you kill, will stop that flight to our city where freedom is strong and where people can live in harmony with one another. Whatever you do, however many you kill, you will fail.”
More <$NoAd$> soon.
--Josh Marshall
A Few Thoughts on a Terrible Day
First a thought, or perhaps an affirmation. The only response to acts of indiscriminate murder such as those today in London is implacable resistance -- and such resistance means not only retaliation against those responsible and guarding against all possible similar acts, but implacable resistance to terrorists' desire and aim to disrupt the rhythm of our daily lives and our civilization itself.
Today we've had a reminder of what we face. But let's be clear what we're seeing. In more venues than I'd care to admit I've seen posts and speechifying which say, in so many words: 'For all those who've gone wobbly on Iraq, see, you got complacent! But terrorism is real!'
The real threat we face isn't in Iraq. And being in Iraq isn't diminishing it. The real threat is painfully low-tech but yet highly-lethal acts of terror committed -- in most cases -- in the great metropoles of the West. And I suspect we'll find, as we did in 9/11, that the immediate perpetrators were neither people who were minding their own business before we invaded Iraq nor even people who have their main base in the core countries of the Arab Middle East, but rather recruits from the disaffected and deracinated diaspora of Muslim immigrants in the West -- a tiny fraction out of the millions who are making their homes in our country and in those of Europe.
Certainly, it's no accident that the two acts of terror in Europe in the last three years happened in America's two main Iraq war allies, though I agree with Ed Kilgore's point that the proximate message here is to the G8. That notwithstanding, what I take from all this is the fundamental irrelevance of Iraq to what happened today.
The threat of terrorism is very real, especially in major cities. But with respect to the folks who want to lasso this into a pillar of support for a disastrous policy in Iraq, frankly, we already knew terrorism was real. Most people are sick to death of our bumbling in Iraq because it's distracted us from actually defending ourselves.
The immediate answer to this is to hunt down the people immediately responsible, root out the primarily-non-state terror networks that support, plan and make these attacks possible and start getting about serious homeland defense -- port security, rail security, nuclear power plant security.
On that last count, what we've accomplished in the US over the last few years has been painfully inadequate, largely because of our focus on nation-states that have only a tenuous connection to this threat -- a lot of lies, mumbojumbo, and scurrilous and dark motives by the usual suspects notwithstanding.
Finally, I think we should look very closely at what actually happened today. It took a lot of coordination and it took a lot of lives. But it was extremely low-tech. It didn't take mad scientists or proliferated technology. And in a way that makes it all the harder to prevent.
Beside the threat we face from the bacillus of Islamic terror, President Bush has created a great running wound on the whole country in the form of the mess he's created in Iraq -- a wound bleeding blood, treasure and a scourge of national division which is now impossible to ignore but which we can ill-afford. Even now his cheerleaders are trying to enlist this outrage in the battle to prop up their folly in Iraq. If anything our folly in Iraq has made the immediacy and intensity of this basic threat worse. But let's not be blinded by our outrage at that folly or distracted from thinking concretely, together and resolutely, how we defend our innocents from such religious fanaticism and the violence it spawns.
(ed.note: It's not normally policy. But since the problems with the site mentioned below have kept me from posting until now, I've cross-posted this entry to TPMCafe as well.)
--Josh Marshall
This is just a brief update on why -- among other things -- there are no posts on TPM this morning, particularly on the coordinated terror attacks today in London.
As you might have expected, the news out of London generated a wave of traffic to this and other sites. And that surge was particularly large at our sister site, TPMCafe. The site's been hard to access since roughly 10 AM this morning. And I've been busy since then working with our tech folks to deal with that -- thus the lack of posts here.
We're adding more server capacity over at TPMCafe. And we'll keep you posted on developments there.
More soon.
--Josh Marshall
Remember, this isn't the first time Patrick Fitzgerald has tangled with Judy Miller in a leaks investigation of the Bush White House. I've posted more details at TPMCafe.
--Josh Marshall
"A special grand jury indicted three of [Kentucky] Gov. Ernie Fletcher's subordinates Wednesday, including his deputy chief of staff, on various misdemeanor charges, including criminal conspiracy and political discrimination."
More here.
--Josh Marshall
As I've noted a few times now I'm not convinced -- though none of us have enough information -- that Judy Miller is in prison right now because of things she did as a journalist, properly speaking. In various chapters of the war and intelligence drama we've all witnessed over the last four years, Miller has been an actor as much as a journalist, often acting in close coordination with the folks who figure as prime suspects in this caper.
