Kao allegedly leveraged his close relationship with Senators who championed the CARES Act to obtain millions in fraudulent loans from Collins’ Paycheck Protection Program

 

Yesterday, the Department of Justice arrested and charged Martin Kao for defrauding the federal government out of $12.8 million from Senator Collins’ Paycheck Protection Program. According to the criminal complaint, Kao leveraged his close relationship with U.S. Senators who championed the CARES Act to pressure a local bank to approve his loan before depositing $2 million of those funds into his personal account.

 

Kao and his wife have both donated the maximum contribution to Senator Collins’ reelection effort, and employees of Kao’s contracting firm and their families have given more than $70,000 to the Collins campaign. In February, Kao’s wife was linked to a straw donor scheme that funneled $150,000 to a pro-Collins Super PAC.

 

Bangor Daily News: Defense contractor who gave to Susan Collins accused of defrauding her business loan program

 

By Jessica Piper

October 1, 2020

 

Key Points: 

 

  • 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 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. A spokesperson for Collins did not respond to questions Wednesday night or Thursday morning.

 

  • “I just got off a couple calls with [a U.S. Senator and Member of Congress],” Kao wrote in an email dated Apr. 7 to the bank. “The [sic] specifically asked about the status of our PPP loan application and were very adamant about stepping in, if our application was getting stalled.”

 

  • In a later email, Kao told the bank that a Senate staffer “wanted to STRESS that these are simple checks of information and mathematical accuracy … and the bank is ABSOLUTELY empowered and relying on the applicants [sic] representations and certifications.”

 

  • Both Kao and his wife, Tiffany Jennifer Lam, are major political donors, having given at least $150,000 to federal groups since the start of 2018. They have given maximum contributions to Collins, a Republican, this cycle, according to federal data.

 

  • Lam was linked to a shadowy $150,000 donation to a pro-Collins super PAC, the Honolulu Civil Beat reported in February. It was the subject of a federal ethics complaint that month from the nonpartisan Campaign Legal Center, which cited evidence the company making the contribution had no legitimate income and was set up to hide the true donors.

 

Portland Press Herald: Hawaiian defense contractor with Maine offices charged with bank fraud

 

By Eric Russell

October 1, 2020

 

Key Points:

 

  • 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.

 

  • 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 unnamed 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. Any additional review the bank does should be perfunctory… at best.”

 

  • Last August, Kao appeared with Collins in Portland when she announced an $8 million contract to Navatek by the U.S. Navy Office of Naval Research.

 

  • Her office did not immediately respond to a request for comment on Kao’s arrest or the charges against him.

 

  • Kao donated the maximum amount of $5,600 to Collins’ reelection campaign in 2018 and 2019, according to Federal Election Commission records. His wife, Tiffany Jennifer Lam, also donated the maximum amount, as did several other Navatek employees, according to Civil Beat. Many of the donations came on the same day, Aug. 18, less than two weeks after Collins visited Navatek’s offices in Portland to celebrate its contract, Civil Beat reported.

 

  • In February, before the pandemic hit, Kao was targeted in a complaint to the FEC over a $150,000 donation made to 1820 PAC, an independent group that is supporting Collins’ reelection. The donation was made by a company called the Society of Young Women Scientist and Engineers LLC. The LLC’s registered agent and manager was Jennifer Lam, Kao’s wife. The FEC complaint, filed by the Washington, D.C.-based Campaign Legal Center, alleges the company was founded to shield the original source of funding.

 

  • “Because (Society of Young Women Scientist and Engineers) does not have a website, social media account, search engine presence or business record, the available facts do not suggest that (it) conducted any business or had sufficient income from assets, investment earnings, business revenues, or bona fide capital investments to cover the $150,000 contribution to 1820 PAC at the time the contribution was made, without an infusion of funds provided to them for that purpose,” the complaint reads.

 

  • Federal election laws prohibit making “contributions in the name of another.” That complaint has not been resolved.

 

  • The 1820 PAC, which has supported Collins’ bid for a fifth term, has been linked to the U.S. Chamber of Commerce.

 

Honolulu Civil Beat: Prominent Hawaii Defense Contractor Arrested For CARES Act Fraud

 

September 30, 2020

By Nick Grube

 

Key Points:

 

  • A politically connected defense contractor in Hawaii was arrested and charged Wednesday by the U.S. Justice Department for allegedly bilking the federal government out of $12.8 million in coronavirus relief aid meant to help small businesses.

 

  • Martin Kao is the CEO of Martin Defense Group, formerly known as Navatek LLC, a Honolulu-based company that over the years has received millions of dollars in federal contracts, primarily to design state-of-the-art ship hulls for the U.S. Navy.

 

  • Kao is a prolific political donor. He, his family and his employees have contributed hundreds of thousands of dollars to federal politicians in recent years, including several members of the Senate Appropriations Committee.

 

  • Kao’s company also appears tied to a mysterious $150,000 donation made to a super PAC supporting U.S. Sen. Susan Collins of Maine, who is up for reelection.

 

  • The Campaign Legal Center in Washington, D.C., filed a complaint with the Federal Election Commission against the company that made the donation, the Society of Young Women Scientist and Engineers LLC, which the Legal Center said appeared to have been created for the sole purpose of hiding the identities of the donors, which could be a violation of the law.

 

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