CEO Accused Of Virus Loan Fraud To Be Released On $2M Bond
A CEO of a Hawaii company accused of defrauding banks of money meant to assist businesses affected by the coronavirus pandemic can be released on $2 million cash bond, a U.S. judge ruled Friday.
Martin Kao, CEO of Martin Defense Group LLC, formerly known as Navatek LLC, is charged with bank fraud and money laundering. Authorities say he defrauded banks of more than $12.8 million through the Paycheck Protection Program. Congress authorized the program to provide emergency financial assistance through forgivable loans to small businesses for job retention and other expenses.
Kao transferred more than $2 million into his own personal accounts, according to a criminal complaint. Investigators talked to an executive and a former employee who said the company wasn’t affected by the pandemic, the complaint said.
Kao shouldn't be released from the Honolulu Federal Detention Center because he lied about his assets, said Assistant U.S. Attorney Craig Nolan. Kao didn't disclose to court officials all the property he owns, Nolan said.
In a previous line of credit renewal, he told a bank he owns property in Taiwan valued at $16 million, but told court officials the property is worthless, Nolan said.
A home in Tokyo valued at $7 million and a $6 million home in San Francisco were among the properties Kao failed to list for pretrial services, Nolan said.
Kao, a U.S. citizen, also has some type of legal status in Taiwan, where he was born, and has the means to flee there on a private or chartered jet, Nolan said.
“We are extremely concerned that he apparently has been dishonest with pretrial services, and therefore the court,” Nolan said, adding that if Kao lied to a bank, he committed additional bank fraud.
Defense attorney Victor Bakke said Kao spoke with pretrial services over the phone after being unexpectedly arrested under “stressful conditions." Kao said the Taiwan property was worthless because he wouldn't be able to get the money out of Taiwan after selling it because he doesn't have Taiwanese citizenship.
U.S. Magistrate Judge Kenneth Mansfield said he was concerned about the discrepancies but isn't persuaded by the argument that if someone has the means to flee, they will.