News & Politics

Too Hot to Handle


Late schools watchdog Ed Stancik had a take-no-prisoners reputation as he waged war on corruption and misconduct in the city’s public education system. But while his office focused on catching wayward custodians, teachers, and bureaucrats, it let what might have been one of its biggest catches ever swim away five years ago—a powerful but venal United States congressman.

Former office investigators say that a top Stancik deputy turned thumbs-down on a request to pursue an allegation that a crooked school vendor had bribed Randy “Duke” Cunningham, a Republican representative from California and member of the Appropriations Committee.

Last month, following a separate federal probe, Cunningham admitted
taking a stunning $2.4 million in bribes from defense contractors. One of those making the payoffs, according to reports and court filings, was the same corrupt vendor that Stancik was chasing at the time, a wealthy Long Island businessman named Thomas Kontogiannis.

When the tip about Cunningham came into Stancik’s office in October 2000, the crusading commissioner was closing in on one of his biggest and most successful investigations ever: the arrest and conviction of former Queens schools superintendent Celestine Miller, who had steered $6 million in computer contracts to companies controlled by Kontogiannis.

A confidential informant in Community School District 29 in Rosedale detailed for Stancik how Miller collected $50,000 in a brown paper bag from Kontogiannis, the district’s landlord. Stancik also alleged that Kontogiannis had picked up the $10,000 credit card tab for a trip to Greece by Miller and her husband, and dropped another $75,000 into their bank account.

Those charges were unveiled on November 1 that year in a joint announcement by Stancik and Queens District Attorney Richard Brown, who handled the prosecutions. Stancik also issued a 25-page report on the probe.

But a couple of weeks earlier, on October 19, the D.A.’s office had received a puzzling letter from Cunningham—whose San Diego congressional district is 2,800 miles away—claiming that Miller was being railroaded.

“There may be a political agenda waged against Superintendent Miller by a company not capable of completing the [computer] contract,” Cunningham wrote. As a result of that concern, the lawmaker said he had asked Henry Hyde, then the chairman of the House Judiciary Committee, to open an investigation. Attached to the letter was a note from the committee’s general counsel confirming that the office was “in the process of gathering information.”

Stancik’s investigators weren’t completely shocked by the reach from outside. They knew that Cunningham was friendly with Kontogiannis, who also held defense contracts. They also knew that the contractor had fueled Miller’s political ambitions, raising money and introducing her to his political pals when she ran unsuccessfully for Congress on the Republican line in 1998.

But the letter was even more intriguing given the tip that Cunningham had recently sold a yacht to Kontogiannis at a vastly inflated price. Eager to expand the probe, the lead investigator prepared a subpoena for the bank records of the Kontogiannis corporation that had purchased the yacht and asked his supervisor to approve it.

Nothing doing.

Sources familiar with the decision differ on who made the call. According to two former investigators, Regina Loughran, a top deputy to Stancik and the author of the report on the Miller investigation, rejected the request, allegedly saying, “Leave it alone. It’s a hot potato.”

But another source insisted that it was not Loughran but another unnamed higher-up who ruled out the subpoena. “The decision was to leave it to [D.A.] Brown’s office, and that was it,” said this source. (A Brown spokesman said the tip was not pursued.)

Whoever made the decision let a big one get away.

When Cunningham tearfully pled guilty on November 30, federal prosecutors detailed contractor payoffs including a condominium, a country home, French antiques, and even $9,200 for a set of laser-shooting simulators for the former Vietnam War flying ace.

There was also a 65-foot yacht, the “Kelly C,” which Cunningham had originally purchased for $200,000. But in September 2000—as the Stancik probe was wrapping up— Kontogiannis agreed to buy the boat from the congressman for $627,000, and then let him go right on using it.

Kontogiannis, who pled guilty in the Miller case, has not been charged in the Cunningham affair. But he has widely been reported to be one of four unnamed co-conspirators described in the criminal information filed against Cunningham in federal court in California.

In late September, The Washington Post‘s Charles Babcock reported that federal agents executed search warrants on Kontogiannis properties. Those raids, wrote Newsday‘s Robert Kessler, hit the businessman’s home, his Rosedale office, and a marina in Glen Cove. Kontogiannis did not return Voice requests for comment.

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