Indictment — United States v. Harold Bennie Kaeding, District of Minnesota (Doc. 1)

Summary

A grand jury indictment in United States v. Harold Bennie Kaeding, Case 0:21-cr-00169-ECT-HB, in the U.S. District Court for the District of Minnesota, filed August 4, 2021 as Doc. 1. Count 1 charges wire fraud under Title 18, United States Code, Section 1343, and Count 2 charges money laundering under Section 1957. The indictment alleges that in 2020 Kaeding submitted false PPP and EIDL applications for Harbor Holdings Corporation, Harbor Corp, AutoPay, Inc. and Voyager Shipping Company, applying for at least $2,182,625 and obtaining $658,490. It states that lenders deposited $504,090 in PPP funds, recalled $984,180 in further PPP funding, and that $154,400 in EIDL proceeds was received. The forfeiture allegations list seized funds, including $91,207.00 seized from a residence, and a vehicle.

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“Indictment — United States v. Harold Bennie Kaeding, District of Minnesota (Doc. 1).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/indictment-no-0-21-cr-00169-dkt-1-d-minn-905a8a1593/, SHA-256 34b736d83480f576ca7be71b75bb80acdbf82ad8227522e598ede3bedf8b45a5.

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CASE 0:21-cr-00169-ECT-HB Doc. 1 Filed 08/04/21 Page 1 of 11
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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

UNITED STATES OF AMERICA,
INDICTMENT
Plaintiff,
18 U.S.e. S 1343
*18 U.S.C. S 1957
v. 18 U.S.C. $ e81(a)(1)(C)
28.U.S.C. $ 2a61(c)
FIAROLD BENNIE KAEDING.

Defendant.

The UNITED STATES GRAND JURY charges that:

INTRODUCTION

At times relevant to this Indictment:

1. From at least in or about April 202A through in or about December 2020,

the defendant, HAROLD BENNIE KAEDING, capitalized on the COVID-19
pandemic to exploit emergency funding mechanisms to knowingly submit numerous

false and fraudulent applicationb to receive loan proceeds he knew he was not entitled

to receive. KAEDING used false and fraudulent pretenses, representations,
promises, and concealment of material facts to apply for at least $2,182,625 in such

loans, of which KAEDING obtained $658,490 in fraud proceeds. KAEDING

knowingly used these criminally derived proceeds to engage in monetary transactions

exceeding $10,000 for the benefit of himself and his family.

The Defend.ant and. Related. Entities

2. Defendant HAROLD KAEDING was a resident of Eden Prairie, in the

State and District of Minnesota.
ScnwnED *
AUo 04 2021S
COURT MPLS
U.S. DISTRICT
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United States v. Harold Bennie Kaeding

3. Harbor Holdings Corporation was a Minnesota corporation formed on or

around March 26, 20L9,' with its registered agent located at 3208 West Lake Street

#7076, Minneapolis, Minnesota, 55416. This address was a PostNet box at which

KAEDING last received mail in or about May 2020. The registered agent for Harbor

Holdings Corporation was listed as Erika Parks.
+

4. Harbor Corp was a Minnesota corporation formed'on or around Aprll24,

2020. Its registered. address was the same as Harbor Holdings Corporation. The

incorporator of Harbor Corp also was listed as Erika Parks.

5. AutoPay, Inc., was a Minnesota corporation formed on or around

October 30,2007. Although AutoPay administratively dissolved on or about January

7, 2009, it filed for reinstatement on or about April 25, 2020. AutoPay's registered

address was listed as 1160 Vierling Drive East#I27, Shakopee, Minnesota, 55379.

AutoPay's Chief Executive Offi.cer was idbntified As KAEDING's spouse with a

registered executive address that was the same as Harbor Holdings Corporation and

Harbor Corp.

6. Voyager Shipping Company was originally registered in the State of

Minnesota on or about March 2, 2012, before being administratively dissolved on or

about April 16,2014. Voyager Shipping Company filed for reinstatement on or about

May 15, 2020, with,the same registered address as AutoPay.

