CEO accused of virus loan fraud to be released on $ 2 million bond

A CEO of a Hawaiian company accused of defrauding money banks meant to help businesses affected by the coronavirus pandemic may be released on $ 2 million bail, a US judge said on 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 maintenance and other expenses.

Kao transferred more than $ 2 million to his own personal accounts, according to a criminal complaint. Investigators spoke with an executive and a former employee who said the company was not affected by the pandemic, according to the complaint.

Kao should not be released from federal detention center in Honolulu because he lied about his assets, Assistant U.S. Attorney Craig Nolan said. Kao did not disclose all the properties he owns to judicial authorities, Nolan said.

In a previous line of credit renewal, he told a bank he owned a property in Taiwan worth $ 16 million, but told law enforcement officials the property was worthless, said Nolan.

A $ 7 million Tokyo house and a $ 6 million San Francisco house were among the properties Kao did not list for refurbishment services, Nolan said.

Kao, a U.S. citizen, also has some legal status in Taiwan, where he was born, and can afford to escape there on a private or chartered jet, Nolan said.

“We are extremely concerned that he has apparently been dishonest with the pre-trial services, and therefore with the court,” Nolan said, adding that if Kao was lying to a bank, he was committing further bank fraud.

Defense attorney Victor Bakke said Kao spoke by phone to the pre-trial services after being unexpectedly arrested under “stressful conditions”. I do not have Taiwanese nationality.

US Magistrate Judge Kenneth Mansfield has said he is concerned about the discrepancies but is not convinced by the argument that if anyone can afford to flee, they will.