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

He said that his company had about 500 employees when it had fewer than 150.

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 a long record of service to its clients and the people of Hawai'i." He added that the fraud charges were "a complete surprise" and planned to retain counsel to review the allegations. 

When we reached out to Navatek, we received the following statement from CommPac on behalf of the Navatek executive management team, "Mr. Kao will not be making any comments at this time."

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