That said, there is a line of thinking that's become fairly widespread among the president's critics and many Democrats that says that journalistic privilege is meant to protect whistleblowers and sources exposing wrong-doing not sources who are the wrongdoers themselves.
There's a certain moral economy to this reasoning. But in practice, in the real world journalists operate in, that reasoning just doesn't hold water. It's a specious reasoning that allows people to have their civil libertarian cake and eat it too.
(I'll try to elaborate on why I think this in a subsequent post.)
Finally, in such a swirl of ethical and political uncertainty, perhaps we can take some heart from the editorialists at the Washington Post. They seem fairly clear that there's little chance that a crime was committed, and that whatever may have happened wasn't such a big deal in the first place.
Good to know they've got this one squared away.
--Josh Marshall
A TPM Reader informs me that Tucker Carlson, and apparently other scofflaw Republicans, are out there again making the claims that Valerie Plame wasn't a covert agent at CIA after all and that, apparently, there's no crime at the bottom of the whole thing.
I'm hoping maybe I can speak to Tucker or maybe that he'll go directly to Langley and also to speak to Mr. Fitzgerald because he seems to know stuff no one else is aware of, perhaps vouchsafed to him through a special revelation.
As we noted almost two years ago, the statute that started this whole gangling cavalcade in motion only applies to covert agents. The Justice Department investigation began in response to a CIA 'referral'. Presumably the people at the CIA know Plame's status. Such a referral is made when the referring agency believes that a crime may have been committed that the Justice Department should investigate. If she wasn't covert, a crime could not have been committed. And yet they sent the referral because they think a crime may well have been committed. Ergo, the CIA must believe she is covert. Carlson says, no. But that's their story and they're stickin' to it.
Perhaps she wasn't covert enough for Carlson. But I'll leave that to Carlson, Angleton, Donovan and whatever other worthies he regularly communes with.
As for Fitzgerald and the current investigation, he seems out of the Carlson loop too.
As we noted a few days ago, DOJ guidelines are pretty clear on just how and when prosecutors should even try to compel testimony from journalists, let alone try to throw them in jail. It's not to be done for idle curiosity or to tie up loose ends, but only when the prosecutor believes he's zeroing in on a crime. And even then they're not supposed to do it unless all other alternatives have been exhausted. So unless Fitzgerald's not following the procedures he should be, it seems Fitzgerald is pretty confident there is a significant crime at the bottom of all this.
In sum, Carlson seems like the only fellow in Washington who's really got the goods on this whole case. If he could just lay it out for us, maybe Cooper, Miller, Fitzgerald and all those good souls at the White House could finally put this regrettable saga behind them.
--Josh Marshall
Ahhh, the intricacies of Aqua-Duke. This from Roll Call ..<$NoAd$>.
Sure, now it’s called the “Duke-Stir.” But the 42-foot Carver boat — yeah, the one that was raided by federal agents on Friday, a fact first reported by Roll Call — had a different name when Rep. Duke Cunningham (R-Calif.) became its unofficial helmsman. The yacht used to be called “Bouy Toy,” so named by its former owners, a gay couple, according to sources at the Capitol Yacht Club.Apparently, the fellas down at the marina kind of razzed ol’ Duke, a former “top gun” fighter pilot, about the gay-themed name. And apparently, Cunningham couldn’t take it. He changed the boat’s name from the sweet-and-saucy Bouy Toy to the mucho macho Duke-Stir in December 2004, according to Coast Guard records.
Aqua-Duke ...
--Josh Marshall
So Matt Cooper agrees to testify ...
I'll be curious to see what turn of events led to this or whether it was just the approaching prospect of a long stint in prison. In Cooper's case I'll give a strong benefit of the doubt till I hear otherwise, since he's one of the few people who's held his head high through this whole sordid and long-drawn-out affair.
Of equal interest to me is Judith Miller.
As we suggested a few days ago, it's not clear to me that Miller is in this jam for the same reasons as Cooper is.
And in the Post this morning comes this hint: "Fitzgerald may learn more details from Cooper's notes. Sources close to the investigation say there is evidence in some instances that some reporters may have told government officials -- not the other way around -- that Wilson was married to Plame, a CIA employee."
Go figure ...
Like to discuss and share your thoughts? We've opened a special discussion thread on this breaking news at TPMCafe.
--Josh Marshall
As near as I can tell, there's no major new Duke Cunningham scandal in the news today. And yet, it's still pretty early.
On the other hand, this gives me an opportunity to highlight the chart Bob Brigham posted yesterday over at the Swing State Project. Particularly if you're just getting started, it can help clear up all the players.
It includes a column each for each bagman/shark, organized vertically with the relevant yacht, how much Duke scored from the given bagman, which house he helped with, and so forth.
