Defense Everyone hates their boss in one way or another,
but Martin Kao takes it to a whole new level.
In case you are unfamiliar with Kao, he is the former CEO of Navatek.
Navatek, recently rebranded as Martin Defense Group, is a defense contractor specializing
in ship hulls for the US Navy.
Kao was a brutal boss who regularly mistreated employees and demanded insane performance
from his team.
In addition to being a terrible boss, Kao was a fraud, stealing over 12 million dollars
from the Paycheck Protection Program or PPP.
So how did Martin Kao mistreat his employees and run a giant scam at the same time?
Martin Kao Kao isn't some big-name businessman or celebrity.
You won't find him on YouTube pushing a flimsy get-rich-quick course or selling one-on-one
mentorship.
Until recently, he's kept his name out of the headlines as the former CEO of Navatek.
But, Kao finally saw his face make the front page when he was arrested in October of 2020
PPP fraud.
First, you have to understand what Martin Defense Group does to understand the gravity
of Kao's crimes.
Martin Defense Group is a government contractor, which means the federal government hires them
to complete jobs related to public service or the military.
Martin Defense Group has been in business since 1979 and has accepted millions and millions
of dollars worth of contracts from the US Navy.
Essentially, Martin Defense Group helps to make ships for the military and improve the
way those ships are made.
Kao was a jerk, plain and simple.
His employees constantly complained about him, and he even soured relationships with
his top-level executives.
A search on GlassDoor shows that employees did not like to work for Kao.
Among other things, former employees called Kao 'narcissistic' and a 'dysfunctional leader.'
They called Martin Defense Group a "toxic work culture with shady business practices."
According to Martin Defense Group's website and Navatek's LinkedIn profile, the company
has 9 locations across the US, including 2 locations in Maine.
This will come into play later when Martin is eventually caught.
Horrible Bosses We have all come home and ranted about our
horrible boss.
While we want to go and cuss them out, we don't.
We keep it professional.
But no one's boss is as bad as Kao, and if they are, it is time for you to quit your
job.
Among other things, Kao was caught multiple times for saying crazy things to his employees.
In one memo to employees about the COVID-19 Pandemic, Kao wrote, "I am a man of even fewer
words when it comes to your personal fears, feelings, or afflictions with regard to the
virus...
In fact, I really only have three words: I.
Don't.
Care."
Kao's words were completely insensitive to say the least.
Many people suffered from mental health issues, depression, and anxiety related to COVID-19.
While these weren’t side effects of COVID-19, they were justifiable as millions of people
around the world were scared of getting the virus.
In addition to telling his employees he didn’t care about their fears, he said some other
outlandish things, including that he would enact 'Draconian measures' for employees caught
being lazy when working from home.
If you are unfamiliar with what Draconian measures, Draco is known for being the first
recorded legislator in Ancient Greece.
Draco was a brutal legislator who replaced oral law with written law.
That said, Draco's laws came with extremely harsh punishments known as Draconian measures.
To put Draco in perspective, pretty much any crime under his rule was punishable by death.
In addition to his crazy memos, Draconian measures, and unfavorable reviews, Kao was
utterly nuts.
In another message sent to employees, Kao said he was "immune" to COVID-19 based on
his blood type.
This myth was busted almost immediately at the start of the pandemic, but that did not
stop Kao from telling his employees he had the magic blood cells.
Even after the myth was debunked, Kao continued to tell people that he possessed this immune
blood.
However, Kao found himself in the hottest of waters after executives put out a press
release shortly after changing their name from Navatek to Martin Defense Group.
They boasted about securing $23 Million in new contracts from Maine, Rhode Island, South
Carolina, and Michigan.
PPP Funding Even though the company was doing fine, Kao
still applied for PPP money.
In fact, Kao was able to get over $12 million in PPP funds.
If you know anything about the PPP, then you know this does not add up.
If you do not know about PPP loans, it is important to understand how they work.
The maximum PPP loan was set at $10 million dollars.
So how did Kao get $2 Million extra?
Easy, he simply submitted a second fraudulent application with a different bank using a
different company.
The first PPP for Navatek was approved for $10 million and issued by Central Pacific
Bank or CPB.
On the application, Kao claimed Navatek had 490 employees and an estimated payroll expense
of $4,072,000 per month.
Investigators believe both claims were gross exaggerations.
The second PPP was submitted and approved for a total of $2,841,490 issued by Radius
Bank.
This loan application stated that Kao only had 140 employees with an estimated payroll
of $1,136,596.
So how did Kao pull this off?
Demands First, Kao used Navatek to apply with Central
Pacific Bank and was insistent that he get his funds immediately.