7. The identified entities filed no tax returns for calendar years 2019 and

2020. Moreover, the identified entities did not report to the State of Minnesota the

payment of any wages to a single employee in 2019 and 2020.
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United States v. Harold Bennie Kaeding

The U.S. Small Business'Administration

8. The United States SmaII Business Administration ("SBA") was an

exbcutive-branch agency of the United States governinent that provided support to

entrepreneurs and small businesses. The mission of ih" Sga was to maintain and

strengthen the nation's economy by enabling the establishment and viability of small

businesses and by assisting in the economic recovery of communities after disasters.

9. As part of this effort, the SBA enabled and provided for loans through

banks, credit unions, and other lenders. These loans have government-backed

guarantees.

CARES Act, Paychech Protection Program, and Relief Funding

10. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was
a federal lhw enacted in March 2020 and designed to provide emergency financial

assistance to the'millions of Americans who are suffering the economic effects caused

by the COVID-l9 pandemic. One source of relief provided by the CARES Act was the

authorization of forgivable loans to small businesses for job retention and certain

other expenses, through a program referred to as the Paycheck Protection Program

("PPP").

11. To obtain a PPP loan, a qualifuing business was required to submit a
PPP loan application, which was signed by an authonzed representative of the

business. The PPP loan application required the business (through its authorized

representative) to acknowledge the program rules and make certain affirmative

certifications in order to be eligible to obtain the PPP loan. In the PPP loan

3
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United States v. Harold Bennie Kaeding

application (SBA Form 2483), the small business (through its authorized

representative) was required to certifi', among other things: (a) that thb small

business was in operation on February 15, 2020; (b) average monthly payroll

expenses; and (c) number of employees. These figures were used to calculate the

amount of money the small business was eligible to receive under the PPP. In

addition, businesses applying for a PPP loan were required to provide docurirentation

showing their payroll expenses.

L2. A PPP loan application was processed by a participating lender. If a
PPP loan application was approved, the participating lender funded the PPP loan

using its own monies, which were guaranteed by the SBA. Data from the application,

including the information about the borrower, the total amount of the loan, and the

Iisted number of employees, was transmitted by the lender to the SBA in the course

of processing the loan.

13. PPP loan proceeds were required to be used on certain permissible
expenses, including payroll costs, mortgage interest, rent, and utilities. Under the

applicable PPP rules and guidance, the interest and principal on the PPP loan was

eligible for forgiveness if the business spent the loan proceeds on these expense items

within a designated period of time and used a certain portion of the loan towards

payroll expenses.

14. The SBA also sponsors Economic Injury Disaster Loans (EIDL), which
is a separate loan mechanism for economic relief. The SBA provides these loans as
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United States v. Harold Bennie Kaeding

"economic relief to small businesses and nonprofit organizations that are currently

experiencing a tempcirary loss of revenue."

THE SCHEME TO DEFRAUD

15. From at least April 2020 through at leAst in oi around December 2020,
in the District of Minnesota, and elsewhere, the defendant,

HAhOLD BENNIE KAEDING,

did knowingly and intentionally devise and execute a scheme and artifice to defraud

and tb obtain money by means of materially false and fraudulent pretenses,

representations, and promises, and by concealment of material facts.

16. It was part of the scheme to defraud that from at least in or about April
2020 through at least in or about June 2020,KAEDING knowingly applied for various

PPP and EIDL funds by submitting knowingly false and fraudulent applications to

various lenders. Every application KAEDING submitted included knowingly false

representations. The pulpose of the scheme was for KAEDING to unjustly enrich

himself by obtaining PPP and EIDL loan proceeds under false and fraudulent

pretenses, including by submitting fabricated supporting records, making false

statements about the number of employees and the amount of payroll expenses,-and

making false statements about the intended use of the loan proceeds.

17. More specifically, in furtherance of the scheme, between in or about
April and May 2020, KAEDING submitted three false and misleading PPP'
applications-one for Harbor Holdings Corporation, one for Harbor Corp, and one for

AutoPay-seeking a total of $504,090 in PPP funds. KAEDING submitted these
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United States v. Harold Bennie Kaeding
*

applications with numerous knowingly false representations, examples of which

include the following:

Submitting applications and completing the required certifications

using the identifying information of other individuals.

