Full text
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
UNITED STATES OF AMERICA,
Plaintiff,
vs.
MARTIN KAO,
Defendant.
)
)
)
)
)
)
)
)
)
)
)
)
CRIMINAL NOS. 21-00061-LEK
23-00003-LEK
Honolulu, Hawaii
February 13, 2025
SENTENCING AS TO COUNTS 1
THROUGH 8 UNDER CRIMINAL
NUMBER 21-00061 AND COUNT 1
UNDER 23-00003 TO THE
INDICTMENT
TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE LESLIE E. KOBAYASHI,
SENIOR UNITED STATES DISTRICT COURT JUDGE
APPEARANCES:
For the Plaintiff:
CRAIG S. NOLAN, ESQ.
Office of the United States Attorney
PJKK Federal Building
300 Ala Moana Boulevard, Suite 6100
Honolulu, Hawaii 96850
For the Defendant:
VICTOR J. BAKKE, ESQ.
Law Office of Victor Bakke
Topa Financial Center
700 Bishop Street, Suite 2100
Honolulu, HI 96813
MELINDA K. YAMAGA, ESQ.
Office of the Federal Public
Defender
PJKK Federal Building
300 Ala Moana Blvd Rm 7-104
Honolulu, HI 96850
Official Court Reporter:
Gloria T. Bediamol, RPR RMR CRR FCRR
United States District Court
300 Ala Moana Boulevard
Honolulu, Hawaii 96850
Proceedings recorded by machine shorthand, transcript produced
with computer-aided transcription (CAT).
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 1 of 68 PageID.1421
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:33PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
2
February 13, 2025
1:33 p.m.
THE CLERK: Criminal Numbers 21-00061-LEK and
23-00003-LEK, United States of America versus Martin Kao.
This case has been called for sentencing as to Counts
1 through 8 under Criminal Number 21-61 and Count 1 under 23-03
to the indictment.
Counsel, please make your appearances for the record.
MR. NOLAN: Good afternoon, Your Honor. Craig Nolan
for the government. Also present is Sara Nieling of the
probation office.
THE COURT: Good afternoon to you both.
MR. BAKKE: Good afternoon, Your Honor. Attorney
Victor Bakke on behalf of Mr. Kao.
Your Honor, I'm representing him in Criminal Number
21-00061, and Mr. Kao is obviously present.
THE COURT: All right. The record will reflect the
presence of Mr. Kao. How are you today, sir?
THE DEFENDANT: I'm okay. Thank you for asking.
THE COURT: Thank you.
Ms. Yamaga.
MS. YAMAGA: Thank you, Your Honor. Good afternoon,
Melinda Yamaga, I am also representing Mr. Kao; however, I am
representing him in Criminal Number 23-00003-LEK.
THE COURT: All right. Will each of you or only one
of you be making argument with regard to sentencing?
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 2 of 68 PageID.1422
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:34PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
01:35PM
3
MR. BAKKE: I will be, Your Honor. I will be lead on
this.
THE COURT: All right. Very good. Do you need some
time to have the hearing assistance? I saw you struggling.
MR. BAKKE: No, we did it ahead of time.
THE COURT: Very good. Is it working?
MR. BAKKE: Yes.
THE COURT: Do you need help? Very good.
MS. YAMAGA: I will have one comment specific to my
case in the criminal forfeiture order that was signed; that's
it.
MR. BAKKE: So we won't be overlapping, Judge.
THE COURT: Sounds very good. Thank you. So everyone
but Mr. Kao and Mr. Bakke may be seated.
All right. So, Mr. Kao, we are here -- you need to
stand -- so we're here today for your sentencing hearing. At
this hearing, I'm going to make certain factual findings and
then I'm going to go over what I believe to be the aggravating
and mitigating factors in your case. And then I'm going to
hear from Mr. Nolan on behalf of the government, on the
government's position on what an appropriate sentence is for
you.
An appropriate sentence is one under the law that's
sufficient but not greater than necessary to meet the goals of
sentencing. And the goals of sentencing include just
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 3 of 68 PageID.1423
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:35PM
01:35PM
01:35PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:36PM
01:37PM
01:37PM
4
punishment for the harm that you have done to our community, an
opportunity to prevent you and others from committing these
types of crimes in our community, and to give you an
opportunity for rehabilitation.
And then of course I'm going to hear from Mr. Bakke
and Ms. Yamaga, and then you'll have an opportunity to speak on
your behalf, if you wish. You don't have to, it won't be held
against you if you don't. And then I'm going to take all of
this information, in addition to the very comprehensive
presentence investigation report, and I will use that to
fashion your sentence. All right?
So let me first ask you to confirm that you and your
attorneys have had a full opportunity to reread, review and to
file any objections to the contents of the presentence
investigation report. Have you had that opportunity, Mr. Kao?
THE DEFENDANT: Yes, Your Honor.
THE COURT: You would agree with that, Mr. Bakke?
MR. BAKKE: Yes, Your Honor.
THE COURT: Ms. Yamaga.
MS. YAMAGA: Yes, Your Honor.
THE COURT: All right. You may all be seated.
The Court makes the following factual findings that on
September 7, 2022, Mr. Kao, you pled guilty to the eight-count
indictment charging you in Criminal Number number 21-61, Counts
1, 2, 3, which charged you with Wire Fraud Scheme in Relation
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 4 of 68 PageID.1424
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:37PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
01:38PM
5
to a Presidentially Declared Emergency in violation of federal
law; Counts 4 through 8, Money Laundering, in violation of
federal law; and in Criminal Number 23-03, to Count 1, Bank
Fraud.
I now place the presentence investigation report in
the record under seal. If an appeal is taken, counsel will
have access to all of the report including the confidential
recommendation.
I have received several letters in support that were
attached to your sentencing memorandum in 23-0003-LEK and I've
gone through all of them.
Mr. Nolan, it's my understanding the government has no
remaining objections to either the factual findings or the
application of the guidelines to the facts; is this correct?
MR. NOLAN: That is correct, Your Honor.
THE COURT: Mr. Bakke and Ms. Yamaga, are there any
remaining objections that the Court needs to address?
MR. BAKKE: None from me, Your Honor.
MS. YAMAGA: No, Your Honor. Thank you.
THE COURT: Then the Court adopts the factual findings
in the presentence report including the addendum that addressed
all of the objections. I agree with probation.
There has been a request for the Court to consider
specific 3553(a) factors of Mr. Kao, and that's set forth in
the sentencing memorandum, in which I have read. So based on
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 5 of 68 PageID.1425
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:38PM
01:38PM
01:38PM
01:38PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:39PM
01:40PM
01:40PM
01:40PM
01:40PM
01:40PM
01:40PM
01:40PM
01:40PM
01:40PM
01:40PM
6
all of this information, the Court determines that the
applicable guidelines are: Total offense level 29, criminal
history category 1. This gives a guideline range of 87 to
108 months, as to Counts 1 through 3, under Criminal Number
21-61; and Count 1, under Criminal Number 23-03; and as to
Counts 4 through 8, under Criminal Number 21-61.
Supervised release, the guideline range is two to five
years, as to Counts 1 through 3, under Criminal Number 21-61;
Count 1, under Criminal Number 23-03, the statutory maximum is
up to five years; as to Counts 4 through 8, under Criminal
Number 21-61, the statutory maximum is up to three years.
Fine plus cost of imprisonment and supervised release,
the guideline range is $30,000 to $1 million. The statutory
provisions are for Counts 1 through 3, under Criminal Number
21-61, and Count 1, under Criminal Number 23-03, is up to
$1 million. As to Counts 4 through 8, under Criminal Number
21-61, the statutory provision is up to $250,000 or twice the
amount of the criminally derived property involved.
Restitution is in the amount of $12,841,490. And
there's a mandatory special assessment of $100 per count for a
total of $900.
So these are the factors the Court sees in aggravation
and mitigation, Mr. Kao.
In aggravation, I first turn to the nature and
circumstances of the offenses to which you pled guilty. In
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 6 of 68 PageID.1426
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:40PM
01:40PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:41PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
01:42PM
7
your situation you, through your company Navatek, applied for
three Paycheck Protection Program loans during the COVID-19
pandemic. These loan requests totalled $15,694,329. You
committed fraud because the applications contained false
information about your company's payroll and the number of
employees which were all falsified. You also falsely stated
that Navatek would not receive any other PPP loans.
To compound this falsity, you used influence and
pressure on senior bank officials to process the loan quickly
by stating you had a relationship with our senators and
congresswoman in congress, and that they supported a quick
approval. As a result of these false applications, you
received $12,841,491 for two loans, the third loan was denied,
and you directed others to move those loan proceeds to
different accounts, including $2 million to your personal
account. You enriched yourself at the expense of local
businesses that were struggling and suffering and needed
emergency funds. And ultimately, as a result of your actions,
it's the taxpayers of this country, of our community, who have
been defrauded and left holding literally the bag to pay for
all of these millions.
Other factors are characteristics. You have a prior
conviction for assault, so you have a history of violence. You
pled guilty and are awaiting sentencing in the District of
Columbia for conspiring to make unlawful federal campaign
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 7 of 68 PageID.1427
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:43PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
01:44PM
8
contributions and then submitting false documents to hide these
contributions. This demonstrates to the Court that you have
lived a life of a pattern of deceit and embezzlement and
entitlement and with a disregard for the law.
Another victim in your case is the Bank of Hawaii.
You altered multiple documents, when applying for a residence
on Kahala Avenue, and received a $3 million mortgage loan for
which you were not eligible. As a result of your falsity, the
bank was forced to spend legal fees to foreclose, which will
continue incurring costs until the loan is paid off.
I've looked at your financial information in the
presentence report. There are several properties that you are
on deed for, two in Kahala one in Beverly Hills; there's
investment properties; there are cars, including a Mercedes and
Ferrari. So the question becomes why. And I can only conclude
it was simply and blatantly greed.
There are factors in mitigation. You have education
and training to support yourself in a legally and acceptable
way; you have no history of mental illness; you have no history
of drug addiction, although to your credit you self-reported an
alcohol addiction while on bond; you have the support of your
wife; you have two young children, ages eight and 9, one of
whom has disabilities and needs assistance in that for autism
and hearing impairment; and you have done volunteer work while
on bond with your church, Meals on Wheels. So those are the
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 8 of 68 PageID.1428
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:44PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:45PM
01:46PM
01:46PM
01:46PM
01:46PM
01:46PM
01:46PM
01:46PM
01:46PM
9
factors in mitigation.
