Former CEO accused of virus loan fraud pleads not guilty

HONOLULU — A former CEO of Hawaii company accused of defrauding banks of money meant to assist businesses affected by the coronavirus pandemic pleaded not guilty Wednesday.

Martin Kao, who was 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.

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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 an indictment. Investigators talked to an executive and a former employee who said the company wasn’t affected by the pandemic, court documents said.

He stepped down as CEO in November, a spokeswoman said.

Authorities describe his company as a “research, engineering, design, and innovations company that specializes in novel systems for the Department of Defense and other partners in academia and other scientific fields.”

During a brief arraignment via telephone Wednesday, defense attorney Michael Green entered the not guilty plea on behalf of Kao.

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Kao said he understands the nature of the charges.

Trial is scheduled for July. Green said he anticipates the trial will be postponed because the case involves “thousands of pages of discovery.”

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