defense

Defense Contractor Charged with $13M in COVID-19 Relief Fraud

The CEO of a defense contractor based in Hawaii has been charged with nearly $13 million in COVID-19 relief fraud.

Martin Kao is the CEO of Navatek, which was renamed Martin Defense Group back in July. According to the Department of Justice, the 47-year-old executive fraudulently obtained about $12.8 million in Payment Protection Program (PPP) loans guaranteed under the CARES Act.

According to the complaint, Kao submitted at least two fraudulent PPP loan applications by falsely inflating his number of employees on the loan application and falsely certifying his company had not received another PPP loan. He stated that his company had about 500 employees when it had fewer than 150.

After receiving the nearly $13 million in loans, he transferred more than $2 million into his personal accounts.

According to Civil Beat, the CEO’s offices in Honolulu were raided by federal investigators. Kao also has political connections due to numerous campaign contributions and used those relationships, specifically with U.S. senators, to strongarm banks into pushing through the applications.

Kao faces two counts of bank fraud and five counts of money laundering. 

According to the Martin Defense Group website, the company provides research and development for the Department of Defense, NASA, and other government agencies. 

In May, the company won a $5.5 million DARPA contract to develop autonomous underwater vehicle technology for the agency’s Manta Ray Program. And in August 2019, the company won an $8 million contract from the U.S. Navy Office of Naval Research (ONR) to design safer hulls and hybrid-electric propulsion systems for small watercraft.

The company was founded in Hawaii in 1979 but has offices in Kansas, Maine, Michigan, Oklahoma, Rhode Island, South Carolina and Virginia.

In an early statement, issued through public relations firm, CommPac, Kao said, “Navatek is a highly reputable company with

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Hawaiian defense contractor charged with coronavirus fraud donated to Shaheen | Crime

A Hawaiian defense contractor whose business has offices and employees in Maine has been accused of falsifying loan applications to receive $12.8 million in federal funds from a coronavirus relief program.

Martin Kao was arrested Wednesday and charged with bank fraud and money laundering. The news was first reported by Civil Beat, a Hawaii-based investigative news organization.

According to a 37-page criminal complaint filed by the U.S. Department of Justice, Kao is suspected of lying on two applications to receive funds under the Paycheck Protection Program for small businesses, part of the CARES Act passed by Congress in late March to address the pandemic. Maine Sen. Susan Collins was a co-author of the act.

Kao and several of his employees have donated to Collins’ reelection campaign, and the two appeared together in Maine last summer when Collins announced an $8 million federal contract to his company, Navartek LLC, now known as Martin Defense Group.

Investigators believe Kao, when applying for PPP loans, deliberately overstated his company’s need for relief, inflated the number of his employees and used a subsidiary company so that he could apply twice. They also allege Kao transferred $2 million in PPP funds to a personal bank account.

“If you game the system to get money that businesses so desperately need in Hawaii, we will find you, we will expose you and we will hold you accountable to the fullest extent of the law,” Kenj Price, U.S. Attorney for the District of Hawaii, said during a press conference Wednesday announcing the charges against Kao.

The complaint also indicates that Kao told officials at the banks that were delivering the PPP loans that he works closely with multiple unnamed U.S. senators and said some senators or their staff had advised him on the application process.

In one email

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Buffalo defense contractor CUBRC gets $16 million in federal funds to build testing facility | Buffalo Politics News

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CUBRC  Schumer

Sen. Charles Schumer stands next to a segment of a wind tunnel used in weapons development at CUBRC in a 2019 visit to the facility. 




WASHINGTON – CUBRC, a Buffalo-based defense contractor, has received $16 million in federal funding to construct a new hypersonic testing facility, Senate Minority Leader Charles E. Schumer announced Thursday.

“CUBRC is the only facility in the nation with the ability to test hypersonic weapons systems at flight conditions at full scale, and it is a critical part of both Western New York’s innovation economy and our national security,” Schumer said. “That’s why I’m proud to have secured this funding that will fund CUBRC’s groundbreaking improvement to its testing and evaluation complex, allowing us to win the global race on innovation in hypersonic technologies and weapons.”

The project will also boost local jobs, Schumer said.

Formed in 1983, CUBRC has long been a key test site for military hypersonic projects.

“This award from DOD will enable CUBRC to further upgrade our capabilities here in Buffalo thus providing our incredible scientific talent the tools necessary to keep the United States in our leadership position on hypervelocity,” said Tom McMahon, CUBRC’s CEO. “This cannot be understated about how important this is to CUBRC, to Western New York and to the nation.”

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Defense contractor who gave to Susan Collins accused of defrauding her business loan program

A Hawaii defense contractor who has donated to U.S. Sen. Susan Collins and whose business operates in Maine faces federal charges alleging he defrauded the Paycheck Protection Program, the small business loan program championed by the senator.

Martin Kao, the CEO of Martin Defense Group, formerly known as Navatek LLC, allegedly inflated the number of his employees his business had and how much they made to get a $10 million loan, then deposited $2 million into his personal bank account, according to a criminal complaint filed in U.S. District Court in Hawaii on Tuesday.

He then allegedly applied for a second loan. Kao, 47, is set to make an initial appearance in federal court in Honolulu on Thursday, according to U.S. Attorney Kenji M. Price’s office. He is facing two charges of bank fraud and five charges of money laundering.

The defense contracting company, headquartered in Honolulu, Hawaii, said it grew to employ 40 engineers and scientists in Portland and Bangor offices this summer. It has offices in six other states and primarily designs ship hulls for the U.S. Navy. Kao appeared with Collins at a company event in Portland last year after his company won an $8 million Navy contract.

Kao allegedly flaunted ties to U.S. senators in conversations with officials at a Hawaii-based bank in loan conversations, noting in an April 2 email his company operates in multiple states and saying he “work[s] very closely” with senators from those states who “championed” the March coronavirus relief bill that included the loan program, according to the criminal complaint. 

It does not name the lawmakers with whom he allegedly talked. Collins spokesperson Annie Clark said Thursday morning the Republican senator had not spoken with Kao since August 2019 and no one in her office had contact with him or his

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Hawaiian defense contractor with Maine offices charged with bank fraud

A Hawaiian defense contractor whose business has offices and employees in Maine has been accused of falsifying loan applications to receive $12.8 million in federal funds from a coronavirus relief program.

Martin Kao was arrested Wednesday and charged with bank fraud and money laundering. The news was first reported by Civil Beat, a Hawaii-based investigative news organization.

According to a 37-page criminal complaint filed by the U.S. Department of Justice, Kao is suspected of lying on two applications to receive funds under the Paycheck Protection Program for small businesses, part of the CARES Act passed by Congress in late March to address the pandemic. Maine Sen. Susan Collins was a co-author of the act.

Kao and several of his employees have donated to Collins’ reelection campaign, and the two appeared together in Maine last summer when Collins announced an $8 million federal contract to his company, Navartek LLC, now known as Martin Defense Group.

Investigators believe Kao, when applying for PPP loans, deliberately overstated his company’s need for relief, inflated the number of his employees and used a subsidiary company so that he could apply twice. They also allege Kao transferred $2 million in PPP funds to a personal bank account.

The complaint also indicates that Kao told officials at the banks that were delivering the PPP loans that he works closely with unamed U.S. senators and said some senators or their staff had advised him on the application process.

“[The Senator] is suggesting a conference call with his Banking Committee and SBA staff director . . . SHE HELPED WRITE THE PPP RULES. . . . . ,” he wrote in an email to a bank executive, according to the complaint. “She has confirmed directly that CPB should and is obligated to fund once SBA issues the approval number.

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