So I'll turn now to Mr. Nolan with regard to the
government's position on an appropriate sentence.
Mr. Nolan.
MR. NOLAN: Sure. Thank you, Your Honor. Before I
get to our position, I just want to put on the record that
PacMar, through its -- I may get his title wrong --
president/owner, Steven Loui, is present. The probation office
found to be PacMar victim, couldn't sort out the legal bills
well enough to come up with a definitive restitution figure.
Mr. Loui, through his attorney, Jesse Schiel, who is also
present, has asked to address the Court. So is the Court --
THE COURT: Yes, absolutely. Victims have a right to,
and if there is anyone from Bank of Hawaii, I would encourage
them to come forward as well.
MR. NOLAN: We don't have representatives of the
victim banks here or the Small Business Administration. Would
you like Mr. Loui to come forward now?
THE COURT: Yes, please, to the podium if he's
comfortable. If not, then next to you at counsel table.
Whatever you are comfortable with. Aloha. Welcome.
MR. LOUI: Your Honor, thank you for allowing me the
opportunity to speak today. I am Steven Loui, owner of PacMar
Technologies, formally known as Navatek. I'm here to redeem
myself from transferring the company I love and started to the
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 9 of 68 PageID.1429
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:46PM
01:46PM
01:46PM
01:46PM
01:46PM
01:46PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:47PM
01:48PM
01:48PM
01:48PM
10
con man and criminal Martin Kao, who has damaged the company I
founded and its loyal and outstanding employees.
Pacific Marine & Supply Company is a ship-repair
company founded in 1944 by my father, Fred Loui. After my
father unexpectedly passed away in 1969, I returned home after
college, after graduating in engineering, to take over the
operations of the company. Under my leadership, Pacific Marine
became the largest commercial ship repair and dry-docking
company in Hawaii.
To complement Pacific Marine's operations, I started
PacMar Technologies in the 1970s under its original name
"Navatek Limited." Since its formation, PacMar's focus was on
developing advanced ships and marine technologies to improve
passenger ride quality, reduce operator injury, and improve
hull efficiency. PacMar has since grown into a diversified
technology company with an international presence, leading the
way in research engineering, design, innovation and
hydrodynamics.
Mr. Kao joined Pacific Marine in 2008, several decades
after the company had been formed, and I would like to say
successful. We are well known for our SWATH ships, dinner
boats and research ships that we had built. Unbeknownst to me
until very recently, Mr. Kao's deceit began at hiring, where he
falsely represented orally, and in his resume, that he held law
degrees from UCLA and NYU. It was only through his initial
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 10 of 68 PageID.1430
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:48PM
01:48PM
01:48PM
01:48PM
01:48PM
01:48PM
01:48PM
01:48PM
01:48PM
01:48PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:49PM
01:50PM
11
deceit that I offered Mr. Kao a job.
In or around August 2018, after 40 years of running
the company, I decided to step away from the day-to-day
operations and believed I had found a worthy successor in
Mr. Kao to keep the company prospering and he would be one who
took good care of the employees.
Unfortunately, Mr. Kao did the opposite, running the
company immediately into the ground just one year through
numerous acts of criminality. Mr. Kao's, criminality included
not only the PPP fraud but also campaign finance fraud and
mortgage fraud, all of which the Court is well aware of.
Upon learning of Mr. Kao's outsized PPP loans through
an article in the Star Advertiser in the summer of 2020, I
immediately reported Kao's fraud to law enforcement and
participated in law enforcement investigations to ensure that
Mr. Kao was held responsible for his actions and to make sure
that the company's reputation and name remained clear.
Thereafter, I immediately initiated state proceedings to have
Mr. Kao removed from the company and began the lengthy process
of saving the company.
In this short period, Kao virtually destroyed a very
productive and local company, one which had a great reputation
at all times prior to Mr. Kao joining it. Approximately 91
employees, roughly half the company's work force, resigned
within nine months of Kao's arrest. Kao's criminality
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 11 of 68 PageID.1431
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:50PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
01:51PM
12
paralyzed the company's ability to secure vital government
contracts that are the life blood of its business. Our
security holdings for our top secret research were put on hold
for many months until we were able to clear it. In that time
we lost many jobs. The company has managed to survive but only
through the loyal and incredibly dedicated work of its
remaining employees, some of which are here today. I also
provided large financial support to meet the cash needs of the
company.
While Mr. Kao cannot defend his past, he now seeks the
mercy of the Court at sentencing conveniently asserting that he
has been reborn and found new meaning in life. Put simply,
Martin's story, and all he has said about his request for a
reduction in sentencing because of his asserted rehabilitation
I believe is a fallacy.
Contrary to self-serving statements to this Court,
Mr. Kao has shown absolutely no remorse for the harm he has
caused to me, to the company, and the senior employees he fired
to clear a way for his criminal cohorts. And certainly not to
any of the employees, including many of the hard-working loyal
employees who lost their jobs due to the wreckage he left
behind. These -- the employees who stayed are the ones really
responsible for saving the company.
Mr. Kao has also shown no remorse by refusing to pay
the company back the millions he stole from it. Instead of
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 12 of 68 PageID.1432
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:51PM
01:51PM
01:51PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:52PM
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
13
repaying the company, Mr. Kao has hidden his millions in assets
through a series of fraudulent conveyances and other
misconduct. We have multiple lawsuits to recover those funds.
Mr. Kao has defied all attempts and has not paid any of the
millions in damages that have been awarded against him, much of
which was simply stolen from the company. For example, he --
contrary to the company's operating charter, he had the company
issue checks to pay for his defense attorney shortly after his
arrest. Any amounts the company has received to date are due
to our costly legal actions to garnish wage and rental income.
The total Circuit Court awarded damages and accrued interest he
owes the company, as of the end of January, is $8,079,945.
This month, in fact it was posted on the internet this morning,
the company has incurred further costs of $500,000 in Federal
Election Commission fines and legal fees because of Kao's
political fraud.
Mr. Kao's claim of rebirth and enlightenment also run
contrary to his conduct before the Hawaii judiciary over the
past three years. In the same state court case that led to his
disassociation from the company, Mr. Kao has been found and
held in contempt of court three times in 2024 alone.
The contempt orders arose from Martin's attempted end
around the Court's rulings against him related to the
garnishment of rental proceeds for two luxury properties owned
by Kao and his wife, Tiffany Lam -- one worth over 6 million in
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 13 of 68 PageID.1433
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
01:53PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:54PM
01:55PM
01:55PM
01:55PM
14
Kahala and the other worth several million in Hawaii Loa Ridge.
After Mr. Kao refused to comply with the Court's
orders in that case, the Court found Mr. Kao in contempt of
court entered on May 2, 2024. The Court's findings that Kao
engaged in bad faith and they stated:
"The Court views Mr. Kao's behavior as delaying the
proceedings in bad faith so that he can engage in evasive
behavior... The Court therefore finds that Kao had violated the
Court order and finds that Kao in contempt for violating that
order... Kao lacked a good faith excuse or reasonable basis for
failing to comply with the Court's order... Consequently, the
Court finds that Kao's contempt -- Kao's conduct in refusing to
comply with the Court's order was 'entirely without color' and
advanced 'for reasons of harassment and other improper
purposes.'"
A month later, after he did not comply with the court
order, on June 13, 2024, the Court issued a second contempt
order. Mr. Kao was found in contempt of court with the Court
finding as follows:
"The Court finds that Kao is in violation of the
Court's Contempt Order... Despite these repeated reminders and
efforts to compel Defendant Kao's compliance with the Court's
Contempt Order, Defendant Kao has refused to comply with the
Court's Contempt Order, just as he refused to comply with the
Court's prior orders which ultimately led to the Court's
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 14 of 68 PageID.1434
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:55PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
01:56PM
15
Contempt Order. This Court bent over backwards to try to be
fair to Defendant Kao. But with his record of constant
evasion, no effort to try to lend any cooperation, recognition
that he had an enormous judgment debt, and doing everything to
avoid paying every penny, this Court is not able to issue a
ruling that would essentially excuse Defendant Kao and justify
his evasive behavior."
Defendant Kao was ordered to pay a civil fine to the
Court in the amount of $200 per day.
After Kao failed to comply with the second contempt
order, Kao was again found in contempt of court a third time
and entered on November 22, 2024. The judge found as follows:
"The Court... finds that there is a record of
extremely evasive conduct by Kao, that his noncompliance with
the Court's Contempt Orders is and has been knowing and
willful, and that his defense of inability to pay and/or
poverty is not well taken given the extreme efforts he has
undertaken to avoid compliance of the Court's Contempt Orders."
Mr. Kao was ordered to pay a contempt fine of $500 per
day under the third contempt order. Mr. Kao currently owes the
circuit court well over $80,000 in civil fines, which he has
refused to pay the judiciary to date and he continues to ignore
and defy the Court's rulings.
Mr. Kao has not made any restitution to the company or
to the Hawaii state judiciary in spite of owing or co-owning
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 15 of 68 PageID.1435
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:56PM
01:56PM
01:56PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:57PM
01:58PM
01:58PM
01:58PM
01:58PM
01:58PM
01:58PM
01:58PM
01:58PM
16
with family members six properties in Hawaii with a fair market
value in excess of $15 million. Additionally, after his arrest
in September 2000, he sold a Beverly Hills condo in June 2021
for $1,245,000 and was in the process of selling a Taiwan
property valued at $800,000. We knew about the Taiwan property
because Kao illegally had the company pay his personal bills to
that attorney. So in the over $2 million received from these
properties, none of it was used to make restitution to the
company or to the Hawaii judiciary. If he was truly remorseful
of his actions and all the damages he caused, he would have
used the cash and sold as many additional properties that he
controlled to pay the court damages.
Mr. Kao continues his fraudulent transgressions
extending to the Department of Justice. For his Washington
D.C. political fraud case, he was given a public defender
because of his claims of insolvency. We know that throughout
2022 and possibly earlier, Kao was receiving $16,000 a month
from the Kahala property and $8,100 a month from the Hawaii Loa
property. These were the rentals subject to our garnishment
orders which he also refused to acknowledge.
