It looks like laundering bribes on behalf of Duke Cunningham may not have been the only shady activity that Thomas Kontogiannis had going on.

The politically connected Greek real-estate developer -- who's already serving jail time for his role in the Cunningham scheme -- has been indicted, along with eight others, for an alleged mortgage fraud scheme, which swindled Washington Mutual and a unit of Credit Suisse out of $92 million.

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Looks like Thomas Kontogiannis -- who's now in jail for helping launder bribes for his friend, former GOP Congressman Randy "Duke" Cunningham -- has more legal woes. He's been accused in a newly filed lawsuit of participating in a scheme to steal more than $50 million, reports Newsday.

The lawsuit, filed by Manhattan-based DLJ Mortgage Capital, alleges that Kontogiannis and others drew up false loan applications on residential properties in Brooklyn and Queens, which they either owned or planned to develop.

Newsday goes on:

The applications were approved by one of Kontogiannis' mortgage funding firms, which then obtained the money from DLJ and the other institutions, according to court papers.

DLJ and the other lenders eventually discovered that the mortgages were never recorded, the complaint stated, adding that the scheme was only uncovered when monthly mortgage payments ended. A further investigation revealed that many of the properties were then sold by Kontogiannis and the other defendants, DLJ said in its complaint.

Kontogiannis' wife Georgia, and other relatives, are also named as defendants.

Cunningham pleaded guilty in 2005 to conspiracy to commit bribery and is serving an eight year sentence in federal prison.

During Cunningham's recent sentencing, a prosecutor told the judge that there was an ongoing criminal investigation into Kontogiannis' alleged mortgage fraud.

The Duke Cunningham case continues to interest in more ways than one. Thomas Kontogiannis, a Greek businessman who helped launder bribes to Cunningham and a relatively minor player in the case, has proven the most sensitive prosecution of the bunch. Indications are that Kontogiannis was a counterterrorism informant, and prosecutors have fought to keep the details of Kontogiannis' cooperation secret ever since he pleaded guilty.

It's becoming one of the more remarkable cases of government secrecy, reports The San Diego Union-Tribune:

More than a year ago, a New York financier pleaded guilty to laundering bribe money for former Rep. Randy "Duke" Cunningham in a deal that was kept secret for months.

That closed-door bargain triggered a battle between federal prosecutors and public-access advocates that took secrecy to unprecedented heights.

At one point, attorneys arguing for openness were prohibited from sharing their briefs with their clients, who were media. Even the court's docket tracking the progress of the case was not publicly available until recently.

While portions of the case remain secret, a batch of previously sealed court filings was released this week that show the government arguing what media law experts said was an astounding position....

In essence, prosecutors argued that once the executive branch says something is classified, courts are virtually powerless to review or disagree.

Thomas Kontogiannis, briber of Duke Cunningham and cooperator extraordinaire, was due to be sentenced today for his role in the schemes. But today the judge put it off since Tommy K just had bypass surgery.

Last week, his lawyers argued that he'd die in prison because of his heart condition. That didn't tug on the prosecutors' heart strings, however, and they recommended a ten-year sentence, adding that Tommy K had actually continued to run a mortgage fraud scheme for months after he'd pleaded guilty in February.

The judge appears to take a similarly dim view and has revoked Kontogiannis' bail:

[Kontogiannis] will remain in federal custody at the hospital.

U.S. District Judge Larry Burns said Kontogiannis went to Greece with family and appeared to commit what he called "new and continuing crimes." The judge did not elaborate on the alleged crimes.

Admitted Duke Cunningham briber Thomas Kontogiannis is extremely good at avoiding jail time, mostly thanks to his penchant for snitching on his partners in crime at just the right moment. This time -- after snitching on his nephew, financier John Michael -- his cold, cold heart is helping him avoid lockup in a different manner.

In advance of a sentencing hearing slated for next week, Tommy K's lawyers have filed papers contending that he's far too sick to do any serious time. He faces a maximum of ten years in prison, but his heart just isn't in it. The North County Times:

The businessman, in his pledge to cooperate with the government, has also admitted to as much as $100 million in mortgage fraud unrelated to the Cunningham case, according to the newly filed court documents.

But Kontogiannis -- who has been charged with bribery three times in the last 14 years -- has a grave heart condition, his attorneys argued in the documents. They asked the court to postpone the sentencing so their client can have bypass surgery.

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You might say it's been a bad year for John Michael, Thomas Kontogiannis' nephew. From The San Diego Union-Tribune:

One of two defendants set to stand trial this week in connection with the laundering of bribe money to former Rep. Randy “Duke” Cunningham has meningitis, and his trial will be postponed.

