Foggo Out at CIA

May 8, 2006 — -- ABC News has learned that Kyle "Dusty" Foggo, the hand-picked executive director of the CIA under Porter Goss, has resigned -- the same day as his boss's replacement was announced by the White House.

Foggo is at the center of a swirling storm of corruption allegations -- and there are suggestions that the scandal, which involves poker parties, sweetheart contracts and prostitutes -- could spread, further tainting the agency. His resignation may serve to tamp down some of the damage to the agency itself as an FBI criminal probe and a CIA inspector general's investigation continue.

Earlier today, the White House announced that Gen. Michael Hayden had been picked to replace Goss, whose resignation came at the end of last week.

ABC News' Christopher Isham reported today that a respected veteran CIA officer -- Stephen Kappes -- had already been asked to return to the agency as Hayden's right hand. Kappes had left the agency when Goss was appointed as its head. Insiders told ABC News that the news of Kappes' expected return is likely to be a huge boost to morale.

Goss had refused to remove Foggo from his powerful post after Foggo came under investigation by the FBI and the CIA inspector general.

A CIA official said Foggo's resignation would be "pretty normal" following the resignation of Goss as director.

The choice of Foggo to run the agency's day-to-day activities has been cited as an example of Goss' mismanagement of the spy agency.

Before being handpicked by Goss, Foggo had been written up for insubordination by his supervisor, the highest-ranking African-American woman in the CIA.

A CIA official confirmed the incident but said the insubordination report was never formally filed.

The supervisor, Jeanette Moore, resigned shortly after Foggo was promoted by Goss.

Foggo recently admitted that he attended Washington, D.C., poker parties that figure in a widening corruption scandal involving a defense contractor, Brent Wilkes, who is a longtime friend of Foggo.

Federal officials are investigating whether Wilkes also provided prostitutes at the parties. Foggo has denied seeing any prostitutes at the parties he attended.

The FBI and the CIA inspector general are both investigating whether any of the CIA contracts awarded to Wilkes were handled improperly.

Foggo has strongly denied any impropriety involving CIA contracts.