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.