Hawaii CEO accused of $12.8M in fraud virus assistance loans

HONOLULU — The CEO of a company that was one of Hawaii’s largest recipients of the Paycheck Protection Program defrauded banks of more than $12.8 million in money meant to assist businesses affected by the coronavirus pandemic, federal authorities said Wednesday.

Martin Kao, CEO of Martin Defense Group LLC, formerly known as Navatek LLC, is charged with bank fraud and money laundering. Investigators talked to an executive and a former employee who said the company wasn’t affected by the pandemic, according to a criminal complaint. A defense attorney listed for Kao, 47, didn’t immediately return an Associated Press message seeking comment. Kao’s first court appearance is scheduled for today.

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Congress authorized the Paycheck Protection Program, known as PPP, in March to provide emergency financial assistance to those suffering economic effects of the pandemic through forgivable loans to small businesses for job retention and other expenses.

Kao transferred more than $2 million into his own personal accounts, the complaint said.

Authorities describe his company as a “research, engineering, design, and innovations company that specializes in novel systems for the Department of Defense and other partners in academia and other scientific fields.”

The executive learned details about Kao’s loan application in July when he read a news article about Navatek being one of the largest PPP recipients in Hawaii. The company hired employees and opened branch offices during the pandemic, the executive told investigators.

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Kao submitted at least two fraudulent loan applications, authorities said.

“According to the charges, Kao falsely inflated the number of employees on the loan application and falsely certified that the applicant and its affiliates would not receive, and had not received, another PPP loan,” the U.S. attorney’s office in Hawaii said in a statement.

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