In addition to his real estate and rental property
income, Kao and his family committed charity fraud and
illegally received over $3.1 million cash from the liquidation
of a charity asset, a luxury San Francisco condominium on Nob
Hill. These transgressions are a subject of two separate
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 16 of 68 PageID.1436
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
01:58PM
01:58PM
01:58PM
01:58PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
01:59PM
02:00PM
02:00PM
02:00PM
02:00PM
17
lawsuits the company has filed -- excuse me, for charity fraud
and fraudulent property transfers. From the discovery in those
cases, the stocks owned in the Kao family Ameritrade account
are worth over $4 million in 2021. I had my staff update the
value of those stocks. As of the end of the year they were
worth more than $9 million.
With Kao's extensive resources, he should have been
using them to pay the multiple court awards totalling
$8.2 million as part of his path to rehabilitation and
respecting laws and justice. Instead, he is lavishing himself
by attending Harvard classes which we estimate cost in excess
of $30,000.
Based on all of the above and much more, PacMar
believes Mr. Kao deserves the maximum jail sentence allowable
by law. His lack of providing any restitution to those damages
from his crimes demonstrates his lack of remorse or accepting
responsibility for his transgressions. Far from being a
first-time offender, he has pled guilty to three separate
indictments and there are many more crimes that he has
committed and continues to commit that he has not been held
accountable for yet. His request to the Court for a reduced
sentence citing his rehabilitation in my opinion is just a
continuing scam. Thank you.
THE COURT: Thank you very much. I appreciate you
taking the time and those also from your company who came here
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 17 of 68 PageID.1437
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:00PM
02:00PM
02:00PM
02:00PM
02:00PM
02:00PM
02:00PM
02:00PM
02:00PM
02:00PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:01PM
02:02PM
02:02PM
02:02PM
18
today. You obviously put a lot of time and thought in your
statement, and I have listened to all of it. So I thank you,
thank you very much. Good luck to you, sir.
MR. NOLAN: Thank you, Your Honor. There is not a lot
more for the government to say. The Court clearly has done its
reading, it's read everything, it had a comprehensive report by
the probation office, really an exceptional report in my view.
The Court has gone through aggravators and mitigators, but the
Court has distilled it. It's greed, deceit and entitlement.
And me saying that ten more times doesn't make it any worse.
I do just want to take a moment though to recall that
about ten days before Mr. Kao submitted the first application,
the one for $10 million, this county was put under a
Stay-At-Home order. So the world had come to a standstill in
March of 2020. We didn't know what was happening. We were
wiping down groceries with bleach wipes because we didn't
understand what was going on around us.
And while that was happening, we were trying to figure
out, How do we move forward? How do we engage in business?
How do we do our work? How do we take care of our kids? How
do our kids get schooled? I think it's fair to say that we
were all in some state of relative panic. And so the
government's response at the municipal level, at the state
level, at the national level was to essentially shut us down
and shut down the economy.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 18 of 68 PageID.1438
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:02PM
02:02PM
02:02PM
02:02PM
02:02PM
02:02PM
02:02PM
02:02PM
02:02PM
02:02PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:03PM
02:04PM
19
This is a state full of small businesses, not unlike
many other states, but mom-and-pop shops, mom-and-pop
restaurants, family-owned institutions that have been around
for generations, new businesses struggling to make it for the
first time. And their customer base was just wiped out, and
their employee base was wiped out. Most of us were told to
stay at home, unless you performed an essential function.
And so the government through congress decided to pour
billions of money through the economy to pump that out as
quickly as it could to save the economy, so that employers who
had no income coming in or greatly reduced income coming in
could pay their employees; so their employees could buy food,
spend some money in their local neighborhoods, and do the
things we do every day and take for granted even when the
economy is bad. It was about as bad as things could get.
And so congress enacted the PPP program, Paycheck
Protection Program, for just that purpose; so that employers
could pay their employees, keep them on the payroll, hopefully
ride out the storm. We never thought it would be as long as it
lasted. We had some reprieves and thought we were done and
then we went back into it, and congress poured more and more
money in.
So along comes Mr. Kao right at the beginning of this
program. In fact, his first submission for the first loan was
actually done on a form that was changed that very night, and
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 19 of 68 PageID.1439
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:04PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
02:05PM
20
he was asked to redo it on the current form, because the SBA
was scrambling to put together this program. And it did put
together this program, and it gave -- it told the banks to push
out the money, and it said it was going to guarantee all of
those loans up to $10 million. And so while mom-and-pop shops
around the state and around the country were applying for
10,000 or 25,000, Mr. Kao decided that he would apply for 10
million.
Now Mr. Kao's company at the time named Navatek was
eligible for a fraction of that. It could have applied for its
-- based on its 140-or-so employees and done the formula, the
formula that took into account the salaries of those employees
up to a hundred thousand, and his company would have been
entitled to couple million, maybe a little more, maybe a little
less depending on how you really calculate it, he could have
done that. He didn't need to do it because he was a defense
contractor. And even if there was a slight disruption in the
money that flowed, that money continued to flow.
His customer didn't go away because his primary
customer was the U.S. Government. And that company that was
founded by Mr. Loui's father, or at least the related company
was, and then grown by Mr. Loui, is a valued defense contractor
primarily to the navy. They deal with boats and ships and
hulls and all sorts of things. Frankly, I don't understand.
They employed 140 people, about a hundred in Hawaii at
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 20 of 68 PageID.1440
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:05PM
02:05PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:06PM
02:07PM
02:07PM
02:07PM
02:07PM
02:07PM
02:07PM
02:07PM
02:07PM
02:07PM
21
the time of that loan. Many of the jobs were high paying
engineer jobs, as you might expect. And so he didn't need the
money for his company, but he was eligible for a fraction. But
that wasn't good enough. So he put down 400-some-odd
employees, when it was 140. They did the calculation, it was
very simple, it came out above the 10 million max; he got the
10 million max.
And then he went to another bank and he lied to that
bank. He said, oh, we're entitled to this. He used the
same -- this time he did stick with his 140 employees; but as
we know, he had already gotten 10 million to cover those 140
and then a bunch of imaginary employees. So he lied to them
and he got his 2.8 million. He used a different -- he had a
number of LLCs related, they were not entitled to different
pots of money, they were entitled to -- there was one group of
employees, no matter which payroll they were on, and that's how
he considered it as well.
So he got the 2.8 million through deceit, through
lies. And then he doctored -- he actually altered the
promissory note after the fact so that some people, not
everyone in his organization, because some people knew, but
some people, perhaps accountants who knew about the earlier
PPP, perhaps others wouldn't see. So he took that note and he
literally on his computer redacted in white all references to
the PPP program. So it looked like a standard SBA note to hide
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 21 of 68 PageID.1441
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:07PM
02:07PM
02:07PM
02:07PM
02:07PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:08PM
02:09PM
02:09PM
02:09PM
02:09PM
02:09PM
02:09PM
22
and conceal on top of his lies.
And then he went to a third bank, it was the second
institution in this state, and he lied to them and they pushed
back and he lied again. And finally they denied it. They
caught him.
And so he did all those things when he didn't need to
in the first place. He took $2 million and transferred it to
his own coffers. In part, that 2 million we don't trace it to
the Kahala home, that's case number two, but it was in there
and it was for evaluation purposes when Merrill Lynch, B of A
looked at his application.
So he did all those things to the detriment of others
who really couldn't pay their employees, who couldn't pay their
rent or mortgage for their business, which was one of the other
eligible categories. He didn't need any of that money. And
while doing this, as the Court said, he used influence. He
touted his connections to politicians in this state and beyond
and their staffs. There were implied threats to the first bank
that, oh, they would be in touch, they would call, did he need
to call them on that bank, one of our largest banks, right?
Banks don't want senators being told that they are not
abiding by the dictates of a federal program. They were just
struggling with, what do we have to verify? He was one of the
first applicants. How do we do this? What standards do we
apply? And he was pushing, pushing, pushing, but the Court
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 22 of 68 PageID.1442
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:09PM
02:09PM
02:09PM
02:09PM
02:09PM
02:09PM
02:09PM
02:09PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:10PM
02:11PM
02:11PM
02:11PM
02:11PM
23
knows that.
The emails are replete. The company emails are
replete with him and some of his colleagues joking about what
they were doing, making fun of it, making fun of others. It
was really terrible stuff, appalling stuff.
And so amazingly and incredibly, during that same very
time period, he applies -- in the second case, he applies to
buy yet another property, and the Court has his financial
assets, a $4.5 million property in Kahala. Pretty nice. And
he wants a loan, so he gets that through Merrill Lynch and B of
A and he gets $3 million. In doing that, he wants -- he again
sat down at his computer and he doctored his investment
portfolio, and he represented that he had much more money than
he did. Those were material statements. Whether or not he
would have qualified, that bank was going to look at that
because that's important. What does he have? Does he have the
ability to pay? Can we go against his other assets? The stuff
that is just standard business practices for banks.
Why he did that, I don't know. It makes no sense.
Did he need another house? He had many already in places like
Beverly Hills and here and Honolulu. But to actually engage in
that kind of conduct as a professional, he worked -- I don't
know whether he has a law degree or not, but he was a business
man leading one of the leading companies, maybe not the
biggest, but one of the leading companies in this state. He
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 23 of 68 PageID.1443
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:11PM
02:11PM
02:11PM
02:11PM
02:11PM
02:11PM
02:11PM
02:11PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:12PM
02:13PM
02:13PM
02:13PM
02:13PM
24
was sophisticated, he worked for an accounting firm for years
before he joined Mr. Loui. There is no reason he should have
done this. Absolutely no reason. It was greed, it was deceit,
and it was entitlement. But the Court knows that.
So here's what the government recommends. First of
all, the government recommends the low end of the guidelines,
87 months. And we are recommending the low end of the
guidelines because we have taken into consideration his
post-offense rehabilitative conduct and his volunteering and
all of that. So that's where the government gives him credit
for that. It's ultimately of course up to the Court.
I will say, and I've been granted authority to say
this by the folks in DC who debriefed him, because you've heard
about that, they debriefed him extensively, he provided a lot
of information. No investigation has been launched as a result
of those debriefings. Whether something does, I don't know.
