A former Hawaii defense contractor changed his plea to guilty in federal court Wednesday, admitting he defrauded banks of more than $22.8 million intended to help businesses struggling through the COVID-19 pandemic.

Martin Kao, 49, the former head of Martin Defense Group LLC, formerly known as Navatek LLC, is charged with bank fraud and money laundering. If convicted, he faces up to 30 years in prison, a $1 million fine and five years probation. On the money laundering allegations, Kao is facing up to 20 years in federal prison on each count and a $250,000 fine.

Kao stepped down as CEO in November 2020.

Federal prosecutors alleged that Kao defrauded banks of more than $12.8 million through the Paycheck Protection Program. Congress authorized the program to provide emergency financial assistance through forgivable loans to small businesses for job retention and other expenses.

Kao’s company was headquartered in Hawaii but operated offices in Washington, D.C., Maine, Rhode Island, Michigan, Oklahoma, Kansas and South Carolina.

“Mr. Kao, how do you plead to charges in count 1, 2, 3, 4, 5, 6, 7 and 8 (of the indictment) guilty or not guilty?” asked U.S. Magistrate Judge Kenneth J. Mansfield.

“Guilty, your honor,” Kao replied.

Kao will be sentenced at 2:30 p.m. Jan. 19 before U.S. District Judge Leslie E. Kobayashi.

Kao allegedly misrepresented the company’s average monthly payroll and number of employees when applying for federal loans.

“The biggest difference between him and everyone else (who received PPP loans) … is that he took those loans, reinvested (in the company), grew the company and hired new employees,” Kao’s attorney, Victor Bakke, told the Honolulu Star-Advertiser.

The U.S. Department of Justice describe’s Kao’s former company as a “research, engineering, design, and innovations company that specializes in novel systems for the Department of Defense and other partners in academia and other scientific fields.”

Founded in 1979 as Navatek, the company has provided naval architecture and modeling and simulation services.

Court documents said Kao began working with the company in 2010. He assumed the role of chief executive officer in 2017 and had owned 99% of the company since March 2019.

Kao is also described as a prolific donor to federal campaigns. He allegedly “made and caused to be made” multiple contributions to federal campaigns using company funds, according to “factual allegations” made in an ongoing civil lawsuit between Navatek Capital Inc. and Kao.

The lawsuit asserts that Kao’s alleged fraudulent attempts to obtain federal loans caused “significant damages” to the company.

From 2019-2020, the alleged contributions to federal campaigns totaled about $184,000. About $77,000 were in his own name; $62,000 were in his wife’s name, Tiffany Lam; $27,000 were in the name of a former company controller, Lawrence Kahele Lum Kee; and $17,200 came from a former chief financial officer, Clifford Chen.

The company noted that because it is a federal contractor, it is prohibited from making contributions to federal campaigns.

Civil Beat found in 2020 that Kao and top executives from Navatek donated nearly $450,000 to federal candidates and causes between 2002 and 2019.

”Mr.Kao also has a pending federal case in Washington, D.C.,” said Bakke, speaking in court. “I believe there is a plea deal to resolve that case. He has not been made any promises in that case in regards to the outcome of this case.”