The United States government has filed a civil forfeiture action against a luxury Kahala home owned by Martin Kao, the disgraced former owner and CEO of a Hawaii-based defense contractor. I ran across the case while reviewing a list of recent federal cases filed in Hawaii, and recognized the address of the property just a block down the street from our home.

The government’s complaint filed in Honolulu’s Federal District Court on July 2 seeks authority to seize the property at 4902 Kahala Avenue, located at the intersection of Kahala Avenue and Kealaolu Avenue. Kao and his wife purchased the property in June 2020.

Kao, 52, was the Chief Executive Officer and 99% owner of Martin Defense Group, LLC, formerly Navatek LLC. The company, often referred to as MDG, specialized in designing and analyzing ship hull forms, ocean structures, underwater lifting bodies, and coupled hydrodynamic systems for the Department of Defense.

He is currently serving an 87-month sentence at the medium security federal correctional facility in Sheridan, Oregon after pleading guilty to defrauding the federal Paycheck Protection Program in a scheme that netted over $12 million; channeling total of $52,000 of illegal campaign contributions to the 2020 reelection campaign of Sen. Susan Collins of Maine, with another $150,000 going to a super pac supporting her campaign, using relatives or employees and a shell company as straw donors; and forging financial documents submitted to Bank of America in order to qualify for a mortgage loan used to buy the Kahala property.

According to the forfeiture complaint, Kao applied to Bank of America for a $3 million mortgage on March 12, 2020. To support the application, he “digitally altered” several E*Trade account statements to “falsely inflate the value of his stock portfolio.”

Between mid-March and the end of May 2020, Kao manipulated the figures on six records — shifting decimal points to multiply values by 100 or 1,000 times. For example:

• A month-end account statement reported the value of Kao’s investments was $83,880.59, which he changed to claim a value of $8,388,000.59.

• The following month’s statement similarly inflated the account value from $49,614.70 to $4,961,400.70.

• A month end statement for April 2020 falsely stated that the account value was $5,618,900.02, while the true value shown on the original statement was just $56,189.02. The same fraudulent values appeared in an earlier “real-time values” record.

• Kao falsely claimed he had paid down a margin loan on his account by $4.1 million, but in fact he had paid only $4,100, inflating the amount by 1000 times.

• Finally, Kao altered a balance report in May 2020 to show an account value of $10,533,900.70, “when, in fact, the value was only $64,339.70.”

Kao submitted each of these forged documents to Bank of America in support of his Mortgage loan application.

The bank approved the loan, which made it possible for Kao and his wife to complete their purchase on June 29, 2020.

The home, at the corner of Kealaolu Avenue and directly across from Waialae Beach Park, spans 9,351 square feet, with 5 bedrooms and 6.5 bathrooms on a 15,074 sq. ft. lot.

For property tax purposes, it’s currently assessed at $7.69 million — $2.89 million for the land and $4.79 million for the structure. The annual tax bill is $80,273.98, and the property is not registered as owner-occupied, according to city tax records.