And if something does and the prosecutors in Washington are
involved with that, and they believe he's entitled to some
cooperation credit down the road for that, then they will call
me and we will make a decision collectively. And if he is
entitled to it, we will bring the issue back to the Court of
course.
But from the government's perspective, the Court
certainly can take into consideration his debriefings under the
statutory sentencing factors, but it did not amount to
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 24 of 68 PageID.1444
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:13PM
02:13PM
02:13PM
02:13PM
02:13PM
02:13PM
02:13PM
02:13PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:14PM
02:15PM
02:15PM
02:15PM
25
substantial assistance.
All right, so back to the 87 months. The government
defers to the Court on supervised release; that's the Court's
resources through its probation office. With regard to the
rest, the forfeiture the Court has already articulated it is
$12,841,490 that should be payable to the Small Business
Administration. There is a forfeiture order already in the PPP
case for that -- it should be that same amount. And the Court
has already ordered the forfeiture of the over 10 million that
the government seized pursuant to warrant from his own
accounts, 2 million, and his company's accounts somewhat north
of 8 million. And he will get credit for that toward that
forfeiture money judgment of course.
With regard to the fine, the government advocates for
a $1 million fine. I mean, Mr. Loui went through some of his
assets, the probation has gone through some of his assets, the
nature of the crime, I'm not going to belabor it, but the
government feels this is one of those relatively rare cases
where a fine is appropriate. And we suggest the top of the
guideline, 1 million.
I know Ms. Yamaga will have something to say about the
criminal forfeiture order entered in the mortgage fraud case
and of course you'll listen to her on that. From the
government's perspective, and I do apologize we should have
gotten that in earlier, but it's a placeholder, there is no
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 25 of 68 PageID.1445
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:15PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
02:16PM
26
doubt that the government is entitled to forfeiture of the
proceeds of that fraud, which are at least 3 million, and
that's what came out of that.
And the government feels the law is very clear,
provided some additional case law that Ms. Yamaga today just
moments before, that made clear that the government also gets
the appreciation prorated in that house for two-thirds of bank
money fraudulently obtained bought that house, one-third of
other money, the Kao's money, bought that.
But what the Court has entered, from the government's
perspective, is a placeholder until we have a foreclosure and a
sale. We just felt, why speculate, why estimate when there is
a state process that's going to come up with real numbers.
Now, the county says it's worth 7.2, 7.3 million, we'll see
what it sells for.
I will point out that PacMar has obviously submitted
to the probation office a request for restitution. The
probation office has looked at that, I've discussed it with the
probation office, PacMar has said to me they would like a
restitution hearing so that they can prove up restitution.
Essentially, what we are talking about are legal bills, legal
costs incurred in responding to subpoenas we issued here for
this investigation specific to the PPP case, I think. And the
probation office didn't feel that they could come up with a
number based on the submissions.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 26 of 68 PageID.1446
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:16PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:17PM
02:18PM
02:18PM
02:18PM
02:18PM
02:18PM
02:18PM
02:18PM
02:18PM
02:18PM
27
The government is really not in a better position than
the probation office, and so I've told PacMar through its
counsel that it really needs to parse the legal bills and put
them in piles so that the appropriate PAR can be considered by
the Court. If the Court is inclined to set a restitution
hearing, it is, of course, my hope that if you do set a
restitution hearing that counsel, PacMar, the government, with
help from the probation office, will come up with an agreed
upon number for the Court's consideration.
THE COURT: So on that, I have a couple of questions.
I didn't want to interrupt you, but if you wanted to finish up
I'm happy to do that. So my questions are threefold. It has
to do with the fine, it has to do with PacMar's request for
restitution, and I just have a question how come there is no
investment information in terms of Mr. Loui had mentioned that
he had all of these investment assets. I didn't see any of
that. I mean, I see the two Mercedes, the Ferrari, the Rolls
Royce and then all of this luxury real estate.
So the dilemma I find myself in in a fine is that I
know that there are several -- I'm personally aware of, because
it's in the federal court as a civil lawsuit, one. So if there
was any chance of recovering any kind of damage award, they
wouldn't be able to touch the money that he would have to pay
towards the fine, because that goes to the government, and I
certainly couldn't double dip if PacMar is given a restitution
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 27 of 68 PageID.1447
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:19PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
02:20PM
28
amount that would then be an offset or a setoff, or what have
you, that they wouldn't be able to recover those amounts.
I'm just trying to figure out on different tracks. I
agree with you that this is one of those rare cases where a
fine makes sense, except for the fact that you have all of
these other victims that are out there that are seeking civil
remedies for the harm that's been done to them. And the
dilemma I find is is it just punishment, so there is an
argument for that. But yet does it then thwart ultimately any
kind of recompense to actual victims?
MR. NOLAN: Right. No, I appreciate the Court's
question and observations because that's true. One reason not
to impose a fine here is that PacMar is looking to recover, the
SBA is looking to recover, Bank of America is looking to
recover. Frankly, we are hindered here because, at least to my
knowledge, and certainly the probation office can correct me if
things change, but Mr. Kao never provided a financial
disclosure. And I'm seeing the probation office confirming it.
He was asked to provide one, of course. He didn't
sign a plea agreement so I don't have a contractual, right, but
in the normal course the probation office asked for that. And
we only have the information -- I believe it goes back to the
bail reports. I don't know if the probation office was able to
get more, but Mr. Kao declined to tell the probation office, in
response to this request, as to what he has out there.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 28 of 68 PageID.1448
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:20PM
02:20PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:21PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
29
So the government certainly understands that the Court
thinks it prudent, given all his outstanding forfeiture
judgments, given all of his outstanding judgments in the state
and arbitration proceedings, and given what the restitution
judgments will be in this case, if the Court decides not to
impose a fine.
THE COURT: Yes. So that's my question with regard to
the fines. That makes sense about the financial disclosure.
As I read in the presentence report, it's publicly available
information that was provided, obviously, what you do a real
estate --
MR. NOLAN: Sure.
THE COURT: -- look it up in the commuter with regard
to that and with regard to the automobiles and the outstanding
loans. So that's what would show up. And there was a report
of, even though there were all these properties, who was on the
deed. Okay, so that -- I was just wondering, somebody with
these assets, I imagine would have an investment account and
Mr. Loui mentioned it, but that makes sense. Okay.
MR. NOLAN: Right. So Mr. Loui has been able to do a
better job than the government at the moment on some of that.
I, of course, haven't verified that information with regard to
investment accounts and the like.
THE COURT: They have all those civil actions across
the street too, so I'm sure they have gotten a lot of
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 29 of 68 PageID.1449
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:22PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:23PM
02:32PM
02:32PM
30
information from that.
MR. NOLAN: And I anticipate of course that after we
have judgments from the court that our civil division will
start -- will seek leave of court to conduct some discovery and
pursue assets out there as well. The IRS has a lien on that
Kahala house. I think that's in the PSR. It's somewhere north
of a million dollars. They are a codefendant in the -- or a
party in the foreclosure actions.
So that's the recommendation of the government. I'm
happy to answer any further questions.
THE COURT: No. Thank you very much. I appreciate
that.
Mr. Bakke.
MR. BAKKE: Your Honor, could I have one moment to
consult with the probation officer? I have a question.
THE COURT: You may.
Mr. Bakke, I'm sorry to interrupt. We have been going
for almost an hour. I think it's fair to the court reporter
that we take a brief recess. Could you consult and then just
let Ms. Cortez know when you are ready to proceed and we will
take like a ten-minute recess. Thank you very much. We stand
in recess.
(Proceedings were recessed at 2:23 p.m. to 2:32 p.m.)
THE COURT: The record will reflect the presence of
counsel and Mr. Kao and Ms. Nieling.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 30 of 68 PageID.1450
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:32PM
02:32PM
02:32PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:33PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
31
So, Mr. Bakke.
MR. BAKKE: Yes, Your Honor. Thank you.
Your Honor, before I get started, on page 23 of the
presentence report it talks about criminal history. And I
believe that on paragraph 97, if the Court had earlier said
today that the defendant had a prior conviction. But that was
not a conviction under state law, that was a deferral, and the
case was dismissed. So there was never any conviction. I just
wanted to clarify that.
THE COURT: Okay, thank you.
MR. BAKKE: Your Honor, when it comes to sentencing we
can sit here all day and talk about what a person did. And
that obviously is where we have to start, okay. But that is
not the end of the story, and we have to balance that under the
3553(a) factors with the mitigating factors.
And, in fact, just the general life history of a
person, because although people have to be held to answer for
their individual acts, individual actions don't always
completely define a person for their whole life. And
especially at Mr. Kao's age, he hasn't led a life of crime.
And these allegations that have brought him here are more types
of crimes of opportunity and things like that, as opposed to an
orchestrated long running -- this is not a Ponzi scheme, this
isn't --
THE COURT: It's not a Ponzi scheme, but it's very
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 31 of 68 PageID.1451
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:34PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
02:35PM
32
involved and it was deliberate. This is not a bank teller who
at Christmas maybe is a single mother and somebody deposits
$5,000 of cash and in a moment of weakness she takes the cash.
That's understandable. This took planning, this took
leadership. This was not a matter of just putting in one piece
of paper or making a phone call.
So I understand what you are saying, it's not a Ponzi
scheme where you're reaching out -- but it was quite
sophisticated.
MR. BAKKE: Your Honor, with all due respect, we
completely disagree with that in a sense of I went through that
same situation. Nobody this side of the bar had to deal with
employees, the COVID, the paying your rent, everything like
that. It was chaos. The problem is Mr. Kao took advantage of
that. And as we know across the country many people took
advantage of it that most didn't have any criminal history.
But when they saw it there and they saw that opportunity they
took it, and it was done over a relatively short period of
time. But I do agree with the Court that, yes, you kind of
have had to know what you were doing, you know.
THE COURT: And you kind of had to have the ability to
threaten that you could use relationships with senators and
congresswomen and throw your weight around with regard to that.
That's an aspect of this.
MR. BAKKE: That's correct. Mr. Kao actually had that
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 32 of 68 PageID.1452
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:35PM
02:35PM
02:35PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:36PM
02:37PM
02:37PM
02:37PM
33
weight, so to speak, to throw around.
THE COURT: Right.
MR. BAKKE: So but the real problem started with him
even coming up with the stupid idea that we can get a bunch of
money here. And like the prosecutor said, he would have been
entitled to something, it looks like, under the regular rules.