--Josh Marshall
"We're going to fight this through to the end," says Duke Cunningham. Those were Rep. Randy "Duke" Cunningham's (R-Wade) words before ducking into a no-press speech before the Escondido Rotary Club.
Does he plan to seek a ninth term? "Absolutely."
--Josh Marshall
O'Donnell's got a new post up on Arianna's site: three questions for Rove's attorney.
--Josh Marshall
A bit more on Rep. Randy "Duke" Cunningham's (R) new pal, Thomas Kontogiannis.
Looking at this November 2000 piece in the New York Post, it seems other pols who've gotten cozy with Kontogiannis haven't fared so well.
One was Celestine Miller, a one-time Queens school superintendent who got charged with taking some $1 million in bribes in the same tangle that got Kontogiannis those convictions he was looking to get pardoned for.
According to the Post, grand jury testimony in the case came from one informant he said he had personally counted out some $50,000 that Kontogiannis had given to Miller in a brown paper bag. And, no, I don't mean brown paper bag in the figurative sense. I mean a literal brown paper bag.
Here's a bit more from the Post piece dated November 2nd, 2000 ...
Authorities say that was just part of a total of $1 million in payoffs Miller and her husband, William Harris, received from the 51-year-old Kontogiannis.Also included in the payoff total, according to authorities:
* Contributions totaling $80,000 to "Friends of Celestine Miller" for her unsuccessful 1998 Republican congressional campaign against Gregory Meeks to succeed Queens Democrat Floyd Flake.
* Several European trips and payments of tens of thousands of dollars on her American Express bill.
* At least $75,000 from Kontogiannis' companies that showed up in Miller and her husband's joint bank account.
* Two two-story homes, worth more than $800,000, given to her by Kontogiannis, whose companies held the mortgages.
Duke runs in good company, don't he?
More coming on this front soon ...
Late Update: Apparently at some earlier point Kontogiannis had branched out from domestic shenanigans. "He and an official at the U.S. Embassy in Athens were arrested by the FBI for taking bribes to provide phony U.S. visas," said the Post.
--Josh Marshall
Who can tell me more about the 'pension reform' bill (Pension Protection Act, H.R. 2830) that Chairman John Boehner pushed through the Education and the Workforce Committee last week?
--Josh Marshall
I wanted to let you know about a new group blog we've just launched over at TPMCafe. It's called House of Labor and, as the name suggests, its focused on the labor movement in the United States.
I'd be much obliged if you'd stop by and check it out.
Here's the introduction to the site and why we think it's important, and here's the url of the site itself: http://houseoflabor.tpmcafe.com.
--Josh Marshall
Question of the day: what law firm did Duke Cunningham helpfully refer Thomas Kontogiannis to when the latter was looking for a presidential pardon?
--Josh Marshall
As we told you yesterday evening, the curse of Rep. Randy "Duke" Cunningham -- the habit of wealthy businessmen to pay Duke double or triple market rates for pieces of property -- has struck again. This time with the sale of Duke's old-new boat, The Kelly C, as reported by The Washington Post.
To recap, Duke bought the Kelly C from then-Congressman Sonny Callahan (R) of Alabama in 1997 for $200,000. Then in 2002 he sold it to Long Island Thomas Kontogiannis for $600,000. And then, after doing $100,000 in repairs and continuing to register it in Duke's name, he was apparently about to sell it back to Duke last month before all the press unpleasantness broke out.
Now, the question on the minds of many chroniclers of Duke's shenanigans last night was just what sort of favor Duke might have been offering to Kontogiannis, who unlike Wade Mitchell, wasn't a defense contractor on the make but simply your average Long Island real estate developer/public contractor who'd recently pled guilty in a bid-rigging and bribery case involving New York public schools in which he'd been compelled to repay said schools some $5 million.
Now, Marcus Stern and Jerry Kammer, in the San Diego Union-Tribune, provide a possible answer. It seems Kontongiannis is one of that long list of congressional friends just looking for some good advice.
Said Kontogiannis: "I said I have this problem and I was wondering if I can get a pardon out of it. He (Cunningham) said to me, 'I know nothing about these things, but I'll find the proper law firm and I'll let you know if they can help you.'"
In the words of the Union-Tribune, Duke "offered to help him explore the possibility of seeking a pardon from President Bush and the Justice Department." But it seems it just didn't work out.
Kontogiannis said he went to Washington and talked to the law firm recommended by the congressman. But he said he then dropped the idea. "It's not worth the aggravation," he said, describing the process as too complicated.
