In Hawaii, Martin Kao was once known for his business acumen as Chief Executive Officer of Navatek LLC, a Hawaiian based defense contractor company. But now he will also be known for being one of the biggest fraudsters sentenced by the U.S. Department of Justice for Paycheck Protection Program fraud. It turns out it doesn’t matter how small the state is. Big fraud still happens. Using lies, and even a little bit of coercion, Kao submitted fraudulent PPP loan applications to at least three banks, on the island and off, in effect stealing $12,842,839 from the U.S. taxpayer.
In his first fraudulent PPP loan application Kao falsely tripled the number of employees at his company. During the bank’s review of Kao’s application, Kao actually strong armed the bank to expedite approval of the fraudulent application by repeatedly claiming that he had discussed his application with United States Senators and their staffs who would supposedly intervene on Kao’s behalf if the bank did not quickly approve his loan. As a result, successfully obtained from the Hawaiian bank the maximum loan of $10 million.
In his second fraudulent PPP loan application Kao falsely claimed eligibility for a PPP loan with an Internet-based mainland bank by concealing his company’s receipt of the first PPP loan. As a result, he fraudulently obtained $2,852,839 in proceeds.
In his third PPP application to a different Hawaii-based bank for another $2,852,839, Kao again falsely claimed eligibility by concealing his company’s receipt of the first and second PPP loans. But this time, the bank questioned why Kao’s payroll records for his employees did not match the tax identification number for the entity identified on the application and they denied him the loan.
On February 14, 2025, Kao was sentenced to over seven years in prison for COVID-19 relief wire fraud.
The investigation was conducted jointly by IRS Criminal Investigation and the Small Business Administration Office of Inspector General.
Today’s Fraud of The Day is based on article “Former defense contractor CEO sentenced for COVID-relief fraud” published by Hawaii News Now on February 14, 2025.
The former CEO of a local defense contractor is heading to prison. Martin Kao, 51, was sentenced in federal court Thursday to 87 months, or 7.25 years, of imprisonment for COVID-relief wire fraud, money laundering, and bank fraud.
He was also sentenced to five years of supervised release, ordered to pay restitution to the Small Business Administration, and will perform 12,800 hours of community service. As CEO of Martin Defense Group, once known as Navatek, Kao lied about laying off employees, inflated payroll numbers, and got duplicate loans from different banks in an attempt to obtain $13 million in Paycheck Protection Program (PPP) loans.