It's just the way it was calculated. And there were other
companies, if you recall.
THE COURT: The way it was calculated because of
abject fraud. He took numbers of individuals that you said
were on your payroll and you inflated it by a factor of
several, not double.
MR. BAKKE: Absolutely. But I think what Mr. Nolan
and I were kind of getting at is this was so stupid because it
didn't have to be done. He could have just gone in and said,
you know what, I legitimately need this -- even though I have a
big company he still could have qualified for something. But
that goes back to greed and despair. Why didn't he just apply
normally, instead of trying to milk it for more than the
program --
THE COURT: Well, you could get six times more than
apparently he might have been able to qualify for. Although, I
don't know if he really qualified for it because it wasn't
meant for people who had like Uncle Sam as the provider. But
even assuming that to be true, we're talking -- well, Mr. Nolan
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 33 of 68 PageID.1453
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:37PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
02:38PM
34
had mentioned somewhere in the neighborhood of $2 million -- we
are talking about almost $13 million.
MR. BAKKE: Absolutely, correct, and that's where the
crime comes in, Your Honor. So I'm trying to get into -- you
know, about this being a long, drawn out, thought out process.
This was something that just came up in a very short period of
time, there weren't a lot of rules, it was ripe for abuse,
which we found out later through all the cases across the
country, and he absolutely has to be held accountable for that.
But I'm trying to put it in kind of a framework like
we didn't know what was going on. You had places like Ruth's
Chris, Shake Shack, you had major companies all applying for
these maximum $10 million loans that they qualified evidently
for under the rules. But when the public kind of heard about
it, a lot of those companies let the loan go because of the
optics. It looked bad, why does this big company get all this
money and the mom-and-pop shops hardly get anything?
Again, not any excuses. I'm not making any excuses.
I'm just trying to put it in a little bit of context because we
are talking about Martin's overall character of his whole life
that this was a very short period of time.
Now, he was very busy during that short period of
time, but he had 50 years before that. He was a good guy,
father, all of that stuff. He was successful. He had the
Ferraris -- he had more than one Ferrari, he had the
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 34 of 68 PageID.1454
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:38PM
02:38PM
02:38PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:39PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
35
properties, he was living a successful lifestyle that came from
legitimate work. He is not a drug dealer or something.
So we go through all that and then, all of sudden, now
he is greedy and deceitful and everything like that. And I'm
looking at that and going, what changed from Martin and the
father and everything to this? Where did he get lost? Because
he wasn't like that before, and the only thing I can find, Your
Honor, is when he got involved with Navatek and Mr. Loui and he
went to work for them. And that --
THE COURT: Wait, wait. Okay, honestly I got to head
you off here. So you are saying because he started working at
this firm, from which he has stolen millions of dollars, that
that somehow they made him do it or influenced him to do these
actions?
MR. BAKKE: Well, Your Honor, I'm unaware of him
having stolen millions of dollars from the company.
THE COURT: Well, it was supposed to go to the
company, right? Didn't he apply for the PPP? It was not for
him personally, he wasn't supposed to personally get the money,
correct?
MR. BAKKE: Correct, for the company.
THE COURT: Right. And he put the company's name on
it, and he made representations about the company qualifying
for PPP.
MR. BAKKE: Yes.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 35 of 68 PageID.1455
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:40PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
36
THE COURT: And so then when those get approved, then
that money is supposed to go to the applicant, Navatek. So I'm
kind of losing you with saying, well, yeah, but Navatek really
didn't lose any money or there is no evidence of Navatek --
MR. BAKKE: They didn't because they weren't entitled
to that money to begin with.
THE COURT: You know what, so I get that. So you are
saying that the whole fraud of this, the only victims then are
the taxpayer and the banks?
MR. BAKKE: Correct, Your Honor.
THE COURT: Navatek is not a victim. Is that the
point you are trying to make?
MR. BAKKE: As far as the PPP loan itself, because I
got a little lost with Mr. Loui talking about all this other
collateral damage that may come, and that may be going to
restitution. But where I was going with this, Your Honor, is
not he went to work for the company so he stole money from the
PPP loan, because we also have the Washington D.C. case.
THE COURT: Yeah, absolutely, which I am taking into
account as 3553(a) factors of sentencing because he is a
convicted felon in another matter, and I know generally what
that involves. So that's an additional factor I can take into
account in evaluating what an appropriate sentence is. But I
don't make any judgment with regard to what happened there
because that's not part of my case.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 36 of 68 PageID.1456
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:41PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
02:42PM
37
MR. BAKKE: Correct, Your Honor. We know that it was
campaign fraud, making illegal donations to elected officials.
THE COURT: Correct.
MR. BAKKE: So that's kind of where I'm saying is when
Mr. Kao came into Navatek, he was not a businessman, he wasn't
experiencing government contracting. Quite frankly, I don't
know how he got 99 percent of the company, why they gave it to
him. It appears because they were happy that he did something
good for them.
THE COURT: Well, I don't know and I don't want to
make any judgment. What's your point with regard to --
MR. BAKKE: My point, Your Honor, is when he came in
that company was rotten already. And so he learned from
Mr. Loui, he learned from them the way they did things, and the
way they did things when he came in was already in place. You
pay people for influence, you throw your weight around, you do
those kinds of things.
Before this thing, when he started, he wasn't any of
that kind of stuff. But he got in there and that's where he
lost his way, Your Honor. He got into that environment, it was
big money, it was relatively easy money, and he loved the whole
thing of it. He loved everyone looking up to him and being the
boss and flying to DC and being the big company in Hawaii. And
he just got lost. He got lost in all of that. And the money,
the Ferraris, the whole thing, right.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 37 of 68 PageID.1457
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:42PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:43PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
38
And that's where I'm just trying to put in a little
bit of context that that's where -- he went from a normal guy
to this super star in the industry and all the benefits that
came with it. And he got lost, he took advantage of it, and
then that brings us to the rehabilitation. Because as high as
he went, he fell just as far.
And as the -- Court is aware, I don't need to go
through all the rehabilitation, but this was all done on his
own. I mean, to me, and I know the Court has read through
everything and the Court really I think in other cases, you
really take into consideration the letters, right? Not because
it's a letter from a bank president, it's somebody that really
knows him and somebody that can really talk to the person.
And I've never seen in a case like this where you have
letters from the Cheese Cake Factory from his co-workers, where
he spent over two years excelling in a job that many people
would say, well, that's so below him. Obviously, there is
nothing wrong with working at the Cheese Cake Factory, but it's
not the CEO of Navatek.
THE COURT: Understood. Understood.
MR. BAKKE: And so those things are looking at -- when
I go back to 3553(a)is that he has humbled himself, because he
went from kind of the zero to the hundred back down almost to
the zero. And that takes a lot of character and a lot of
humbling, and he did well, and he excelled at it. And I think
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 38 of 68 PageID.1458
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:44PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
02:45PM
39
his values changed.
And I remember I told him one time, I went to visit
him and he said, oh, look at this Ferrari. I got this Ferrari.
And I go, yeah, but you know what, Martin, what's important now
is not what's in your garage, it's who lives in your house.
That's where your focus and goals are. And he just looked at
me like, I never thought of it that way. And he's got a
beautiful family, and he put them through hell through all of
this, and he'll have to attenuate to that.
But it's that kind of situation where, you know -- the
Harvard thing. I was like, what do you mean you got into
Harvard? He didn't even tell me. I found out --
THE COURT: Did it really cost $30,000?
MR. BAKKE: I don't know how much the tuition is.
THE DEFENDANT: It's about $900 a college credit,
graduate credit. I've taken 20 credits already.
THE COURT: And you took 20 credits. Thank you.
Okay.
MR. BAKKE: Again, it's not one of these cases where
we are looking so hard at rehabilitation, because that's, as
the Court said, that's just one of the factors. Just one of
them. But it's also a very important one.
Obviously, restitution and all that stuff it sounds
like we're probably going to have to have a restitution study
to sort that out more. There's also the $2 million after we
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 39 of 68 PageID.1459
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:46PM
02:47PM
02:47PM
02:47PM
02:47PM
02:47PM
02:47PM
02:47PM
02:47PM
40
are done with court here. We have to go downstairs because
they are going to take the $2 million that is up on the bail;
so we are going to have to sort that out more.
What I'm really here about now is with Martin because
we hear everything, well, he lied, he lied, he lied. Yeah, no
doubt that he lied. I guess my position is, does it really
raise it to that much of an aggravating factor in a situation
where really the whole charge is lying? I mean, everyone that
was charged with PPP loans lied. So it's kind of like that is
the crime.
THE COURT: Well, it is the crime. Fraud is the
crime, right? And then we look at also the amount that the
person benefitted by, right? So I admit to you there was a lot
of PPP fraud apparently. I don't think the statistics will
bear out that there were a lot of fraud in excess of
$12 million.
MR. BAKKE: I would agree with that. It's about 1 to
2 million and then after that it's like 15 or 20. It's kind of
like not a real gap in the middle from the cases that I saw.
THE COURT: Right. So this is a pretty egregious case
in terms of the amount and also his role.
So where are you on what's an appropriate sentence?
MR. BAKKE: Your Honor, I just believe that under the
very unique circumstances of this case, especially such as an
exemplary post-offense rehabilitation, I don't know where the
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 40 of 68 PageID.1460
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:47PM
02:47PM
02:47PM
02:47PM
02:47PM
02:47PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:48PM
02:49PM
41
actual range should be. But I would recommend that a guideline
range of 87 months is more than necessary to comply with the
sentencing goals in 3553(a)(2). How much? I'll defer to the
Court, Your Honor.
But with his background, prior to starting at Navatek
and ending at Navatek, prior to that he's led a good life, and
he's going to come out of this at some point. We just got to
make sure that it's -- and this is the hard job for you, Your
Honor, is the Goldilocks, which is we don't want it too hash
but not too soft either. He definitely has to be made an
example of, and he has to atone, and he has to pay and all of
that. I just don't know where that perfect bowl of porridge is
at the end of the day, but I believe that 87 months is more
than necessary.
THE COURT: Okay. Thank you very much.
Ms. Yamaga, is there anything you wanted to add and
then I'll give Mr. Kao an opportunity to speak on his behalf.
