Executives of two Arlington-based security companies have pleaded guilty to illegally obtaining $31.8 million in federal contracts intended for minority-owned businesses.
Keith Hedman, CEO of Protection Strategies Inc., also pleaded guilty in federal court in Alexandria to paying a $50,000 bribe to a U.S. government contracting official for the official's help in securing contracts for a shell company, according to the U.S. attorney for the Eastern District of Virginia.
"These executives used their knowledge and experience to abuse a program created to ensure minority small-business owners could compete for government contracts," said U.S. Attorney Neil MacBride. "They not only illegally obtained millions from the United States, they also victimized legitimate minority owners who didn't get the bids."
According to court records, Hedman, 53, of Arlington, formed Protection Strategies Inc. with an African-American woman who was listed as its president and CEO, enabling the company to receive contracts from NASA and other agencies set aside for minority-owned and disadvantaged small businesses.
But when the woman left the company in 2003, Hedman became the sole owner of PSI, which was no longer eligible to qualify for contracting preferences, prosecutors said.
Hedman then created a shell company, Security Assistance Corp., and selected an employee, Dawn Hamilton, 48, of Brownsville, Md., to serve as the figurehead owner based on her Portuguese heritage in order to qualify for the preferential treatment in bidding for contracts, according to charging papers.
But in reality, Hedman retained ultimate control of the company, court papers said.
By misrepresenting that Security Assistance Corps. was a minority-run business, Hedman and others were able to obtain a least $31.8 million in payments, authorities said.
Hedman and Hamilton pleaded guilty last week. Hedman agreed to forfeit more than $6.3 million, and Hamilton agreed to forfeit more than $1.2 million.
Other executives who have pleaded guilty to major fraud or conspiracy to commit major fraud in connection with the scheme are: David George Lux, 62, of Springfield; Joseph Richards, 51, of Arlington; and David Sanborn, 60, of Lexington, S.C.