Exhibit - Us V Kao Hawaii

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Case 1:21-cr-00061-LEK Document 105-1 Filed 08/02/23 Page 1of4 PagelD.928

Page 234
DISPUTE PREVENTION & RESOLUTION, INC.

STATE OF HAWAII

NAVATEK CAPITAL, INC., DPR No. 21-0234-A
individually and

derivatively on behalf of

Nominal Respondent MARTIN

DEFENSE GROUP, LLC, fka

NAVATEK LLC,
Claimant,
vs.

)

)

)

)

)

)

)

)

)

)

)
MARTIN KAO; JOHN DOES 1-10;  )
JANE DOES 1-10; DOE )
PARTNERSHIPS 1-5; DOE )
CORPORATIONS 1-10; DOE )
ENTITIES 1-10; and DOE )
GOVERNMENTAL UNITS 1-10, )
)

)

)

)

)

)

)

)

)

)

)

Respondents,
and

MARTIN DEFENSE GROUP, LLC,
fka NAVATEK LLC.

Nominal
Respondent.

VIDEO CONFERENCE ARBITRATION
Volume 2
Taken with Zoom Video Conferencing, commencing at

8:30 a.m. on September 28, 2021 pursuant to Notice.

EXHIBIT "A"

WILLIAM T. BARTON, RPR, CSR NO. 391

Case 1:21-cr-00061-LEK Document 105-1 Filed 08/02/23 Page 2 of 4 PagelD.929

Page 235 Page 237
1 APPEARANCES:
2 The Arbitrator ' IDEX
; HERRYMOHIATTLESS. 2 EXAMINATION
; ool Dispute Proven ion & Resolution 3 Witness Name Page
13
Pauahi Tower, Suite 1155 4 STEVEN SHAW
= ens 5 CROSS BY MR. KIUCHI sssssesnsecnsee
6 Se nyant@vintweall.com 6 REDIRECT BY MR. SCHIEL
” etc dial sapaad 7 REDIRECT BY MR. ROBINSON ...ssssceece 309
mA iivet on tuisllet tina’ toe 8 RECROSS BY MR. KIUCHI ......--sssssssssee 315
9 Martin Defense Group, LLC, fka Navatek LLC
DAVID M. LOUIE, ESQ. av 9 BY THE ARBITRATOR ......scssssssssssseees ILS
Meo 10 TOMSIMON
a ie [diag cn ue 11 CROSS BY MR. KIUCH ............-:sseeseeee 327
12 First eran re, ve 12 REDIRECT BY MR. LOUIE w...sssssssssssseen 388
15! » ouute
13 Rooetite Bena 96813 13 REDIRECT BY MR. ROBINSON ...........c00000 add
M4 dmi@ksglaw.com 14 RECROSS BY MR. KIUCHI
»  eeoce 15 FURTHER BY MR. LOUIE...
1s migiseiaw-com 16 FURTHERBY MR. KIUCHI
For Respondent/Crossciaim Respondent 17
37 Martin Kao
ALLISON A. ITO, ESQ. 18
18 (appearing by video conference)
Choi & tho ; 19
19 700 Bishop Street, Suite | 107
Honolutu, Hawaii 96813 20
20 (808) 533-1877
a aito@hibklaw.com 21
KEITH M. KIUCHL, ESQ. 22
22 (appearing by video conference)
American Savings Bonk Tower 23
23 1001 Bishop Street, Suite 985
Honotulu, Hawaii 96813 24
24 (808) 533-2230
kkiuchi1 06@es.com 25
25
Page 236 Page 238
1 MICHEL A. OKAZAKI, ESQ. 1 THE ARBITRATOR: Can everybody state their
2 GeKewtihes Stee Ape 2 appearances starting with NCI.
Honolulu, Hawaii 96825 3 MR. SCHIEL: Good moming, Jerry. On behalf
: (308) 22 mn iqhawai.r.com 4 of NCI Jesse Schiel. David Louie is also in the
4 . 5 room, Ryan Louie, and our client Steven Loui and of
5 she Ge ee owe fh Mavatck LEC 6 course our witness today, Steven Shaw.
PETER STARN, ESQ. 7 THE ARBITRATOR: I'mcurious. Is Ryan
° pean eect fo. 8 related to Steven or to David? Or either?
7 (appearing by video conference) 9 MR. SCHIEL: He's David's son.
3 TT take eeaarcus & Fisher 10 THE ARBITRATOR; Nice to see you, Ryan. I
3 Pacific Guardian Center 11 hope you can get your dad over the tough spots in
Honolulu, Hawai 96813 12 this case. He probably could use all the help you
10 ee 537-6 100 13s can give him. All right, then can we have
ll pany rare 14 appearances from Doug, please.
13 ‘ronnie 15 MR. ROBINSON: Eric Robinson appearing on
wn law.com . too eee
13 Also Present (appearing by video conference) 16 behalf of Martin Defense Group, LLC. I'm joined by
ul Daniel Brunk 17 Mr. Doug Chin, Dan Brunk and expect to be joined
Martin Kao 18 throughout the day by Peter Starn and Robert Brown.
he Tom Simon 19 THE ARBITRATOR: Then, Keith, please for
17 20 your side?
ie 21 MR. KIUCHI: Keith Kiuchi, Allison Ito and
20 22 Mike Okazaki representing Martin Kao. Martin Kao is
23 23 —_ also on the screen.
23 24 THE ARBITRATOR: Thank you for joining us on
the screen, Mr. Kao, Who is your next witness, Eric?
Case 1:21-cr-00061-LEK Document 105-1 Filed 08/02/23 Page 3 of 4 PagelD.930