MS. YAMAGA: Nothing with respect to the sentence. I
just have a comment on the criminal forfeiture. Do you want me
to address that now?
THE COURT: Sure.
MS. YAMAGA: So as Mr. Nolan alluded to, he and I have
had a conversation, I just noted that his motion and proposed
order was only filed two days ago, which gave me very little
time to review it, in particular, little time to review it with
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 41 of 68 PageID.1461
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
02:49PM
42
Mr. Kao.
I can go through the one legal issue that I noted upon
my initial perusal, but what I'm ultimately asking the Court to
do is to hold off on the final order of judgment and just give
me one week to review it with Mr. Kao --
THE COURT: Absolutely.
MS. YAMAGA: -- and we might not make this one
objection that I had already highlighted to Mr. Nolan.
THE COURT: Yes, I think so. And I think the way the
proposed order was is that it was just the fact of the
forfeiture wasn't entitled to under the case but not the
amount. And then we're going to have to talk about the
calculations. So I just assume that you are not challenging
that the government is entitled to forfeiture, but you are
really challenging how that's going to be calculated in the
final amount.
MS. YAMAGA: That's correct. It's the appreciation
whether that's --
THE COURT: Yes, and that might be a legal issue for
me to rule on.
MS. YAMAGA: Yes, Your Honor. That's the only issue
right now.
THE COURT: Right. And then the other issue that came
up is potentially a restitution hearing with regard to
Navatek's claim.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 42 of 68 PageID.1462
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:49PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:50PM
02:51PM
02:51PM
43
Do you guys have any position on that, or you guys
want to think about it and we'll have a status conference?
MS. YAMAGA: I'd defer to Mr. Bakke.
THE COURT: Because that's on his, yes. You're on the
bank loan. Sorry.
Mr. Bakke.
MR. BAKKE: Maybe we can have a status conference on
it.
THE COURT: Okay, very good. Let's do that because I
don't have enough information to do that.
Mr. Kao, you have an opportunity to speak on your
behalf, it's this time, if you wish. If you don't, it won't be
held against you. Do you wish to say something to the Court?
THE DEFENDANT: Yes, Your Honor.
THE COURT: All right. Please.
THE DEFENDANT: First of all, good afternoon.
THE COURT: Good afternoon.
THE DEFENDANT: Thank you for this opportunity to
address the Court.
I'm here because I failed. I'm here today to accept
responsibility for my mistakes and face the consequences of my
actions. So I say before this Court, I'm sorry, I have no
excuses, I acknowledge my mistakes, and I accept full
responsibility for the wrongs I've committed.
I can assure the Court that these statements are not
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 43 of 68 PageID.1463
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:51PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
02:52PM
44
said impiously, but I also do not believe that anything I say
today, however genuine, could ever excuse my actions. At the
end, only my actions can.
As I've come to learn through my own epistemology, a
life journey towards repentance, any genuine contrition,
accountability and acceptance of my mistakes cannot be
proclaimed, they must be ensued through and from my actions.
A lot of people have said a lot of things about me and
the person I was when I committed these offenses. So today let
me tell the Court who I was.
I was a naive and ignoramus imposture. So naive, so
ignorant that I had no fear or even understanding of the
consequences of my actions. I didn't think that it was illegal
or that lying could be prosecuted as a crime. I wrongfully
thought that fraud would result in no direct physical or
visceral financial harm was of any consequence. None of the
crimes I'm here before the Court today were contrived or
premeditated. Instead, everything was by opportunity and by
chance.
So when the banks told me to just apply as I saw fit,
to just apply, however it made sense for my company, don't
worry about how you apply, we'll figure it out later. It
doesn't matter how you apply. It only matters how you spend
the money.
So I saw opportunities in the chaos with the pandemic.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 44 of 68 PageID.1464
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:52PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:53PM
02:54PM
02:54PM
02:54PM
02:54PM
02:54PM
02:54PM
02:54PM
02:54PM
02:54PM
45
And if someone asked questions later -- and I took advantage of
it. And if someone asked questions later, I would just deal
with it at that time. Both of my offenses occurred around the
same time, both during the height and frenzy of the pandemic,
both crimes of opportunity committed without planning or any
forethought.
While my mistakes may be borne from situational
circumstances, it doesn't make -- mean that there is no
accountability for my actions. For too long I have allowed
myself to hide behind the misguided notions of ethics and
philosophies of consequentialism, that somehow the end justify
the means. From the false narrative I've painted in my mind,
that despite my wrongful conduct and how the company applied
for the PPP loans, my actions were justified and even to be
celebrated. Because in the calendar year 2020, despite COVID,
despite Hawaii shutting down, despite America shutting down,
despite the world shutting down, I still spent $16 million.
$15,850,461 to be exact on my employees' payroll salary and
wages, most of which are here today. It included my own salary
of $1. I spent far in excess in payroll in 2020 in the 12.8
million my company received in PPP loans.
I know this is not a time to get into the details, but
I can assure this Court that I did not receive one penny of the
PPP money.
THE COURT: I'm sorry, what about the $2 million that
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 45 of 68 PageID.1465
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:54PM
02:54PM
02:54PM
02:54PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
02:55PM
46
was put into your account?
THE DEFENDANT: The $2 million was a distribution for
my personal capital account. And the reason he was able to
trace it was because the PPP funds weren't deposited into the
company's general business account, which pays payroll, my
distributions --
THE COURT: But you know you are being held
accountable for the $2 million that was transferred.
THE DEFENDANT: I know. I understand.
THE COURT: And now you're saying that that was money
you were legally entitled to and that was not part of the crime
that you committed. I just want to make sure what you're
telling me so I understand it correctly.
THE DEFENDANT: I'm not sure how to explain the
semantics other than to say that when we received the PPP
loans --
THE COURT: Right. It went into the company account,
it got commingled --
THE DEFENDANT: It went into the company account, two
tranches: One for 10 million and one for 2.8. When we
received the 10 million, we moved 8 million of it into a
company account, a higher bearing interest brokerage account.
THE COURT: Okay.
THE DEFENDANT: Company account, company account.
From our general business account where we paid salaries, wages
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 46 of 68 PageID.1466
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:56PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
47
and everything else, I made a distribution to myself --
actually a loan for $2 million. So I understand the
traceability rule and the money being tainted. So I understand
that dynamic, and I don't --
THE COURT: And that's why I'm having a little
difficulty swallowing that you didn't take -- you know, I have
to say it's interesting because the dilemma I have on
sentencing, quite frankly -- well, I'll let you finish and then
I'll let you know some of the concerns I have, but go ahead.
THE DEFENDANT: You know all this, you know, the money
fungibility issues, how much money I spent on payroll, I agree
it all fueled my delusions of self-righteousness. I even sent
emails that are bragging that our company will be the poster
child of PPP. Once the Small Business Administration came in
and audited us on how we spent the money, once congress saw
that we talked about my congressional influence on
relationships, once they saw how we spent -- how much money we
spent on payroll, how I hired and created jobs during the
pandemic in each of their individual states, this was across 12
different states.
THE COURT: So you're like Robin Hood then, you're
actually a good guy doing all of these things. So no matter
how you robbed other people to pay for that, you did only good
things with it; is that what you are telling me?
THE DEFENDANT: That's what I fooled myself into
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 47 of 68 PageID.1467
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:57PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
02:58PM
48
believing.
THE COURT: But you understand that's not what
happened now, or do you still believe that? That's the problem
I'm having.
THE DEFENDANT: I do believe that. I do believe that
I'm here today because I made a mistake. I justified my own
actions in how I applied. And I can confess to the crimes I've
done, but I cannot accept the things that I didn't do.
THE COURT: Like what, that you didn't do, that are
you going to be held accountable in the sentencing or that
there are other things that people are mad at you about that
has nothing -- what we are talking about is a sentencing. I'm
trying to figure out an appropriate sentence for you, so I'm
just -- I just need clarity in my mind. You said you're not
responsible for the things that you didn't do.
THE DEFENDANT: Right.
THE COURT: And I know Mr. Loui talked about a lot of
different things and that's in state court. I'm just looking
at what's in the presentence report.
THE DEFENDANT: Okay. Then I'll disregard what
Mr. Loui said.
THE COURT: Yeah. I don't know what's going on, and I
make no judgment with regard to that. The victims have an
opportunity to speak, and they can talk about whatever they
want to talk about because they have a right to talk about how
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 48 of 68 PageID.1468
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
02:58PM
02:58PM
02:58PM
02:58PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
02:59PM
03:00PM
03:00PM
03:00PM
03:00PM
03:00PM
03:00PM
49
they believe they've been affected. So whatever is going for
the garnishment and everything else, that's not part of this
case.
THE DEFENDANT: I'll disregard that then. I'll
retract that statement.
THE COURT: Great.
THE DEFENDANT: I understand that lying to myself only
prolonged my mental anguish, and I could not accept the
consequences of my actions because I refused to confront the
reality of my own choices, insisting that I was a victim of
prosecutorial zeal.
Today I truly see and can clearly see that my mistakes
and failures, while manifested in my criminal actions before
this court today, are so much more embodied in my failure as a
CEO and leader in our business community. There was no book,
no manual, no courses you could take -- that I could take to
learn how to be a CEO. For me, all I knew how to do wrongfully
was to emulate those I worked for, their behavior.
THE COURT: So you are not in a drug conspiracy where
you are working for the mafia, the Mexican cartel. This was a
whole idea of filling out forms to seek money from a government
program where you falsified information. So what you are
telling me is that other people made you do this?
THE DEFENDANT: No, I'm not telling you that at all.
THE COURT: Okay. You are telling me that you are in
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 49 of 68 PageID.1469
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:00PM
03:00PM
03:00PM
03:00PM
03:00PM
03:00PM
03:00PM
03:00PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:01PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
50
a culture where somehow you got the message that this is what
you are supposed to do, even though nobody told you directly to
multiply the number of -- to falsify and multiply by almost a
factor of like three, right, from 150 to 400 employees, that's
because you were working in this terrible culture?
THE DEFENDANT: No, my culture that I'm referring to
is the culture of political influence and the culture of maybe
lawless dispensations. So when I applied for the PPP loans,
the reason I applied the way I applied was, at the time we were
growing our company exponentially and, the truth be told, the
way we grew our company was by making promises to senate
appropriations, congressional appropriation members in exchange
for creating jobs in their state.
