MZM 527 Gave to Just One Lawmaker

Posted July 12, 2005 at 6:31pm

The defense contractor whose ties to Rep. Duke Cunningham (R) prompted a federal investigation has used a variety of methods to donate more than $50,000 to the California lawmaker since 2000.

A review of Federal Election Commission and IRS records showed that Mitchell Wade — the founder and, until recently, CEO of the firm MZM Inc. — directed contributions to Cunningham from a 527 account and from MZM’s own corporate coffers as well as from himself, his wife and MZM’s political action committee.

Cunningham, in turn, received those donations using three entities: His re-election committee, his leadership PAC and his own 527 committee.

The complex web of donations sheds new light on the relationship between Cunningham and Wade, whose dealings are now the subject of a federal grand jury probe in Southern California.

That investigation was sparked following news reports that Wade had purchased Cunningham’s San Diego-area home for what some observers have called an inflated price of $1.68 million. Wade resold the house at a $700,000 loss.

Cunningham has also been living on a boat owned by Wade docked at the Capital Yacht Club in Washington, D.C. Federal agents recently raided the boat as well as Cunningham’s San Diego home and MZM’s office near Dupont Circle.

Cunningham has acknowledged helping MZM get federal defense contracts, though he has admitted only that he showed “poor judgment” in selling the house to Wade and has denied any wrongdoing.

The financial relationship between Cunningham and the defense firm appears to have begun in 2000, when MZM gave a direct $5,000 corporate contribution to the American Prosperity PAC State Fund, a non-federal account created by Cunningham under Section 527 of the tax code.

MZM gave another $10,000 to Cunningham’s 527 in 2001. That same year, the defense company created two new entities: MZM PAC, a federal committee registered with the FEC, and the Eagle Group, a 527 self-described as “connected” to MZM on its filings with the IRS. Both committees are registered at 1523 New Hampshire Ave. NW, the address of MZM’s headquarters.

Since it was formed, IRS records show that the Eagle Group has received just one contribution, a $10,000 donation in 2002 from MZM. And the Eagle Group has given out just $7,000 — $5,000 to Cunningham’s 527 and $1,000 apiece to the D.C. Republican Committee and the campaign account of D.C. City Councilman David Catania, all in 2002.

In total, Cunningham’s 527 received $20,000 in soft money from MZM. That represents less than half the money the Congressman has raked in from the firm, which has been even more generous with hard dollars.

Since 2001, MZM PAC has donated $10,000 to American Prosperity PAC (Cunningham’s federal leadership committee), and another $12,000 to Friends of Duke Cunningham, the lawmaker’s re-election account.

Copley News Service has reported that former MZM employees have alleged they were pressured to donate to MZM PAC by Wade. Both the PAC and several of the company’s employees gave significant contributions to Reps. Virgil Goode (R-Va.) and Katherine Harris (R-Fla.). Both lawmakers have since offered to refund the contributions of any donors who felt pressured to give to them.

Beyond the various federal and non-federal committees. Wade and his wife, Christiane Wade, have also opened their wallets for Cunningham. Mitchell has personally given $6,000 to the lawmaker’s re-election since 2001, while Christiane has chipped in $4,000.

MZM did not return a call seeking comment for this story.