U.S. Judge Larry A. Burns did not set a new date for John Thomas Michael, a 35-year-old mortgage broker from Long Island in New York.

The trial of the other defendant, Poway defense contractor Brent Wilkes, will go ahead with a slight delay.

Jury selection will begin tomorrow but the opening statements and first witnesses will not be heard until Oct. 9.

Yet another stop in the tour of all-around muck that is the Duke Cunningham case.

In a filing today, prosecutors allege that John Michael, who's been indicted for laundering Cunningham's bribes and lying to investigators, hid incriminating documents by keeping them with what prosecutors call "a stash of personal entertainment materials and paraphernalia." You can read the filing here.

The prosecutors don't identify exactly what those items are, but note that "Michael has expressed extreme embarrassment" over them and that "their nature objectively supports his perspective" (read: he has good reason to be embarrassed). They say that they'll identify the materials at a court hearing if need be.

Prosecutors want to introduce evidence of Michael's embarrassing "stash," in order to prove that he knew the Cunningham documents were, in their own way, as embarrassing. That he kept documentation of Cunningham's sketchy mortgage details in a place where he also stored "materials he did not want to anyone else to learn about" proves, they write, that he knew he was up to no good.

Part of the indictment against Michael, the nephew to Greek man of mystery Thomas Kontogiannis -- prosecutors call Michael and Kontogiannis "professional money launderers" -- is that he obstructed justice by forging record of the Cunningham mortgages and hiding others.

Michael is scheduled to go on trial along with Brent Wilkes in October, but a later trial date is expected to be set.

So why was Thomas Kontogiannis, who's pled guilty to helping bribe Duke Cunningham, staying at a five-star Greek resort? Because the government told him to, prosecutors say. From The North County Times:

A federal judge allowed a New York man who has admitted bribing former North County U.S. Rep. Randy "Duke" Cunningham to remain free on bond, after an Assistant U.S. Attorney said at a hearing this morning that the man's recent trip to Greece was at the direction of federal agents.

U.S. District Judge Larry Alan Burns had called the hearing to learn whether the man, Thomas Kontogiannis, had traveled overseas without permission. Any such trip requires prior approval because Kontogiannis pleaded guilty earlier this year on a money laundering charge.

At today's hearing, Assistant U.S. Attorney Jason Forge said the trip was made at the government's behest.

"My understanding is that everything Mr. Kontogiannis did was not just 'with permission,' but at the direction of agents and other representatives of the government," Forge said.

Stranger and stranger.

Within the hour, Thomas Kontogiannis is scheduled to go before U.S. District Judge Larry Burns in San Diego and explain why his recent Greek vacation doesn't violate the terms of his $1.5 million bond, under which he had to surrender his passport. But that's not the only new Tommy K-related morsel. On Friday, Burns ruled that attorneys for former ADCS chairman Brent Wilkes will get to review the sealed addenda to Kontogiannis' guilty plea. From the ruling:

1. The government shall disclose to defense counsel any sealed written addenda to the plea agreement of defendant Thomas Kontogiannis, case no. 07CR423-LAB, which addenda shall remain under seal. 2. The only persons to whom defense counsel may disclose, directly or indirectly, the contents or substance of any written addenda are John Michael, Brent Wilkes, and investigators or other agents assisting in the preparation of defendants’ defense.

What, we can't see? Shucks. Wilkes will stand trial next year for bribery and fraud related to the Randy "Duke" Cunningham corruption case. Kontogiannis has pleaded guilty to related charges and is cooperating with the government.

It appears that Thomas Kontogiannis fun in the Grecian sun is over. Kontogiannis, despite having surrendered his passport when he posted bail, was tracked down at a five-star resort in Greece. The judge wasn't happy about it. And now he wants an explanation, Justin reports at the Blotter:

In an order Thursday, Burns wrote he had "received information from reliable sources" that Kontogiannis "has traveled outside the United States" in violation of the terms of his release.

He ordered Kontogiannis to appear at a hearing next Monday to explain why his bond should not be revoked.

Thomas Kontogiannis, the Greek-born businessman and veteran cooperator who's pled guilty to helping bribe Duke Cunningham, has gotten kid glove treatment from prosecutors. But here's something that seems to have puzzled even the trial judge.

As we noted last week, The North County Times reported that they'd tracked down Tommy K at a five-star hotel in Greece. It seemed an odd place to find an admitted felon. Judge Larry Burns agrees. From The San Diego Union-Tribune:

[John Michael's lawyer Raymond Granger] said that Kontogiannis has been on vacation in Greece this summer. Since pleading guilty, Kontogiannis has been free on a bond, but surrendered his passport to federal authorities and was allowed to travel out of the country only if accompanied by federal agents, or with their permission.

