Washington, D.C. — A former Delaware based security company and a husband and wife duo have agreed to pay $221,000 to resolve allegations of defrauding the U.S. government by exploiting small business seta side contracts and participating in an illegal kickback scheme, the Justice Department announced this week.
The company, Praetorian Shield Inc., along with Grady and Ranya Baker, allegedly falsely claimed eligibility as a Woman Owned Small Business (WOSB) and a Service Disabled Veteran Owned Small Business (SDVOSB) in order to win contracts from the Department of Homeland Security (DHS) for federal building security services.
“This conduct thwarts the purpose of the small business program, which is meant to support small and disadvantaged businesses,” said U.S. Attorney Kelly O. Hayes for the District of Maryland. “This settlement demonstrates our commitment to holding accountable those who gain an unfair advantage through deception.”
A Fraudulent Scheme Disguised in Red, White, and Blue
Between 2016 and 2023, according to federal investigators, the Bakers used false representations to pose Praetorian as a legitimate small business contractor eligible for DHS’s highly competitive small business program. In reality, the operation was a front, allegedly controlled by executives at Paragon Systems Inc., one of the largest private security providers to the U.S. government.
Grady Baker, then Vice President of Operations at Paragon, is accused of orchestrating the scheme by instructing his wife to establish Praetorian using her middle and maiden names, despite her not typically using those names in any official capacity. While Praetorian appeared on paper as a WOSB and SDVOSB, the Bakers and Paragon executives are said to have retained full operational control, violating the eligibility rules for such contracts.
Kickbacks and a Wider Conspiracy
The scheme didn’t stop at misrepresentation. According to the Justice Department, Praetorian and the Bakers funneled more than $188,000 in kickbacks to Paragon executives to grease the wheels of the operation. In return, Ranya Baker allegedly received $98,000 in kickbacks from another Paragon subcontractor, Patronus Systems Inc.
This settlement follows a larger crackdown on the contracting abuse. In November 2024, the U.S. government recovered $52 million from Paragon Systems Inc. in a related civil case. Other players in the scheme, such as Athena Services International LLC (ASI) and Athena Joint Venture Services LLC, along with their owner Alisa Silverman, previously paid over $1.6 million to settle similar allegations.
“Those who fraudulently procure, or assist others to fraudulently procure, small business set-aside contracts will be held accountable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When ineligible companies obtain contracts reserved for veteran owned or socially or economically disadvantaged businesses, they prevent the small business community from receiving the contracting opportunities that Congress intended.”
The settlement with Paragon, resolves allegations that acting through former high-ranking corporate executives, knowingly engaged in a fraudulent scheme to use purported small businesses that it controlled to obtain Department of Homeland Security (DHS) set-aside contracts reserved for Woman-Owned Small Businesses (WOSBs), Service-Disabled Veteran Owned Small Businesses (SDVOSBs) and other small businesses. The former high-ranking Paragon officials who carried out this alleged scheme included the company’s president, vice president of business development, vice president of operations, compliance manager and contracts manager. The United States contends the former Paragon executives engaged female relatives and friends to serve as figurehead owners of purported small businesses in order for those companies to obtain DHS set-aside contracts relating to the provision of security services at federal buildings, and that the Paragon-controlled companies then subcontracted substantially all of the work under the set-aside contracts to Paragon.
The settlement further resolves allegations that the purported small businesses surreptitiously paid substantial sums of money to the Paragon executives in violation of the Anti-Kickback Act. In total, the United States contends that the purported small businesses controlled by Paragon made over 300 separate payments to the former Paragon executives, totaling more than $11 million, which they attempted to conceal as purported “consulting payments” made to various shell companies formed by the former executives.
While the $221,000 settlement with the Bakers and Praetorian is based on their financial ability to pay, it brings to a close one more chapter in a widespread contracting fraud case that exploited programs intended to uplift underserved businesses.
The Justice Department emphasized that the claims resolved are allegations only, and there has been no determination of liability.