So when the pandemic hit, I was asked and directed by
members that I served, Will you continue to honor the job
commitments you made in my state? And I couldn't do that. I
could not have done it without the PPP loan.
THE COURT: Without falsifying the PPP loan so that
you would get a six-fold kind of money.
THE DEFENDANT: Correct. So the PPP loan, the way
it's calculated, it's based on historical data.
THE COURT: Right. So I guess what you are saying is
you are arguing it was a crime of necessity? You had a gun to
your head and you had to do this because you made these
promises and, therefore, you had to commit fraud? Honestly, I
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 50 of 68 PageID.1470
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:02PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:03PM
03:04PM
51
wouldn't recommend you go down this road, I have to tell you,
because it's kind of like blaming your mother for all of this.
Well, she didn't raise me right and therefore I committed this.
I'm sure that's not what you intend to say.
THE DEFENDANT: No, it's not.
THE COURT: Yeah, but it's going down that road. So I
would just ask you to think about what you want to share with
me. Because what I have before me are fairly discreet acts,
right, the two loans, the misrepresentations, six times the
amount that the company would have been entitled to, according
to the government, and then fraudulently conducting yourself
with regard to the mortgage loan.
So I don't think anybody else applied for those
things, and I understand what you are saying about the
different tranches, and then you're being paid out and you
ordered this thing. But the way that the information is is
that the 2 million that went into your personal account came
from the PPP -- came after the PPP money was deposited with the
company.
So I'm just going to ask you, what's the point that
you're trying to make in terms of explaining to me why you did
this other than greed -- or it was greed, but you have a reason
for it, like people made you do it.
THE DEFENDANT: It's not that someone made me do it.
It's -- whether it's greed or personal pride, I was in a
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 51 of 68 PageID.1471
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:04PM
03:04PM
03:04PM
03:04PM
03:04PM
03:05PM
03:05PM
03:05PM
03:05PM
03:05PM
03:05PM
03:05PM
03:05PM
03:05PM
03:05PM
03:06PM
03:06PM
03:06PM
03:06PM
03:06PM
03:06PM
03:06PM
03:06PM
03:07PM
03:07PM
52
position where during COVID a lot of people were asking for a
lot of things, and it felt good to be able to meet those
expectations -- rightfully or wrongfully.
And as much up as I had hoped to placate my
benefactors, maybe wrongfully, through using PPP funds, I
understand now that -- and I'm not making excuses for what
happened, and I apologize if it came out that way; but again, I
can't change the past.
THE COURT: Sure.
THE DEFENDANT: All I can do is accept what I've done.
I'm reminded of -- as I stand here before you, facing
incarceration, losing my freedom, I'm reminded of a quote from
one of my favorite books, Man's Search For Meaning.
"Everything can be taken from a man but one thing: the last of
the human freedoms. To choose one's own attitude in any given
set of circumstances, to choose one's own way."
I am reminded of a speech I once heard by Chief
Justice John Roberts where he gave this commencement speech at
his son's graduation and he titled it: I Wish You Bad Luck.
It was a facetious title but one with a great message. The
message being that it's often through life's misfortunes and
how we respond that we learn life's greatest lessons.
As you know, before going back to school, I worked as
a dishwasher and cook. Before that I applied to work at the
American Red Cross and was turned down after they did a
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 52 of 68 PageID.1472
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:07PM
03:07PM
03:07PM
03:07PM
03:07PM
03:07PM
03:07PM
03:07PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:08PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
53
background check. The pain of being rejected doing work when
you are offering to do it for free is kind of indescribable.
But that misfortune turned what was a pride-swallowing siege of
washing dishes and mopping floors into a real appreciation for
just having a job. It turned the misfortune of this
circumstance to be working at the restaurant for two years
where I met some of the most hard-working and resilient people
in my life.
Although I can't change the past, I can only look at
this process in what it's supposed to be for me. Truth be
told, when I was first arrested and released, my mind went to a
very dark place. I kind of immersed myself -- I became a
full-blown alcoholic in less than a month. I immersed myself
in readings of Dostoevsky, Franz Kafka, Tolstoy, those dark
allegories of the injustices of our justice system seemed to
resonate with me at that time.
But do I recognize that this process, while it's easy
to forget about the rehabilitation side because of how violent
the -- I guess the prosecution and punitive side of it is, I do
understand that we are not opponents and that we are actually
on the same side. I think you want for me to be the best
version of me possible.
THE COURT: I also want you to pay back all your
victims.
THE DEFENDANT: Sure.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 53 of 68 PageID.1473
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:09PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
03:10PM
54
THE COURT: So I agree. I really want you to
rehabilitate, I want you to experience remorse and ask for
forgiveness. But most of all, the point is, how are you going
to make amends to your family for being away from them for
years, to the victims, to your former colleagues for the
financial harm and distress?
You don't have to give me an answer now. I don't
think there is an answer. But that's what I'm interested in,
you figuring that out during your period of incarceration. And
when you come out and you are on supervised release, there is
going to be a significant community service component, because
I think you owe that to our community, and then you'll be able
to work with probation on criminal thinking. Because that's
what you are describing, this idea that you are better than
everybody else, that this is somehow doing actions that serve
the greater good. That's criminal thinking, and they can help
you with that.
THE DEFENDANT: I understand. Thank you for
listening.
THE COURT: So my dilemma, what I wanted to share with
you, Mr. Kao, is that typically people who stand before me,
like when you were saying sort of the defense of necessity,
that you felt like you were required to do this because you had
to keep your company afloat or what have you, but there are
people who facilitate pounds of methamphetamine into our state
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 54 of 68 PageID.1474
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:10PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:11PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
55
that destroys families, children, many people's lives and has
been for decades that literally have come before me, and it's
true that the Mexican mafia had taken their sister and shot her
in the head and said, If you don't do this and go to the Big
Island and facilitate pounds of making coming into the Big
Island, we're going to kill your kid and then we're going to
kill you. So that person is still convicted and sentenced to a
mandatory minimum of 20 years.
And I've got to say if anybody gets to sort of argue
necessity, that's a pretty good thing. What you told me really
doesn't move the needle of necessity; so that's the context I'm
putting it in. I'm putting it in the context of the
21-year-old that I need to sentence who has been sexually,
physically abused in his childhood, his addictions started
because his parents started giving him meth when he was nine or
10, your kids' age -- this kid didn't have a chance -- and he
has an addiction and he agrees to carry a bag or receive or
whatever. 60 months, five years out of his life, mandatory
mandatory minimum. So that's the context I'm looking at it.
And then I look at you, and I look at you with this
tremendously privileged life, tremendous intelligence,
tremendous abilities, you come from a good family, that you
have a good family, that you have the kind of material goods in
your life, beautiful homes, rental properties, luxury cars.
That 21-year-old never had a chance coming out.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 55 of 68 PageID.1475
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:12PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:13PM
03:14PM
03:14PM
03:14PM
03:14PM
56
Now the law is what the law is and I have to sentence
him to five years in prison. How that's going to help him get
a GED, hopefully he will get it in prison and then come back
out and work with probation and I'll meet with him regularly
because no one has ever taught him that this is the way that
you need to proceed in the world. And it's tough and you have
all this trauma, whether you can do this.
It's really hard. I hear what you are saying. I'm
sure it has been devastating for you to be indicted and
arrested and have to look at serious time. The dilemma I have
is, in many ways, thinking this through, going through the
materials, there is a thing called upward departure, and I
think the egregious actions by you in this case really could
justify an upward departure way past the top of the guidelines
in this case. Because what you did there was no need to do
except for entitlement and greed.
On the other hand, I think, how does this help the
victims, right? So there is just punishment, that's a
component, to prevent you and others from committing this kind
of fraud, so the next time there is a government program that
people can apply for, people are going to remember Martin Kao
and they are going to say, you know what, the government might
come after me, it's not worth the risk.
But then there is the other component of this, how do
we make amends for the victims, and having you come out of
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 56 of 68 PageID.1476
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:14PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:15PM
03:16PM
57
prison earlier rather than later, and I know you are able to
work, whether it's going to be at the Cheesecake Factory or
someplace else, there is an ability to earn money that you can
do that may provide some recompense to the victims. So that's
really what I'm weighing on.
The government is saying low end of the guidelines,
I've told you that I think there is some basis to upwardly
depart to you having a significant amount. When I think about
the 21-year-old kid who gets the 60-month mandatory minimum for
being stupid, being poor, being traumatized, and then I hear
your story, I look at 12.8 million, it's really, really hard to
evaluate. But I need to concentrate on your 3553(a) factors,
your personal characteristics, the facts of the offense, the
harm that's done to our community by your actions. And that's
what I'm going to do.
But I appreciate you sharing your thoughts. I hope
that you will think about what I've said and think about what
you can do when you get out in terms of making amends.
So the Court is going to state the sentence and
reasons for the sentence and then I'll invite the attorneys for
any legal objections with regard to the sentence.
So the guideline range of imprisonment is 87 to
108 months for Counts 1 through 3 and Count 1 and Counts 4
through 8 as to each of them. There are separate counts that
could run concurrent or consecutive, which means it would have
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 57 of 68 PageID.1477
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:16PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
03:17PM
58
to be served one at a time.
So upon consideration of all the 3553(a) factors, you
are committed to the custody of the Bureau of Prisons for a
term of 87 months as to each -- let's see, let's make it
specific. As to Counts 1 through 3 under Criminal Number
21-61, and Count 1 under Criminal Number 23-03, and Counts 4
through 8 under Criminal Number 21-61, to run concurrently.
Supervised release of five years as to Counts 1
through 3 under Criminal Number 21-61, and Count 1 under
Criminal Number 23-03, and three years as to Counts 4 through 8
under Criminal Number 21-61. And that's to run concurrently.
No fine. And I'm making the specific finding that you
have financial obligations to the victims. And rather than
imposing a fine that would be paid only to the government after
the forfeiture any other financial holdings that you have, I
believe should be made available through court means to the
victims.
Special assessment of $900, $100 for each count for a
total of $100.
And then the conditions of your supervised release are
as follows. You were previously provided with the 13 standard
conditions of release.
Do we have a stipulation, Mr. Bakke and Ms. Yamaga?