More to come, one would hope, on the money Kontogiannis's mortgage company lent Duke to help buy the slick new house.
--Josh Marshall
Bingo!
So many shoes have been waiting to drop on the Duke Cunningham front that it was starting to look like an Imelda Marcos type situation.
But the Post has managed to pull them all together into one of those eye-popping Cash-n-Carry-Cunningham stories we've all come to know and love.
Back in the annals of Dukedom, you'll remember that before Mitch Wade bought Duke the Duke Stir, Duke lived on his own yacht, the Kelly C. But, as the story goes, Duke had that one off for repairs somewhere. And thus his current (or until last week current) stay on the Duke Stir. (About ten days ago, we told you that it seemed she was down in Alabama since her current registration lists Mobile as her current hailing port.)
Well, seems it's a tad more complicated than that.
Apparently Duke sold the Kelly C to a Long Island real estate developer named Thomas T. Kontogiannis back in 2002 for $600,000. Kontogiannis then spent about a $100,000 refurbishing Duke's boat. And for the last year or so he's been using it for dock parties on Long Island since the boat doesn't do so well in rough seas. But having poured $100k into the thing, Kontogiannis wasn't so sure he really wanted the Kelly C after all. So just before the house scandal broke last month, he was going to sell it back to Duke. (Apparently the unfortunate press attention has now scotched the deal.)
Now, you might imagine this would lead to all sorts of complications since Duke's old yacht would have be re-renamed and re-re-registered and so forth. But no so! Kontogiannis never got the boat renamed or registered. In fact Duke was so confident that he'd soon be buying the Kelly C back that earlier this year he'd already gone ahead and registered it in his name -- despite Kontogiannis's owning it -- using the address of the new home he bought at Rancho Sante Fe.
Now, about that home Duke bought.
There's always been a bit of a question where Duke scraped up the money to buy the thing. Public records suggest he paid cash. But even with the $1.675 million Mitch Wade gave him for the old house he was still almost a million short. So where'd the extra money come in?
According to the Post, Duke "asked if a mortgage company owned by Kontogiannis's nephew and daughter could finance $1.1 million in mortgages ... Kontogiannis said he recently paid off a $500,000 second mortgage on the Rancho Santa Fe home at the congressman's request, mostly with money he owed Cunningham for the yacht."
From here it gets so complicated I'm just going to have to quote from the Post at length ...
Kontogiannis said he went to a party on the Kelly C around 1995, when it was owned by another congressman, and liked the steel-hull craft. After Cunningham bought it 1997, for a reported $200,000, Kontogiannis said he told the congressman: "If you ever decide to sell it, I'd love to buy it."Cunningham "called and asked if I was still interested" in buying the boat, Kontogiannis said. He did so, he said, after getting the boat appraised at $1.2 million. The developer said he financed the transaction by giving the congressman about $30,000, assuming the payments on an existing $140,000 bank loan and financing the remaining $425,000 as a personal note that accumulated interest at the prime rate. He said a family company, Axxion LLC, made the payments on the bank loan.
The congressman approached him again in 2003 when Cunningham planned to buy the Rancho Santa Fe home, Kontogiannis said. The congressman asked if Coastal Capital, the company the developer said is owned by his nephew and daughter, could finance the mortgage at its wholesale price, which had a slightly lower interest rate than retail mortgage lenders. The decision was "a slam dunk," Kontogiannis said, because the house had been appraised at $2.55 million.
Kontogiannis said Cunningham asked him last year to pay back the Kelly C loan, which was accruing interest at about 3 1/2 percent, by paying off the second mortgage on the house. Interest on the congressman's loan was accruing at 10 percent, though Cunningham wasn't making payments, he said.
The developer paid off the mortgage, he said, after Cunningham wrote him a check for $70,000 to make up the difference between what he owed on the boat and what Cunningham owed on the second mortgage.
That all sounds pretty above board, doesn't it?
Okay, let's get started here. Duke bought the Kelly C for $200,000. Five years later Kontogiannis gets it appraised for $1.2 million. Which prompts the question: Does Elizabeth Todd do boat work too? And if not, who was the fool who sold Duke the boat for a million dollars under value?
So Duke buys the boat in 1997 for $200,000 and, presumably because it's a collectible, five years later it had appreciated to $600,000. Or $1.2 million. But who's counting?
Late Update: A few readers asked, so just to be clear, the assumption that the Kelly C appreciated in price because it was a collectible was, yes, rather meant in jest.
--Josh Marshall
'Patriotism is the last refuge of the scoundrel' poster-boy Cunningham cancels 4th of July events, holds firm on flag-burning amendment.
--Josh Marshall