Page 399 Page 401
1 Q. And with regard to Exhibit 129 where they 1 Q. And Exhibit 40 is, we start with
2 are talking about max 3.5 million loan without 2 Mr. Schmicker. And this is later. This is
3 looking like we are cooking anything, did you review 3 April 8th. This is after the application has gone
4 a number of emails by and between Mr. Kahele Lum Kee, 4 in.
5 Mr. Cliff Chen and Mr. Kao? 5 Mr. Schmicker is asking if they filed for
6 A. Yes. Mr, Kao was usually CC'd on emails 6 the SBA money. Do you see that?
7 like that. 7 A. Yes. That's what it says.
8 Q. Did it appear that Mr. Kao was in frequent 8 Q. Then we go up, and then what is Mr. Kao's
9 contact by email with Mr. Lum Kee and Mr. Chen as to 9 response to Mr. Schmicker?
10 this PPP loan application? 10 A. "Sounds sketchy. Best to stick to our
11 A. Yes, these three were sharing a brain 11 standard practices of raping and pillaging."
12 throughout this entire process as far as getting 12 Q. And then, Mr. Schmicker responds. Just
13 these loans done. 13 going up he talks about it's free money under some
14 Q. Got it. Let's now tum to Exhibit 130. 14 simple conditions. Then go up. What does Mr. Kao
15 (Screensharing a document.) 15 say?
16 Q. So Exhibit 130, going down to the bottom, 16 A. "Our payroll is already funded by the
17 this is about the payroll costs. And Mr. Lum Kee is 17 federal government. This would be double-dipping. [
18 emailing. April 2nd, again, before the application 18 would need at least two cups.”
19 is actually submitted. 19 Q. This is on April 8th. This is while the PPP
20 And he's emailing to Mr. Kao, see attached 20 loan at CPB is still pending.
21 inclusive of the new office pool costs, Did you see 21 What did you take these emails to mean,
22 this, sir? 22 Mr. Simon?
23 A. I did, yes. 23 A. It's interesting a lot of defense contracts
24 Q. Allright. Then going up. This is from 24 basically bill the government for the payroll of the
25 Mr. Kao on April 2, 2020 at pretty late in the day, 25 people who are working the job, like a cost plus
Page 400 Page 402
1 24:30 p.m. The attachment says, copy of summary of 1 contract.
2 payroll costs 1219 MK edits XLSX. What does that 2 And so, what Mr. Kao seems to be saying here
3 normally mean to you? 3 is interesting, and I didn't catch this the first
4 A. It looks like the, there was an Excel 4 time. Is that the he may not have been eligible for
5 spreadsheet that at some point was edited by Martin 5 this PPP loan at all since the federal government is
6 Kao to reflect new information that Mr. Kao wanted in 6 funding the payroll there is no real risk to Navatek.
7 that spreadsheet. 7 And it wasn't like Navatek needed to dip
8 Q. Okay. Let's move on to Exhibit 132. 8 into their cash reserves to cover the payroll during
9 Exhibit 132 is an email, at the bottom, yes, from 9 the difficult time because the federal government was
10 Mr. Lum Kee to Mr. Kao. 10 already doing that.
11 (Screensharing a document.) 11 That's sort of the way I looked at it. Then
12 Q. It says, "Roger will finalize the PPP loan 12 he basically is saying because the federal government
13 application today and upload this along with the 13 is covering the payroll as per their contract as a
14 941s." 14 defense contractor and they are applying for a PPP
15 Do you see that? 15 loan to cover the same expenses that it would be
16 A. Yes, sir. 16 double-dipping.
17 Q. Then Mr. Kao's response was "chance'm"? 17 And Mr. Kao seems very comfortable with
18 A. Yes. My understanding is that's kind of a 18 that.
19 local, pijin local term in Hawaii for let's take a 19 Q. All right. Then let me ask you to turn,
20 chance, let's roll the dice, let's see how this goes. 20 that was Exhibit 40. Dated April 8th.
21 Q. Got it. 21 Then let me ask you to turn to Exhibit 143.
22 THE ARBITRATOR: That exhibit number was? 22 (Screensharing a document.)
23 MR. LOUIE: 132. 23 Q. Go all the way to the bottom. First email.
24 Q. Now, let's go to number Exhibit 40. 24 This is ~ I'm not sure what this is. Let's go up
25 (Screensharing a document.) 25 above that to Mr. Kao.