MR. BAKKE: Yes, Your Honor.
MS. YAMAGA: Yes, Your Honor.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 58 of 68 PageID.1478
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:17PM
03:17PM
03:17PM
03:17PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
03:18PM
59
THE COURT: So the Court doesn't need to -- those are
imposed without the Court reading it.
You must abide by the mandatory and standard
conditions of supervision including the following:
You do not have a recent history of substance abuse
and the offense is not drug related, so I waive the mandatory
drug test condition.
You must cooperate in the collection of DNA as
directed by probation.
You must report to the probation office in the federal
judicial district where you authorized to reside within 72
hours of the time you are released, unless probation instructs
you to report to a different probation office or within a
different time frame.
You must abide by the follow special conditions:
You must not possess or use alcohol during the term of
your supervision. You must warn any other residents or guests
that you are prohibited from possessing any alcohol on your
residence and on your property. You must submit to alcohol
testing at the direction of probation.
You must participate in an outpatient mental health
treatment program and follow the rules and regulations of that
program. The probation officer, in consultation with the
treatment provider, will supervise your participation in the
program such as provider, location, modality, duration, and
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 59 of 68 PageID.1479
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:19PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
60
intensity.
Restitution of $12,841,490 is due, less any amounts
paid to the Small Business Administration, 721, 19th Street,
3rd Floor, Room 301, Denver, Colorado 80202. Any unpaid
balance is to be paid during the period of supervision through
a monthly installments of 10% of your gross monthly income
commencing 30 days after the start of supervision. The Court
may order this requirement to be changed from time to time, as
circumstances warrant, but no court order shall be required for
your voluntary agreement to pay more than the court-ordered
amount. Interest will begin accruing 30 days after the start
of supervision. Payments must be made by payroll deduction
when applicable. You must notify the probation officer of any
change in your financial circumstances that affect your ability
to pay. Your financial circumstances must be reviewed by the
probation officer on at least an annual basis.
You must provide the probation officer access to any
requested financial information and authorize the release of
any financial information. The probation office may share
financial information with the U.S. Attorney's office.
You must apply all monies received from income tax
refunds, lottery winnings, inheritance, judgments and any
anticipated or unexpected financial gains to the outstanding
court-ordered financial obligation, at the discretion and
direction of the Court.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 60 of 68 PageID.1480
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:20PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
03:21PM
61
You must not incur new credit charges, or open
additional lines of credit, or apply for any loans without
prior approval of probation. You must not borrow money or take
personal loans from any individual without prior approval of
the probation officer.
You must maintain a single personal bank account,
separate and apart from your spouse, any family members or
others, into which all income, financial proceeds, and gains
must be deposited and from which all expenses must be paid.
You must notify the probation officer of any
contemplated employment and must obtain approval from the
probation officer for all employment. Unless you are
self-employed, you may not be employed in any capacity wherein
you have custody, control or management of your employees'
funds.
You must complete 12,800 hours of community service.
The probation officer will supervise your completion of
community service hours, including approving the community
service site, the frequency of participation, etcetera. You
must provide written verification of completed hours to the
probation officer.
Finally, you must submit your person, property house,
residence, vehicle, papers or office to a search conducted by a
United States probation officer. Failure to submit to a search
may be grounds for revocation of release. You must warn any
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 61 of 68 PageID.1481
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:21PM
03:21PM
03:21PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:22PM
03:23PM
03:23PM
03:23PM
62
other occupants that the premises may be subject to searches
pursuant to this condition. The probation officer may conduct
the search under this condition only when reasonable suspicion
exists that you have violated a condition of supervision and
that the areas to be searched contains evidence of this
violation. Any search must be conducted at a reasonable time
and in a reasonable manner.
Before I impose the sentence as stated, any legal
objections from the government?
MR. NOLAN: Your Honor, I just wanted to ask the Court
in 21-61 to incorporate the forfeiture orders at the PPP case
at ECF numbers 116 and 123. And then you've said you are going
to give the defense some time I think in 23-3.
THE COURT: Yes. And so in 21-61 that will be
incorporated -- the order of forfeiture will be incorporated
into the judgment. We'll just have to wait for the amount.
MR. NOLAN: And no legal objections.
THE COURT: All right.
Mr. Bakke.
MR. BAKKE: No legal objections, Your Honor.
THE COURT: Ms. Yamaga.
MS. YAMAGA: So I do -- I'm asking that the order of
forfeiture in 23-03-LEK not be made final today. It's not
titled as a preliminary order of forfeiture, but I'm acting as
if it is a preliminary, and I'm asking that it not be made
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 62 of 68 PageID.1482
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:23PM
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
63
final so that I may make legal objections if needed.
THE COURT: Okay, very well. So I'm going to give you
a week.
And what date would that be, Ms. Cortez?
So if you could file any objections and then, Mr.
Nolan, if you want to file a response, let me know.
MR. NOLAN: Okay, thank you.
THE CLERK: Your Honor, February 20th.
THE COURT: Any objection? By February 20th, of
course, meet and confer. If you can work it out, that would be
great.
MS. YAMAGA: Thank you.
THE COURT: And the import of the 12,800 community
service hours, which is the most I've ever imposed, obviously
is to reflect the harm to the community of $12,800,000.
All right. So I impose the sentence as stated. I
have considered the advisory guideline computations and the
sentencing factors under 18 U.S.C., Section 3553(a). As I
explained more fully in my assessment of the specific
aggravating and mitigating factors in your case, Mr. Kao, I
have considered your history and characteristics as well as the
serious harm to our community caused by your offenses.
I have read the letters received on your behalf, I
believe the sentence provides just punishment and, equally
important, I hope it serves as an adequate deterrence to others
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 63 of 68 PageID.1483
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
03:24PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
64
who may consider this type of fraud.
I hope that this sentence will discourage others from
heading down such a life-altering path. I have considered the
sentencing guidelines and the policy statements and the law.
So I impose the sentence as stated.
You do have the right to appeal your sentence and the
manner in which it was determined. But the deadline to file
your notice of appeal is 14 days after your judgment is filed.
If you file after those 14 days, you may be found to be too
late and given up your right to appeal. Do you understand
this?
THE DEFENDANT: Yes, Your Honor.
THE COURT: All right. So do you want me to make any
recommendations to the Bureau of Prisons as to designation?
MR. BAKKE: Yes, Your Honor. To Sheridan. I think
it's FCI Sheridan.
THE COURT: Okay, FCI Sheridan. That's it? There is
no programming or anything. He doesn't have a drug problem,
he's already got a college degree.
MR. BAKKE: Well, Your Honor, he would like help with
the RDAP program for the alcohol.
THE COURT: I can make a recommendation for the
500-hour residential drug treatment program.
MR. BAKKE: Yes, if you could.
THE COURT: Okay. All right. And so any objection to
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 64 of 68 PageID.1484
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:25PM
03:25PM
03:25PM
03:25PM
03:25PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
03:26PM
65
self-surrender?
MR. NOLAN: No, Your Honor. It was recommended by the
probation office and the government will follow their
recommendation.
THE COURT: All right, very good. Let's have a date
for the self-surrender.
THE CLERK: Yes, Your Honor. Self-surrender to the
facility will be March 25, 2025.
THE COURT: All right, March 25, 2025, Mr. Bakke and
Ms. Yamaga.
Mr. Kao, do you intend to pay for your own way and
self-surrender, or do you want to turn yourself into the
marshals here?
MR. BAKKE: I'll discuss with that with him because we
still have that case in DC to deal with logistically.
THE COURT: I understand that, but he has to
self-surrender on March 25th.
MR. BAKKE: Correct. But I'm just saying between
turning himself -- I'm sorry, did you say turn himself into
FDC?
THE COURT: So Bureau of Prisons is going to designate
him to the facility that he is going to be serving the time at.
So he can either fly on his own expense or he can turn himself
in to the marshals and be held here and then the marshals will
transport him.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 65 of 68 PageID.1485
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:26PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:27PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
66
MR. BAKKE: Right, I understand that. Just so I
understand -- yes, we want to self-surrender.
THE COURT: Right. And so you are ordered to
self-surrender by March 25, noon of the time zone in which the
facility you've been designated to serve your term of
incarceration. If you fail to show up or you show up late, a
bench warrant can issue for your arrest and that would not be a
good thing.
So you have the date, you can work with pretrial
services on what you need to do in order to turn yourself in at
the Bureau of Prisons facility.
Anything else?
MR. NOLAN: No, Your Honor. Thank you.
THE COURT: All right. And then I guess I would want
briefing or something from you on what we should do with
Navatek's restitution request. So I would suggest that you
confer with counsel and maybe Navatek and then write me a
letter with a CC to everybody, this is the discussion, this is
what we believe we want from the Court.
MR. NOLAN: Could we have two weeks to do that?
THE COURT: Absolutely, yes. I don't think there is
any rush.
MR. NOLAN: Okay. Thank you.
THE COURT: Two weeks would be.
THE CLERK: February 27, 2025.
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 66 of 68 PageID.1486
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
03:28PM
67
THE COURT: All right, February 27th, see if you could
get me that.
MR. NOLAN: Thank you.
THE COURT: Very good. Nothing further, Ms. Yamaga.
MS. YAMAGA: No, Your Honor. Thank you.
THE COURT: Mr. Bakke.
MR. BAKKE: Nothing, Your Honor.
THE COURT: And, Ms. Nieling, anything else?
MS. NIELING: No, Your Honor.
THE COURT: All right. So good luck to you, Mr. Kao.
We stand in recess. Thank you everyone.
(Proceedings were concluded at 3:28 p.m.)
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 67 of 68 PageID.1487
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
68
COURT REPORTER'S CERTIFICATE
I, Gloria T. Bediamol, Official Court Reporter, United
States District Court, District of Hawaii, do hereby certify
that pursuant to 28 U.S.C. §753 the foregoing is a complete,
true, and correct transcript from the stenographically reported
proceedings held in the above-entitled matter and that the
transcript page format is in conformance with the regulations
of the Judicial Conference of the United States.
DATED at Honolulu, Hawaii, February 28, 2025.
/s/ Gloria T. Bediamol
GLORIA T. BEDIAMOL.
RMR, CRR, FCR
Case 1:21-cr-00061-LEK Document 165 Filed 03/19/25 Page 68 of 68 PageID.1488