SAN DIEGO -- The U.S. Attorney's Office was reported Thursday to have filed a lawsuit against Rep. Randy "Duke" Cunningham, claiming the Escondido Republican must forfeit his Rancho Santa Fe home to the government because it was bought with money obtained illegally.

Although there is no public record of the lawsuit at the U.S. District Court in San Diego, the county's record shows the U.S. Attorney's Office filed notice of the lawsuit with the San Diego County Recorder's Office on July 21, The San Diego Union-Tribune reported.

Cunningham's attorney, Lee Blalack, declined to comment on the lawsuit, but he told the newspaper he had filed a motion challenging the U.S. government's legal claim on the house.

The five-bedroom, eight-bath Spanish colonial estate on Via Del Charro was listed for sale Wednesday for $3.5 million, the newspaper reported. But the U.S. attorney's declaration that it has a claim on the property makes a sale difficult, if not impossible, right now, according to local real estate agents.

The notice filed with the county is a legal notification that a suit has been filed. It lets prospective buyers know someone else has first claim to a property, the Union-Tribune reported.

The July 21 notice was filed by the U.S. Attorney's Office less than a week after Cunningham announced publicly he would not seek re-election and would sell the house, giving a portion of the profit to charity.

The notice said in part that "said property constitutes or is derived from proceeds traceable to a violation of Title 18 United States Code, Section 201 ..." which pertains to bribery, graft and conflicts of interest, according to the newspaper.

Cunningham's troubles began with another home sale in 2003, when he sold his Del Mar-area house to defense contractor Mitchell Wade for $1.675 million.

Wade later sold it at a $700,000 loss. Cunningham also lived on Wade's yacht while in Washington, D.C.

Cunningham used the money from the Del Mar home sale to buy the Rancho Santa Fe home for $2.55 million in late 2003 from Douglas Powanda, a former executive with Peregrine Systems awaiting trial on fraud charges for his alleged role in an accounting fraud conspiracy at the business software development company, according to the Union-Tribune.

A San Diego federal grand jury is now investigating the congressman's house deal with Wade.