Sham CEO sentenced to four years in scheme to win government contracts

June 28, 2013

A woman who served as the figure­head CEO of a shell company in a scheme to win lucrative government work meant for minority-owned businesses was sentenced to four years in federal prison Friday after an emotional, hours-long hearing in which even her defense attorney choked back tears.

Dawn Hamilton, 48, of Brownsville, Md., sniffled and dabbed her eyes with a tissue as she apologized to a federal district court judge in Alexandria, saying her crime was motivated by “selfishness and wanting a certain lifestyle.”

“There’s no doubt I’ve made some very bad choices throughout my life, and my family will suffer greatly,” Hamilton said.

Judge T.S. Ellis III said that though he was sympathetic to some of Hamilton’s hardships — her attorney said she was a recovering drug addict and domestic violence survivor — they were “no excuses for criminal conduct.”

Hamilton had pleaded guilty in March to major fraud against the U.S., one of many to admit to wrongdoing in a far-reaching case. Three others — including Keith Hedman, 53, who led the scheme — were sentenced to varying prison terms in recent weeks.

According to court filings from prosecutors and defense lawyers, Hedman was the owner of Arlington-based Protection Strategies Inc., or PSI, a security consulting firm that at one time was eligible for contracts designated for minority-owned businesses because it had listed an African American woman as its chief executive. When she left in 2003, Hedman set up a shell company called Security Assistance Corp., or SAC, and installed Hamilton as its figure­head CEO to win the same work, according to the filings.

Hedman and others were paid more than $31 million to do work for NASA, the Coast Guard, the Defense Department and other agencies, and the work they did was satisfactory, prosecutors wrote. The contracts, though, were supposed to go to minority-owned small businesses.

Assistant U.S. Attorney Ryan Faulconer said in court that Hamilton was a “catalyst” for the fraud and pocketed $1.2 million personally. Prosecutors wrote in court filings that her minority status as a Portuguese American allowed her and others to win more than 20 contracts worth more than $153 million.

Defense attorney Nina J. Ginsberg argued that Hamilton was somewhat less responsible for the fraud than the others involved, and that Ellis should take into account her tumultuous life. At one point, Ginsberg’s voice began to crack.

“I am proud to stand next to this woman for what she has accomplished,” Ginsberg said, stifling tears.

Ellis told the defense attorney to sit down and compose herself.

“It’s really inappropriate,” he said. “It doesn’t help with me.”

About a dozen of Hamilton’s supporters filled two rows of the courtroom, and many left crying and hugging after the hearing. According to Ginsberg, prosecutors and the judge, Hamilton continues to run SAC, which continues to work on government contracts routed through the Small Business Administration.

Ellis said he hoped the sentence would “stand as a beacon to warn others” not to perpetrate similar fraud, which he said “we now know is pretty easy to do, because the Small Business Administration is not as vigilant as it should be.”

According to the Small Business Administration, SAC has been proposed for debarment — meaning they can finish work on contracts they already had but would not be eligible for any new work. Ginsberg and Hamilton declined to comment after the hearing.

Matt Zapotosky covers the federal district courthouse in Alexandria, where he tries to break news from a windowless office in which he is not allowed to bring his cell phone.
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