By Greg Moran, San Diego Union-Tribune, February 5, 2008
5 Feb 2008 // The guilty pleas that New York mortgage broker John Michael quietly entered yesterday in federal court marked the close of another chapter in the congressional bribery scandal that brought down former Rep. Randy “Duke” Cunningham.
Michael, 36, pleaded guilty to a charge of conspiracy to commit money laundering and to subsequently lying to a federal grand jury. Michael, a minor player in the Cunningham affair, faces a maximum of five years in prison on each charge and a $250,000 fine.
In return for the plea, the government dropped more serious charges of bribery and obstruction of justice against Michael. U.S. District Court Judge Larry Burns set a May 5 sentencing date for Michael, who remains free on bond.
In entering his guilty pleas in front of Burns in San Diego federal court, Michael admitted that a $525,000 mortgage his company processed in late 2004 was part of a money laundering plan to hide the fact that the funds were actually bribe money to Cunningham.
The money was paid to Cunningham by Poway defense contractor Brent Wilkes. A jury convicted Wilkes on Oct. 5 of 13 charges, including bribery, in connection with the Cunningham scandal.
Cunningham used the money to help pay for a mansion in Rancho Santa Fe.
Michael also admitted that he lied about the details and structure of the transaction to a federal grand jury investigating Cunningham in August 2005.
Cunningham eventually pleaded guilty to conspiracy and tax evasion and is serving an eight-year, four-month sentence at a federal prison in Tucson.
The loan scheme was arranged by Thomas Kontogiannis, Michael's uncle and a financier who pleaded guilty to money laundering a year ago. Kontogiannis underwent open-heart surgery days before he was to be sentenced, so the hearing has been delayed.
Kontogiannis is recuperating at a rehabilitation facility in New York, under guard of federal marshals. He faces a maximum 10-year sentence.
Wilkes is scheduled to be sentenced Feb. 19. Court papers indicate probation officials are recommending that Burns sentence him to 60 years in prison.
Wilkes also is facing a new problem. Last week, prosecutors filed court papers demanding that the two federal public defenders appointed to represent Wilkes in a second indictment stemming from the Cunningham investigation be removed and that Burns order Wilkes to reimburse the government for their work.
Wilkes got the taxpayer-funded lawyers appointed in August to defend him against conspiracy, fraud and money laundering charges he faces along with former CIA official Kyle “Dusty” Foggo. He submitted a financial affidavit under seal to Burns to show he could not afford his own lawyers.
Burns made the appointment provisional, meaning it could be withdrawn if prosecutors came up with information showing Wilkes could fund his own defense.
In the court papers, the prosecutors contend that Wilkes has access to more than $1 million in equity in homes he owns, as well as money from the sale of the office building for his company, ADCS Inc. The government says Wilkes paid mortgages, bills and divorce lawyers before and after he was appointed public defenders.
Lawyers for Wilkes could not be reached for comment yesterday.