News Article

Navatek CEO Warned Workers of 'Draconian Consequences' if They Slacked Off During Pandemic
Date: Oct 05, 2020
Author: Nick Grube
Source: ( click here to go to the source)

Featured firm in this article: PacMar Technologies LLC of Honolulu, HI

Now, Martin Kao faces federal charges of bank fraud and money laundering for allegedly bilking the coronavirus relief program of $12.8 million.

Navatek CEO Warned Workers Of 'Draconian Consequences' If They Slacked Off During Pandemic

Now, Martin Kao faces federal charges of bank fraud and money laundering for allegedly bilking the coronavirus relief program of $12.8 million.

WASHINGTON -- Months before Navatek LLC's CEO Martin Kao was arrested on federal charges of defrauding the Paycheck Protection Program meant to help small businesses stay afloat during a deadly pandemic, he sent a company-wide email to his employees assuring them their jobs were safe.

But he also made it very clear that he would not be sympathetic to employees who didn't perform to the fullest extent possible in order to keep the company on a good financial path. If any of them took advantage of working from home there would be "draconian consequences," he told them.

After all, Kao wrote, he himself had a blood type that made him immune to COVID-19 -- a claim that has since been debunked by scientists.

Martin Kao, right, posed with University of Rhode Island President David Dooley in 2013 at an event at the college.

University of Rhode Island

"I am a man of few words when it comes to matters like COVID-19 and our Country's response in directly dealing with the virus and its collateral effect," Kao wrote in his email, which was obtained by Civil Beat after his arrest. "I am a man of even fewer words when it comes to your personal fears, feelings or afflictions with regard to the virus during these times. In fact, I really only have three words: I ... Don't ... Care.

"What I do care about is ensuring that all of you have the knowledge and ability to take comfort that your jobs and finances are secure and the Company is positioned to continue to grow at an incredible pace, despite the impact of CV-19."

The U.S. Justice Department arrested Kao Wednesday and charged him with two counts of bank fraud and five counts of money laundering for falsifying loan documents to obtain more than $12.8 million from the $670 billion Paycheck Protection Program administered by the Small Business Administration.

Kao is accused of inflating how many employees he had on staff so that he could get more money than he was eligible to receive through the program.

After securing a $10 million federally backed loan from Central Pacific Bank -- which is the maximum amount allowed under PPP rules -- prosecutors say he obtained another loan worth more than $2.8 million from a second financial institution by falsely claiming he had not received any other PPP money.

The charging documents indicate that Kao sought out the money even though Navatek, which receives millions of dollars in government contracts to research and design ship hulls for the U.S. Navy, appeared to be doing OK financially.

The company boasted of its success despite the pandemic in a Sept. 25 press release announcing that it was changing its name to Martin Defense Group to better reflect its growing presence in the defense sector.

The announcement said the company's growth had been "exponential," and that it had secured nearly $23 million in new contracts with universities in Maine, Rhode Island, South Carolina and Michigan.

The press release came out as thousands of businesses were forced to shutter due to the outbreak and millions of Americans suffered from joblessness.

Federal investigators say that of the more than $12.8 million in PPP loans obtained by Navatek and its subsidiaries, at least $2 million went into Kao's personal bank account.

"We are committed to partnering with leading research universities across the country and providing students and graduates with opportunities to work on defense projects that have a strategic impact on how we defend our nation, fight and win," Gary Ambrose, the company chief operating officer, said in the press release.

"We will help build the nation's next generation of science, technology, and engineering innovators while rapidly applying innovative solutions for our Soldiers, Sailors, Airmen, and Marines."