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.
“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.”
Records from the SBA show that 25,000 companies in Hawaii received $2.4 billion in PPP money that was first made available after Congress passed the $2.2 trillion CARES Act in March. Navatek was one of just 20 Hawaii businesses that received loans worth between $5 million and $10 million.
Navatek is based in Honolulu, but has branch offices in other states, including Kansas, Maine, Oklahoma and Michigan.
Kao is a prolific political donor whose family members and employees have given hundreds of thousands of dollars to federal politicians. Some of the top recipients include U.S. Sen. Brian Schatz, of Hawaii, and Republican Sen. Susan Collins of Maine, who has boasted of securing millions of dollars in federal work for Navatek.
Kao also appears tied to a $150,000 contribution made to a pro-Collins super PAC by a mysterious Hawaii-based company that the Campaign Legal Center in Washington, D.C., has argued is an illegal donation.
Kao emailed his employees on March 23, which was the same week Congress passed the CARES Act.
He told his workers that despite his claimed immunity from the virus he took their safety seriously and supported them working from home to prevent the further spread of COVID-19. He also left them with a warning — be grateful and don’t mess around.
“Navatek has made sacrifices beyond explanation to protect your jobs, financial wellbeing, and personal/family’s wellbeing during these challenging times for all Americans,” Kao said.
“So, when you are ‘working from home’ in your pajamas, and get up to go to the bathroom, grab a drink/snack from the refrigerator, change the channel on the TV or whatever you’re watching on Netflix … be sure to take time to walk in front of a mirror. Look in the mirror and ask the person staring back at you, what sacrifices are you making?”
“Working from home, while MILLIONS of other American’s are losing their jobs, paycheck and livelihoods is an absolute privilege,” Kao said. “So, if I sniff, whiff, or hear of anyone abusing this privilege, it will be met with draconian consequences.”
Representatives of Navatek did not respond to Civil Beat’s request for comment on Kao’s email, and instead issued a written statement through Andrew Pereira, of the public relations firm CommPac.
“The company has nothing more to say at this time,” he said.
A message left on Kao’s cell phone was not returned.
After his arrest last week he was held in the Federal Detention Center in Honolulu. A federal judge ruled Friday Kao could be released if he paid a $2 million cash bond and agreed to GPS monitoring.
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