HONOLULU, Hawaii (HawaiiNewsNow) – A prominent Hawaii businessman has been arrested in connection with an alleged scheme to defraud banks of more than $12.8 million in federal Paycheck Protection Program funds, money that was supposed to be used to help buoy struggling businesses.
Martin Kao, CEO of Martin Defense Group (previously known as Navatak), was arrested Wednesday and charged with bank fraud and money laundering in connection with the alleged scheme.
US Attorney for the District of Hawaii Kenji Price said Kao submitted fraudulent information in his PPP loan documents, including by inflating the number of employees he had and what they earn.
After getting a $10 million loan through the program, Price said, Kao deposited $2 million into his personal bank account. Kao then allegedly applied for a second loan through the program.
The Paycheck Protection Program was created to help businesses stay afloat amid the pandemic.
Over 25,000 were issued in Hawaii, amounting to $2.5 billion federal aid.
Loans through the program can be forgiven as long as the money went to keeping employees on the payroll or to cover other business expenses.
The Martin Defense Group is a defense contractor and Kao owns 99% of it.
Price said prosecution of the alleged scheme is a message to other businesses. To those who try to game the system, he said, “we will find you … and expose you.”
Meanwhile, Price also said that other businesses are being investigated for potential fraud in connection with funds through the CARES Act.
Prominent businessman arrested for allegedly defrauding banks of CARES Act funds by HNN on Scribd
This story will be updated.
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