Burns seemed intrigued by that revelation, and ordered prosecutors to find out if it was true. He said he might hold another hearing to “clarify the terms” of Kontogiannis' bail.

“On no occasion did I contemplate he would be vacationing in Greece pending sentencing,” Burns said.

So it seems that there might soon be a Grecian five-star hotel clause in Kontogiannis bail.

There was another major revelation in yesterday's hearing, which centered on Michael's motion to dismiss the charges against him. The SDUT also reports that prosecutors "indicated" that Kontogiannis might not testify against his nephew Michael and alleged Duke-briber Brent Wilkes. Perhaps they've calculated that all Tommy K's dirty laundry (which Michael's lawyer did his best to air) might become a distraction for a jury.

There are some things you probably don't know about Thomas Kontogiannis. For one thing, he has a civil engineering degree from the University of Athens. For another, he shrugged off forfeiting over $1 million in ill-gotten gains during his guilty plea in February. But one true mystery remains: why'd he launder money for Duke Cunningham?

It turns out, listening to the man himself, there's the high-minded reason. And then there's... well, the expected reason.

It was never personal interest. My interest is United States, basically. And [Cunningham] was in a position that I could reach out and tell them information that I was gathering from all over the world.

Sure, there's that. (Assuming it's true.) But then Tommy K levels with us.

Second, it is good to have a powerful Congressman that if you ever need anything, you can ask him to help you or assist you in what you might need.

Now that's the Tommy K we've come to know and love.

The one time Greg O'Connell, lawyer for Thomas Kontogiannis, answered my phone calls, he respectfully told me he wasn't going to talk with me and ended the conversation. My loss: I'd love to ask him about this statement he made in court on February 23.

I only have the broadest understanding of the things that this government is asking my client to do.

In context, O'Connell was imploring Judge Burns to keep as much of the hearing transcripts classified as possible, so it's possible that his plea of ignorance is something of a rhetorical gambit -- i.e., how can the public be permitted to know aspects of the case forbidden even to Kontogiannis' attorney? But maybe the substance of his cooperation is so super-secret that even O'Connell, a former assistant U.S. attorney, is in the dark.

(A digression: Even if his lawyer is in the dark, Kontogiannis is getting some plush treatment. The North Country Times reports tracking Kontogiannis to a "five-star hotel in Greece." In February, Kontogiannis surrendered his passport and was forbidden travel outside of federal custody. Usually, that means travel occurs only for family or urgent business, and it's an open question what in the world Kontogiannis is doing in the lap of Grecian luxury.)

David hinted at it on the main page this morning: reporters on the Kontogiannis story have long wondered whether Tommy K might be a U.S. intelligence asset. After all, he has an amazing knack for staying out of jail despite at least two convictions, he's an international businessman, and the government went to extraordinary lengths to keep his identity secret in his current plea arrangement -- including delaying Kontogiannis' fingerprinting for months after his guilty plea. Now, in the unsealed transcript of Kontogiannis' February 22 hearing, Judge Larry Burns provides some strong hints in that direction.

In February, when arranging Kontogiannis' guilty plea, the government requested that Burns keep the proceedings under seal -- a highly unusual request -- pending the development of an unspecified "investigation." Burns, attempting to strike a balance between the government's need to pursue its investigation and the public's right to open court proceedings, decided to give the government a renewable 30-day closure period. "The court's experience is that deadlines tend to move an investigation on," Burns said on February 21. A memo provided by the government explaining both the facts of Kontogiannis' involvement with the investigation and the legal arguments justifying the extraordinary secrecy would remain sealed permanently, to be released "over my dead body," Burns promised the next day.

However, at that subsequent hearing, Burns still grappled with striking the proper balance. A sticking point was how the court would even place in the record the fact that the case was sealed without making public who the case concerned -- an imperative for both prosecutors and Kontogiannis' counsel.

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Kontogiannis just can't stop snitching.

This time around, his cooperation helped lead to the indictment of one-time ADCS bigwig Brent Wilkes, as well as his own nephew, John Michael. From the February 21, 2007 hearing, here's a telling exchange between prosecutor Jason Forge and Judge Larry Burns:

THE COURT: How long ago was the plea agreement struck with Mr. Kontogiannis?

FORGE: Your honor, the date, the content -- within the past couple of weeks, February 9, 2007. We signed it when it was struck. We did not reach an agreement and postpone. It was struck just before we indicted the case against Mr. Wilkes and Mr. Michael, and that was a requirement for the plea.

