Two contracting executives plead guilty to major government fraud

March 18, 2013

Executives at two Arlington companies have pleaded guilty after being accused of fraudulently obtaining more than $31 million in federal contract payments meant for disadvantaged small businesses, the Justice Department said Monday.

Keith Hedman, 53, of Arlington and Dawn Hamilton, 48, of Brownsville, Md., pleaded guilty to major government fraud last week before the U.S. District Court for the Eastern District of Virginia. Hedman also pleaded guilty to conspiracy to commit bribery and agreed to forfeit more than $6.3 million, according to Justice. Hamilton agreed to forfeit more than $1.2 million.

Justice alleged that Hedman and an unnamed African American woman established an Arlington-based security service consulting company around 2001. The woman was named president and chief executive, allowing the contractor to win work set aside for certain minority-owned small businesses, Justice alleged.

After the woman left in 2003, the company was no longer eligible for the set-aside work, and Hedman created a shell company to win small-business work, even though it was not qualified, according to Justice.

Hedman selected Hamilton, an employee, as a “figurehead owner,” according to a Justice statement. Government prosecutors alleged that Hedman and Hamilton falsely claimed that Hamilton founded the company and was the only member of its management team. Justice said Hedman and Hamilton misled the Small Business Administration through 2012.

From 2003 to 2012, “Hedman — not Hamilton — exercised ultimate decision-making authority and control over the company by controlling its finances, allocation of personnel and government contracting activities,” Justice said in a statement. “Hedman nonetheless maintained the impression that Hamilton was leading the company, including through forgeries of signatures by Hamilton to documents she had not seen or drafted.”

The shell company won more than $31 million in government contract payments, according to Justice.

The government did not identify either company. Hamilton testified in 2011 before the House Small Business Committee as president and chief executive of Arlington-based Security Assistance Corp. On a government vendor list, Hedman is associated with Arlington-based Protection Strategies.

“PSI is aware of the legal proceedings involving Mr. Hedman and is fully cooperating with the government,” Protection Strategies President Michael Voce said in an e-mail. “Hedman contemporaneously resigned as CEO of PSI and his employment with the company was terminated over eight months ago.”

Three other employees of the unnamed companies also pleaded guilty this month to major fraud or conspiracy to commit major fraud: David George Lux, 62, of Springfield; Joseph Richards, 51, of Arlington; and David Sanborn, 60, of Lexington, S.C.

Hedman, Lux and Sanborn could not immediately be reached by phone, while no phone number could be located for Hamilton or Richards.

All are set to be sentenced this summer, according to Justice.

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