Special Report: Capitol Crooks

In the fall of 2003, an influential Washington defense contractor named Mitchell Wade was shooting the bull with Haig Melkessetian, a senior executive in his company, at their elegant office not far from the White House. “Haig,’’ Wade declared, “I have a good deal for us.’’ The contractor enthusiastically laid out his plan: His good friend, Randall “Duke’’ Cunningham, a decorated Vietnam War fighter pilot, was planning to lead a congressional delegation to Saudi Arabia on a mission to help Saudi officials improve their image in the wake of the 9/11 terrorist attacks. Melkessetian, a former Army Special Forces soldier and Arabic linguist, was taken aback. “I can’t be on both sides of the fence,’’ he told Wade, noting that their company, MZM Inc., was heavily involved in major counterterrorism projects with the Defense Department. “Don’t start that ideological crap with me,’’ Wade snapped, according to Melkessetian’s account. “I’m not here for ideology. I’m here to make money.’’ And make money he did—a cool $150 million in government contracts since 2002. But Wade’s road to riches was one that would ultimately lead him to jail and ignominy, and, along the way, to a prison term for one lawmaker and still more criminal charges, in the next few days or weeks, against some of the most influential insiders in the nation’s capital. Melkessetian, now a consultant for a U.S. intelligence agency, is helping federal prosecutors in a massive corruption investigation involving Wade, MZM, and Cunningham. The former eight-term Republican congressman from California pleaded guilty last November to accepting more than $2.4 million in bribes and favors from Wade; his mentor, Brent Wilkes, a San Diego-based defense contractor; and two other “unindicted coconspirators.”

A huge spider web.” Cunningham “earmarked” millions of dollars in defense projects for Wade and Wilkes in a manner so brazen federal prosecutors called it “unparalleled” in the long, sordid history of congressional corruption. Cunningham now is serving an eight-year prison term, while Wade, 46, has pleaded guilty to paying Cunningham more than $1 million in bribes and is cooperating with prosecutors. Wade’s sentenc- ing has been postponed until next March. He faces a maximum prison term of 135 months. He declined to be interviewed for this account, as did his attorneys.

Prosecutors are using information from Melkessetian and his MZM colleagues to test Wade’s veracity, to track cash or other assets he may be hiding, and to recommend the length of his prison sentence. The MZM employees have told investigators that they were unaware of Wade’s corrupt acts, but as Melkessetian puts it, they suspected he was “up to no good.”

Today, the FBI, the Defense Criminal Investigative Service, and the Defense Security Service are working with prosecutors to put the finishing touches on indictments against several other defense contractors, and senior defense and intelligence officials, who helped Wade with his corrupt activities.

“We have been looking at everybody that’s involved,’’ says a federal law enforcement official. “Anytime you talk about defense contracting, it’s a huge spider web.”

Although Wilkes has not been charged, the government alleges that he gave more than $630,000 in bribes, gifts, and favors to Cunningham, and investigators now are trying to determine whether he obtained federal contracts through a high school buddy, Kyle “Dusty” Foggo, the former No. 3 official at the CIA. Foggo resigned in May. His attorney has said that Foggo broke no laws. Investigators are also probing whether Wilkes provided limo services, hotel suites, and prostitutes to Cunningham. Wilkes is not cooperating with investigators. “Every single allegation is false, will be fought, and my client will be vindicated,” says his attorney, Nancy Luque.