Thomas Kontogiannis: thrice-convicted felon. Identity thief. Admitted money launderer to extremely crooked Congressman. And, in his own telling, counterterrorist.

Thanks to Judge Larry Burns, who earlier this week ordered four days of court transcripts in the murky Kontogiannis case unsealed, we have our first peek into the motivations of the shady Long Island businessman. Not avarice nor profit guided his actions, Kontogiannis told the court: he linked up with Duke Cunningham out of a post-9/11 sense of patriotism.

“My interest is (the) United States, basically. And (Cunningham) was in a position that I could reach and tell (the government) information that I was gathering from all over the world.”

Cunningham and Kontogiannis have a relationship stretching back years before 9/11. With his frequent travel abroad -- including on a strange trip with Cunningham to Saudi Arabia in December 2004 -- Kontogiannis told the court that he was in a position to help the government learn to fight terrorism, based on his network of contacts. Laundering money for Cunningham's boat and home purchases was merely, to Kontogiannis, a cost of doing business to keep the ear of a Congressman who served on crucial defense and intelligence committees. Asked if he was buying Cunningham's influence, Tommy K replied, "definitely."

Kontogiannis, in his own mind at least, isn't some ordinary shyster. He's Jack Bauer.

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Earlier this week, Judge Larry Burns ruled that four days' worth of sealed proceedings surrounding Thomas Kontogiannis' guilty plea in the Duke Cunningham case should be made public. The prosecution in the case, for unspecified reasons, has argued for months that the case proceed in secret. Earlier this month, prosecutors agreed to release portions of certain transcripts -- but still want others to stay under wraps. Burns order just pertains to those portions that prosecutors have agreed to release.

It's unclear when the transcripts will be released. But they'll represent the first disclosures in the case since the court released the fact of his plea in June. And maybe we'll learn the "security reasons" why Kontogiannis wasn't fingerprinted for months.

A federal prosecutor filed court papers yesterday formally rejecting the assertion that he indirectly profited from the ill-gotten largesse of several-time-felon Thomas Kontogiannis.

Two weeks ago, attorneys for John Michael, who's facing money laundering charges in the Duke Cunningham scandal, issued a j'accuse of their own. It so happened that Phil Halpern, an assistant U.S. attorney on the Michael case, had an uncle named Leonard, who lived on the same Nassau County, New York cul-de-sac as Tommy K. Two years after Leonard died in 2003, Tommy K's daughter, Annette Apergis, bought the Halpern property using an account of her father's connected to laundering money for Cunningham-directed bribes. Michael attorney Ray Granger asked, essentially: What are the odds?

It gets weirder.

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If John Michael's motion against his uncle, Thomas Kontogiannis, could be summarized in two words, they'd be these: Stop Snitching. The only thing is, judging by some of the filings in the motion, snitching is how Kontogiannis has been able to stay out of jail, despite at least two previous convictions.

Kontogiannis's first known conviction came when he pleaded guilty in 1994 to conspiring to bribe an official at the U.S. embassy in Athens, secure fraudulent visas, and commit immigration fraud. An unknown individual paid Kontogiannis to get him a fake visa, and so Kontogiannis flew to Athens, where he conspired with a Greek employee of the embassy, Pantelis Papazachariou, to supply the visa, and got the balance of his money when he supplied the individual with the goods. Additionally, he got a second individual in touch with Papazachariou to secure a fake student visa. Only one problem: both unknown individuals were federal informants. Kontogiannis was caught red-handed.

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Thomas Kontogiannis really can't help himself. We knew that the New York-based businessman was convicted in 1994 of committing visa fraud and bribing officials at the U.S. embassy in Athens; and again in 2000 of paying a Queens school district official 50 grand in a paper bag to steer lucrative contracts to his company. But there was big money in those capers: the contract for installing computer equipment at the schools involved millions of dollars, and Kontogiannis and his henchmen ultimately had to repay the district nearly $5 million. Most notably, in February, Kontogiannis pleaded guilty to a count of engaging in an illicit monetary transaction for Duke Cunningham after Cunningham gave him up for laundering millions in bribes from Mitchell Wade and Brent Wilkes.

But in his nephew John Michael's motion, we see a seedier side of Kontogiannis: a guy who can't help himself when there's money to be snatched. Apparently, in 1996, Kontogiannis stole the identity of a certain Thomas Conti, opened at least ten credit cards in Conti's name, and racked up a couple grand in purchases. All this occurred when Kontogiannis was on federal probation in the visa-fraud case.

