8th person pleads in $30M NASA contract fraud

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Associated Press

Posted on May 23, 2013 at 2:30 PM

ALEXANDRIA, Va. (AP) — An eighth person pleaded guilty Thursday to his role in a $30 million fraud and bribery scheme that duped NASA into awarding contracts to companies that falsely claimed eligibility for preferences granted to minority-owned businesses.

Michael Dunkel, 59, of Merritt Island, Fla., pleaded guilty in U.S. District Court in Alexandria to fraud for illegally receiving more than $4.4 million in government payments. Dunkel falsely claimed he was an employee of an Arlington-based company that received contract preferences through a Small Business Administration program.

In reality, Dunkel simply paid a kickback to the Arlington company so it would pass the work through to him.

As it turned out, the Arlington company, Security Assistance Corp., was not even eligible for the SBA preferences anyway. The company's figurehead CEO, Dawn Hamilton, pleaded guilty in March to $30 million in contract fraud, admitting that she was awarded NASA security contracts under the SBA program even though her company was truly controlled by another man, Keith Hedman, who was not eligible for the SBA preferences that are granted to small, disadvantaged businesses.

Both Hamilton and Hedman have already pleaded guilty and await sentencing.

Court records show the scheme ran from 2005, when Dunkel was introduced to Hedman, through 2012, when federal agents raided the companies' offices.

Previous guilty pleas include a former Homeland Security regional director, Derek Matthews of Harwood, Md., who took $12,500 in bribes in exchange for inside information to help the companies controlled by Hedman.

The SBA program, known as the 8 (a) program, has been under scrutiny in recent years. Audits by the Government Accountability Office (GAO), Congress' investigative arm, found 14 firms that received $325 million in contracts through fraud or abuse of the system.

Regarding the cluster of cases being prosecuted in Alexandria, the SBA says it last month took action to bar the companies and individuals involved from gaining any future contracts, though the companies could become eligible again if they show they have severed ties with the wrongdoers and implemented reforms.

As for broader concerns about fraud in the 8(a) program, SBA spokeswoman Emily Cain said the agency has no tolerance for fraud and has initiated more enforcement actions in the last four years than occurred in the prior 10 years before that.

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