Eden Prairie man sentenced to over seven years in prison for COVID-19 relief fraud

An Eden Prairie man has been sentenced to 87 months in federal prison, three years of supervised release, and ordered to pay restitution for fraudulently obtaining more than $2.1 million in COVID-19 relief funds and using the money for personal expenses, U.S. Attorney Andrew M. Luger announced on Tuesday.

Harold Bennie Kaeding, 75, was convicted of three counts of wire fraud, three counts of aggravated identity theft, and one count of money laundering following a 10-day trial in August. He was sentenced on Friday, Nov. 15, by U.S. District Judge Eric C. Tostrud.

According to trial evidence and court documents, Kaeding submitted fraudulent loan applications between March and May 2020 through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. He used the names of close family members to apply for loans on behalf of six purported corporate entities. These entities, however, were either defunct or nonexistent when the pandemic began. None had filed tax returns or reported wages for 2019 or 2020.

To support his fraudulent applications, Kaeding fabricated tax documents, bank statements, and other records. He inflated employee numbers, exaggerated payroll expenses, and made false statements about the intended use of the funds.

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Kaeding initially received $1,642,670 in relief funds before banks detected irregularities and recovered some of the money. He retained $658,490, which he transferred to accounts he controlled, often in family members’ names. He used the funds to prevent foreclosure on his residence, purchase an SUV, and stockpile over $80,000 in cash.

In early 2021, after learning he was under investigation, Kaeding fled to Colombia. Authorities located him and arranged his deportation back to the United States to face charges.

The case was investigated by the FBI and IRS. Assistant U.S. Attorneys Jordan L. Sing and Robert M. Lewis prosecuted the case.