That's not all. Exhibits filed along with Michael's motion also reveal that in December 1996, Chase Manhattan declined Conti's application to start a line of credit, alerting him that he already had a delinquent account with the bank. In response, Kontogiannis actually created a limited power of attorney for himself over Conti's finances in order to stop fraud investigations by the banks and credit card companies. He and "Conti" wrote to American Express's fraud division on December 23, 1996:

Since all accounts with American Express were current and in good standing and after a personal visit with Mr. Kontogiannis, there is no reason to further pursue this and it would be greatly appreciated that Mr. Contis [sic] accounts be restored at the earliest convenience.

That, at least, was generous of Tommy K. The documents, unfortunately, don't specify what he bought with Conti's money. But his buddies down at the Bing must have been impressed.

On Friday, indicted Duke Cunningham co-conspirator John Michael attempted to turn the tables on his uncle Thomas Kontogiannis, who appears to be cooperating with the government to convict Michael in order to get his own sentence reduced. Michael threw down the gauntlet in a wide-ranging motion seeking the dismissal of charges against Michael, the exclusion of Kontogiannis's testimony, and the removal of one of the U.S. attorneys on the case, Philip Halpern, as Kontogiannis's daughter purchased a home owned by Halperin's uncle in Nassau County, New York. Reports the San Diego Union-Tribune:

The papers allege that Kontogiannis' daughter, Annette Apergis, purchased a Nassau County, N.Y., home from a member of the Halpern family in June 2005. The prosecutor's uncle died in 2003 and the home, on a privately owned and maintained street, was bought from his widow, according to the papers.

But the transaction wasn't recorded until this year – after Kontogiannis took a plea deal from prosecutors. Kontogiannis pleaded guilty to one count of money laundering for his role in hiding the bribes given to former congressman Randy “Duke” Cunningham through mortgages.

The motion filed by Granger, says the case against Michael should be dismissed because prosecutors have allowed Kontogiannis to continue to profit from his complex mortgage and financial frauds, even after he pleaded guilty in February.

Granger is asking District Court Judge Larry Burns to dismiss the indictment against his client, or prohibit Kontogiannis from testifying. Michael is going on trial along with Brent Wilkes, the Poway defense contractor who is alleged to have bribed Cunningham to win lucrative defense contracts.

We've added Michael's motion to our Document Collection, and you can read it here. Check back for choice tidbits, as it reveals aspects of Kontogiannis's murky, extralegal history.

Update: This post initially stated that Kontogiannis' daughter sold her home to Halpern's uncle, when in fact it was Annette Kontogiannis Alpergis who purchased the property.

Free Thomas Kontogiannis! Well, he hasn't been sentenced yet after pleading guilty to a count of money laundering in the Duke Cunningham case, so he can't be "freed." But freeing the transcripts of his plea agreement would be a welcome start for anyone interested in understanding more about the most mysterious aspect of a bribery scandal that brought down a congressman.

Nearly everything about Kontogiannis' guilty plea has been shrouded in secrecy. It wasn't until June that Judge Larry A. Burns even unsealed the plea, made by Kontogiannis in February. And that secrecy has come at the behest of the prosecution, which has sought to keep the proceedings under wraps -- even going so far as to make the novel argument that it can classify judicial records. The U.S. attorney's office further argued that it couldn't publicly disclose the reasons why such secrecy is necessary.

But now, after pressure from the San Diego Union Tribune to open the proceedings up, the prosecution is backing down -- somewhat.

Federal prosecutors said yesterday they would agree to release portions from some sealed transcripts concerning the guilty plea of a key figure in the Randy “Duke” Cunningham investigation.

Assistant U.S. Attorney Jason Forge said the portion of a hearing in February where New York developer Thomas Kontogiannis pleaded guilty could be made public.

Forge also said prosecutors do not object to the release of 85 percent of the material in transcripts from four hearings regarding the plea that were conducted in February and April. All those transcripts are under seal and were the subject of a federal appellate court hearing Monday.

It's still unclear what substantive information from the pleading will emerge. But this is the first indication in months that some aspect of Kontogiannis' very unusual plea arrangements will become public.

Nobody knows why prosecutors want to keep details surrounding Thomas Kontogiannis' guilty plea secret, and it's anyone's guess what classified information the Greek, New York based businessman had access to. But it's clear that prosecutors have been using some novel arguments and tactics to keep the information under wraps.

At the end of a secret hearing on the issue yesterday, The San Diego Union-Tribune reports, the 9th U.S. Circuit Court of Appeals invited the newspaper's publisher, which is litigating to have the material released, to weigh in:

At the end of the hearing, the judges said they wanted more arguments from the newspaper and the government on a key question: Can members of the executive branch of government – such as federal prosecutors – declare records generated by the judicial branch as “classified”?

It's unclear when the court will rule.