According to the criminal complaint filed for this case, Kao harassed the team at CPB,
stating multiple times that he knew Senators, who remained unnamed in the court filing,
and other government officials.
These high-ranking members of government wanted his loan application to be fast-tracked.
In one email, Kao said: "The Senator is suggesting a conference call with their Banking Committee
and SBA staff director . . . SHE HELPED WRITE THE PPP RULES!"
Kao was the equivalent of a spoiled child stamping his feet in front of an ice cream
truck demanding that the ice cream man scoop faster because Kao knows dairy farmers.
For anyone who has worked in customer service, we all know people like Kao.
His goal was to harass the bank to the point where they would release the funds to get
him off their back.
While he was harassing CPB, he had his eyes on Radius Bank.
Kao contacted Radius, claiming that he applied for a PPP from another local bank in Hawaii
but was turned down.
Kao had ties to several other companies related to Navatek and could use any one of them to
apply for another loan, which he did.
Radius backed him for another $2 Million PPP loan under the impression that Kao hadn't
already received the original $10 million.
Now the burning question—what did he do with the money?
Money Laundering Kao's charges included money laundering.
That is because Kao used the money from the PPP fund for personal gain.
When the first PPP was received, Kao transferred $2 Million to his personal Merrill Lynch retirement
accounts.
A second $2 Million transfer was sent to Navatek's Wealth Management account.
Two more transfers for $3 million each were sent to the same Wealth Management account
for Navatek LLC in the same period.
Finally, $20,000 was withdrawn from the PPP funds and went directly to Kao's checking
account.
Now back to the PPP.
If you are unfamiliar with the process, it is pretty simple.
Businesses that struggled to pay to keep employees gainfully employed had the opportunity to
apply for a forgivable loan.
This loan was 100% forgivable if employers met the following rules.
PPP money was to be spent on business expenses.
This includes rent, mortgage, utilities, and upkeep.
Secondly, the rest of the money was to go to pay your employees and keep them off unemployment.
Finally, the business had to rehire or offer to rehire employees laid off because of COVID.
None of the funds that Kao received went to employees.
The majority of the amount was kept in bank accounts held by the business or by Kao personally.
In addition, Kao paid himself a cushy $20,000 for his hard fraudulent work.
Kao was arrested on two counts of bank fraud and five counts of money laundering.
Currently, he is being held on $2 million bail.
Prosecutors requested that he remain in custody because he still had access to all of these
stolen funds and has citizenship in Taiwan.
There is no formal extradition treaty with Taiwan, so he could likely get away if he
fled there.
To make matters more complicated, Kao has already lied multiple times to the court.
Kao owns multiple million-dollar properties in San Francisco, Tokyo, and Taiwan.
In addition, he lied to the court about the value of his Taiwan property, which he claimed
was 'worthless.'
According to bank records, the property is valued at over $16 million.
With all of these lies, the judge decided to set his bail at $2 million provided he
wears GPS tracking and turns his passport into authorities to prevent him from leaving
the country.
Sketchy Politics In the middle of Kao's PPP investigation,
he's also being looked at for illegal campaign contributions to Maine Senator Susan Collins.
US Election law limits the ability of government contractors to contribute to political campaigns.
Government contractors donating to political campaigns would be a clear breach of trust
for the public as it is basically bribery.
This is what investigators believed happened between Kao and Collins.
Kao could not directly donate money to Collins, so instead, he set up a new foundation and
used friends to proxy donations to Collins' campaign.
A search warrant shows that Kao had reimbursed personal friends $45,000 that they used to
donate to Collins.
In addition, Kao set up a new company called the Society of Young Women Scientists and
Engineers.
This new company was created solely for the purpose of donating $150,000 to a super PAC
that supported Collins' campaign.
This is fraud.
No questions asked.
So maybe Kao likes Susan Collins.
What's wrong with that?
The issue arose when Collins played a significant hand in securing an $8 Million contract for
Navatek.
Once Kao secured the contract, the illegal campaign money was "donated" to Collins.
While no charges regarding the campaign contributions have been filed, we'll chalk this up to "where
there's smoke, there's fire."
Kao Fallout Kao is set to stand trial in July and has
submitted a not-guilty plea with the court.
Federal sentencing guidelines state that bank fraud can carry a punishment of 30 years in
prison with a $1 million fine.
Money laundering can carry a maximum of a 20-year sentence per count.
In addition, financial crimes such as bank fraud and money laundering can bar an individual
from holding an executive position or being a registered agent for a business entity.
On another note, the company which Kao ran changed its name in October 2020.
Navatek, now known as the Martin Defense Group, has many of the same executives.
Coincidentally, Kao was arrested in October 2020.
Did the team who took over know the arrest was coming?
Did they change the name to distance themselves from Kao?
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