“The end justifies the means” is a phrase of Niccolò Machiavelli. It means that if a goal is morally important enough, any method of getting it is acceptable. “Morally” might have been a word that Martin Kao struggled with. When explaining to the U.S. District court all the evidence against him for Paycheck Protection Program fraud, he switched the quote around to “I believe that maybe the means justify the ends.”
It didn’t matter which came first for Kao, the “means” or the end”, because the evidence was so over whelming, he pled guilty on September 7, 2022 to bank fraud and money laundering of more than $12.8 million in pandemic relief loans.
Kao was CEO of Navatek, a successful company that held numerous government contracts, including building ships for the U.S. Navy. Kao applied for PPP loans using false information in order to receive more money than he was entitled to. Kao defended his actions, stating he included “prospective” employees who didn’t exist yet, therefore inflating the number of employees he had on his loan applications. Kao must have had big hiring plans because he kept filing for new loans for the company subsidiaries even after he had received the maximum funds allowed.
Navatek’s payroll appeared to be large no matter how many employees were accounted for. Kao wrote himself a payroll check for $2 million that came out of the same bank account that held the PPP funds.
Meanwhile, Kao faces additional charges for illegal campaign contributions in Washington, D.C., allegedly making illicit donations through a shell company to support Maine Sen. Susan Collins. A plea agreement has been offered in this case. Our morally absent Kao told the judge that the deal is “contingent” on his guilty plea in the Hawaii bank fraud and money laundering case. Sentencing for Kao is in January.
Shout out to the IRS-Criminal Investigation and the SBA’s Office of Inspector General who did a great job bringing this crime to justice.
Today’s Fraud of the Day is based on an article “Hawaii Defense Contractor Admits To Pandemic Relief Fraud” published by Honolulu Civil Beat on September 7, 2022
The former CEO of a Hawaii defense contractor pleaded guilty Wednesday in federal court to bank fraud and money laundering after he obtained more than $12.8 million in pandemic relief loans under false pretenses.
As the head of Navatek LLC in 2020, Martin Kao applied for Paycheck Protection Program loans using false information about his payroll to receive more money than he was entitled to. He also kept applying for new loans under the names of subsidiaries after the company had already received the maximum of $10 million, according to prosecutors.
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