Navatek CEO warned workers of ‘draconian consequences’ if they loosen up during the pandemic

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

But he also made it very clear that he would not sympathize with employees who did not perform to the best of their ability to keep the company on a good financial footing. 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 university. University of Rhode Island

“I am a man of few words when it comes to matters such as COVID-19 and our country’s response to dealing directly with the virus and its side effect,” Kao wrote in his email, which was obtained by Civil Beat after his arrest. “I am a man of fewer words when it comes to your personal fears, feelings or afflictions regarding the virus during these times. In fact, I really only have three words: I … don’t … care.

“What I do care about is making sure that all of you have the knowledge and ability to be sure that your jobs and finances are safe and that the Company is positioned to continue growing at an incredible rate, despite the impact of CV- 19 “.

US Department of Justice 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 the number of employees he had on staff in order to get more money than he was eligible to receive through the program.

After obtaining a federally backed loan of $ 10 million from the 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 at the same time. falsely claim that they had not received any other money from PPP. .

The indictment documents indicate that Kao sought the money even though Navatek, who receives millions of dollars in government contracts to research and design ship hulls for the US Navy, appeared to be doing well financially.

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

The announcement said that 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 was released as thousands of businesses were forced to close due to the outbreak and millions of Americans suffered unemployment.

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 to 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 the way we defend our nation, fight, and win,” Gary Ambrose , director of operations of the company. he 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.”

Federal agents raided Navatek’s offices in Honolulu as part of the US Department of Justice investigation. Cory Lum / Civil Beat

SBA records show that 25,000 businesses 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 20 Hawaii companies that received loans worth between $ 5 million and $ 10 million.

Navatek is based in Honolulu, but has branches in other states, including Kansas, Maine, Oklahoma, and Michigan.

Kao is a prolific political donor whose family members and employees have donated hundreds of thousands of dollars to federal politicians. Some of the main recipients include US Senator Brian Schatz of Hawaii and Republican Senator Susan Collins of Maine, who has boasted of having obtained millions of dollars in federal labor for Navatek.

Kao too appears to be tied to a contribution of $ 150,000 made to a pro-Collins super PAC by a mysterious Hawaii-based company that the Campaign Legal Center in Washington, DC, 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 alleged immunity to the virus, he took their safety seriously and supported them by working from home to prevent further spread of COVID-19. He also left them a warning: be grateful and don’t waste time.

“Navatek has made sacrifices beyond explanation to protect their jobs, financial well-being, and personal / family well-being during these challenging times for all Americans,” Kao said.

“So when you’re ‘working from home’ in your pajamas, and you get up to go to the bathroom, grab a drink or a snack from the fridge, change the channel on TV or whatever you’re watching on Netflix … be sure to take the time to walk in front of a mirror. Look in the mirror and ask the person staring at you, what sacrifices are you making? “

“Working from home, while MILLIONS of other Americans are losing their jobs, wages and livelihoods is an absolute privilege,” said Kao. “So if I smell, smell or hear from someone who is abusing this privilege, there will be draconian consequences.”

Representatives for 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 at the Federal Detention Center in Honolulu. A federal judge ruled Friday Kao could be released if you posted a $ 2 million cash bond and accessed GPS monitoring.

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