A high-profile Hawaii-based defense contractor has been arrested on charges of swindling $12.8 million in funds intended to prop up small businesses during COVID-19.
Martin Kao, 47, a generous political donor, was arrested on Wednesday and charged with bank fraud and money laundering, accused of siphoning off $2 million of the fraudulent loan into his own personal bank account.
The Department of Justice accused Kao of falsifying loan applications so that he could receive more money than he was entitled to under the Paycheck Protection Program (PPP), which was created by Congress as part of the $2 trillion CARES Act meant to stave off financial ruin for individuals and small businesses during the pandemic.
Kao submitted at least two fraudulent PPP loan applications, prosecutors allege.
They claim he 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.
He was charged with two counts of bank fraud and five counts of money laundering.
Kao will make his initial appearance in court in Honolulu on Thursday, before U.S. District Court Judge Kenneth J. Mansfield.
Kao in 2017 was appointed CEO of Navatek, a defense company with contracts for the Defense Department and Nasa.
Five days before his arrest Kao announced that the company was being renamed Martin Defense Group, after him.
‘While I respect and value Navatek’s history, our re-branding as Martin Defense Group allows us to turn