Eden Prairie man sentenced to over seven years in prison for COVID relief fraud, aggravated identity theft, and money laundering

Date: Nov. 19, 2024

Contact: [email protected]

St. Paul, MN - An Eden Prairie man has been sentenced to 87 months in federal prison, three years of supervised release, and was ordered to pay restitution for fraudulently applying for more than $2.1 million in COVID-19 relief funds and then spending those proceeds on himself, announced U.S. Attorney Andrew M. Luger.

As proven at trial, between March and May 2020, Harold Bennie Kaeding applied for at least $2,182,625 in loans through the Paycheck Protection Program (PP) and the Economic Injury Disaster Loan (EIDL) Program. Kaeding used the name of his own close family members to submit the loan applications in the names of six different purported corporate entities. But these entities were either defunct or not even in existence when the pandemic began, trial evidence showed. None of the businesses had filed tax returns or reported the payment of wages to a single employee for calendar years 2019 and 2020. Kaeding instead fabricated tax documents, manufactured bank statements, and submitted other records to ensure the applications appeared legitimate. These false statements to lenders manufactured the number of employees a given entity employed, the amount of average monthly payroll expenses, and false statements about the intended use of the loan proceeds.

As a result of his material falsehoods and omissions, Kaeding initially received approximately $1,642,670 in relief funds before some banks detected irregularities and clawed back some of the money. This left Kaeding with $658,490 in fraud proceeds, which he transferred to bank accounts-often opened in the names of close family members-that he controlled. Among other things, Kaeding used the money to get his personal residence out of impending foreclosure, purchase an SUV, and stockpile more than $80,000 in cash. In early 2021, Kaeding fled to Colombia after learning he was under investigation. Law enforcement eventually located Kaeding and successfully deported him back to the United States to face prosecution.

Following a ten-day trial in August 2024, Kaeding was convicted by a federal jury on three counts of wire fraud, three counts of aggravated identity theft, and one count of money laundering. He was sentenced last Friday, November 15, 2024, by Judge Eric C. Tostrud in U.S. District Court.

This case is the result of an investigation conducted by the IRS Criminal Investigation (IRS-CI) and FBI. Assistant U.S. Attorneys Jordan L. Sing and Robert M. Lewis prosecuted the case.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.