43 (Pages 399 to 402)
Case 1:21-cr-00061-LEK Document 105-1 Filed 08/02/23 Page 4of4 PagelD.931

Page 403 Page 405
1 (Scrolling through a screenshared document.) 1 taken credit for starting it.
2 Q. Mr. Kao's -- right there. 2 Q. That was Exhibit 143. Let's now turn to
3 So Mr. Kao's response here says he's, 3 Exhibit 17, please.
4 "Speaking of moving funds around maybe we should 4 (Screensharing a document.)
5 start moving slowly more funds out of CPB over the 5 Q. You saw this, Mr. Simon?
6 next few months, wash it from them before moving it 6 A. Yes. This one jumped out at me also.
7 all back to CPB. That way it looks like ‘new’ funds. 7 Q. This is dated May 1, 2020 now. It's an
8 Is it difficult to change the account that the 8 email from Mr. Chen to Mr. Kao. And it texts a
9 government PMT systems sends money to? Can have them 9 Bloomberg news article about how the department sees
10 send to Navatek Merrill account until we exhaust the 10 early fraud.
11 CPB loan funds currently in there. That way it even 11 A. Exactly. The timing here is relevant.
12 looks like we're using it for payroll." 12 Because at this point he had already applied for
13 What did you take this to mean, Mr. Simon? 13 three different PPP loans all of which had false
14 A. This is the email I was referring to at the 14 statements in the loan applications.
15 beginning of my cross-examination. They are clearly 15 Q. Okay. Now, in response to this, Exhibit 18,
16 trying to deceive Central Pacific Bank hereby 16 please.
17 creating the illusion that they are actually using 17 (Screensharing a document.)
18 the money for payroll and to try to hide from them 18 Q. Mr. Kao responds to Mr. Chen's email. Go
19 the fact that the federal government is covering the 19 back to Exhibit 17. I'm sorry.
20 payroll already as part of their contract. 20 (Screensharing a document.)
21 And so, Mr. Kao has come up with a scheme 21 Q. Exhibit 17, the time is May 1, 2020 at
22 here to wash the money in and out of the account to 22 2:18 a.m.
23 create the illusion that this money is being used for 23 A. Right. That time Mr. Chen is telling
24 something it's not. 24 Mr. Kao that the Justice department is seeing fraud
25 Q. Because Mr. Kao is on all of these emails 25 in SBA, in this all these PPP loans.
Page 404 Page 406
1 and is authoring many of them, is it plausible to you 1 Q. Now, go to Exhibit 18.
2 if he decides to blame Mr. Lum Kee and Mr. Chen, his 2 (Screensharing a document.)
3 lieutenants, as having done this? 3 Q. And this is now May 1, 2020 at 2:25 a.m.
4 A. No. These guys were clearly in bed together 4 Shortly after.
5 making all this happen. 5 A. Exactly.
6 Q. Then going up to the top email. What is 6 Q. And Mr. Kao's response is?
7 Mr. Kao saying there? 7 A. FK. I think we can all assume what he means
8 A. I remember this one. “And it looks like we 8 by that, yeah. He's clearly not taking the news of
9 are indeed getting stiffed by COVID-19 with CPB. No 9 Department of Justice investigations of PPP loan
10 cash payments coming in for gov when the look. I'm 10 fraud well.
11 starting to fall in love with COVID-19. Will for it Q. Allright. We've already --
12 sure be the case if we get Radius and FHB. So much 12 THE ARBITRATOR: Maybe pause for a bit.
13 so I wish I could have take credit for starting it." 13 We've been going about an hour.
14 Q. What did you take this to mean? 14 (Discussion off the record.)
15 A. This is sort of ghoulish, the idea that he 15 THE ARBITRATOR: We will resume at around
16 loves this COVID-19 because he's able to get all this 16 2:15.
17 money from banks. 17 (Whereupon, a recess was taken from
18 The idea that he's going to love it even 18 2:06 p.m. to 2:18 p.m.)
19 more if they can get the loans that he never should 19 THE ARBITRATOR: You're on your examination,
20 have applied for in the first place from Radius and 20 David. Go ahead. It's about 2:18.
21 First Hawaiian Bank. 21 BY MR. LOUIE:
22 Again, | just find this distasteful during a 22 Q. Let's pull up Exhibit 11.
23 time where like hundreds of thousands of Americans 23 (Screensharing a document.)
24 are dying and the economy has crawled to a halt that 24 Q. Mr. Simon, Mr. Kiuchi asked you, well, he
25 he loves COVID-19 so much he wished he could have 25 was suggesting to you that you didn't know if Mr. Kao

Serr

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