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.