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Banks (Finance)

Hawaii Defense Contractor Arrested and Charged with Coronavirus Relief Fraud

Strategic Insights

— 1 min read

Martin Kao, the 47-year-old CEO of Martin Defense Group, formerly known as Navatek LLC, was arrested and charged by the U.S. Justice Department for allegedly bilking the federal government out of $12.8 million in coronavirus relief aid meant to help small businesses. The investigation revealed that Kao falsified loan applications for the Paycheck Protection Program, created by Congress as part of the $2 trillion CARES Act, by lying to lenders about his company's employee count and using subsidiary companies to mask the fact that he had already obtained PPP loans from other institutions.

Key Takeaways:

  • Martin Kao, CEO of Martin Defense Group, was arrested and charged with bank fraud and money laundering for falsifying loan applications for the Paycheck Protection Program.
  • Kao allegedly lied to lenders about his company's employee count to receive more money than he was eligible for and used subsidiary companies to mask the fact that he had already obtained PPP loans from other institutions.
  • The investigation revealed that Kao had transferred more than $2 million in PPP money from Navatek to a personal bank account.
  • The U.S. Attorney's Office has launched a number of investigations into potential CARES Act fraud in Hawaii, with several agencies, including the FBI, IRS, Secret Service, and Hawaii Attorney General's Office, working in concert to root out wrongdoing.
  • Kao is a prolific political donor, having contributed hundreds of thousands of dollars to federal politicians in recent years, including several members of the Senate Appropriations Committee.
  • The company, Navatek, appears tied to a mysterious $150,000 donation made to a super PAC supporting U.S. Sen. Susan Collins of Maine.

Statistics:

  • $12.8 million: the amount of coronavirus relief aid allegedly bilked by Martin Kao and Navatek LLC.
  • $2 trpillion: the amount of the CARES Act designed to help individuals and businesses during the COVID-19 pandemic.
  • $2 million: the amount of PPP money transferred from Navatek to a personal bank account by Kao.
  • 150: the number of employees claimed by Kao's company, when in reality there were fewer than 150.
  • 3: the number of attempts by Kao to obtain PPP loans.

Sources:

  • U.S. Justice Department
  • Kenji Price, U.S. Attorney for the District of Hawaii
  • Martin Defense Group
  • Hawaii News Now
  • Civil Beat

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