Misrepresenting the number of active employees on payroll.

Including a knowingly bogus monthly payroll figure.

Submitting knowingly falsified supporting documentation, such as

forged tax return documents or bogus bank account statements.

Misrepresenting various information in ord"er to quaiify under PPP loan

requirements, such as dates of incorporation or that the applicant had

not applied for or received other PPP funding.

, 18. As a direct result of KAEDING's material falsehoods and omissions,
between April and May 2020,lenders approved these PPP applications and deposited

$504,090 in PPP funds into bank accounts that KAEDING opened and controlled.

Thereafter, KAEDING transferred this money to various other bank accounts that
t

he controlled and could access for the purpose of converting the money to his own

purposes.

19. It was further part of the scheme that KAEDING applied for at least 5
other PPP loans. KAEDING applied for these additional loans, in his own name or

that of others, despite PPP requirements-which KAEDING initialed and certified

on every application he submitted-that the applicant "has not and will not receive

6
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United States v. Harold Bennie Kaeding

another loan under the Paycheck Protection Program" for the period of February 15,

2020, through December 3I,2020."

20. Each of these five additional applications contained either false claims, '1

fabricated suppofting documents, or both. The additional applications sought PPP

funding for, resfectively, Harbor Corp, Harbor Holdings Corporation, AutoPay,

Voyager Shipping Company, and AutoPay dlbla Harbor. In total, the five additional

applications sought $1,362,435 in PPP funds. Although $984,180 in this funding

initially was approved and deposited into bank accounts KAEDING controlled-

$242,090 for AutoPay and $l+Zi,OgO for Voyager Shipping Company-the lending

banks successfully recalled the full $984,180 in PPP funding. The other $378,255 in

applied-for PPP funds for Harbor Corp and Harbor Holdings Corporation was denied

prior to funding.

2I. It was further part of the scheme that KAEDING fraudulently applied
for at least four EIDLs. Each of these four applications contained. either false claims,

fabricated supporting documents, or both. In total, -the four applications sought

$316,100 in EIDL funding. KAEDING received $154,400 in fraudulent EIDL

proceeds that he thereafter transferred to various other bank accounts that he

controlled. or could access'for the purpose of converting the money to his own

purposes.

22. In total, as a result and in furtherance of his scheme to defraud,
KAEDING received approximately $658,490 in fraud proceeds, some of which he

distributed and misappropriated, or attem$ted to distribute and misappropriate, for

7
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United States v. Harold Bennie Kaeding

the personal benefit of himself and other parties in violation of PPP and EIDL

requirements. Rather than use PPP and EIDL funds for permissible business

expenses, KAEDING instead transferred the $658,490 to bank accounts that he

controlled and for his personal use. More specifically, KAEDING withdrew at least
J

$84,200 in cash from numerous ATMs and used $80,000 to make a substantial

payment against a home mortgage to avoid the foreclosure of the personal residence

in which KAEDING was living. KAEDING also used his fraud proceeds to wire funds

and provide cash to various family and friends. For example, on or about June 3,

2020, KAEDING wired $51,000 of fraud proceeds directly to his spouse's bank

account.

23. In total, KAEDING's fraud scheme sought at least $2,L82,625 of which
KAEDING obtained $658,490 in fraud proceeds. KAEUNG misappropriated these

proceeds for the personal benefit of himself and others.

COUNT 1
flMire Fraud)

24. Paragraphs 1 through 23 are incorporated by reference as if fully set
forth herein.

25. On or about the d.ate set forth below, in the State and District of
Minnesota and elsewhere. the defendant.

HAROLD BENNIE KAEDING,

for the purpose of executing and attempting to execute the above-described sch'eme

and artifice to defraud, knowingly transmitted and caused to be transmitted by

8
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United States v. Harold Bennie Kaedins

means df wire communications in interstate and foreign commerce, certain writings,

signs, signals, and sounds, as described below:

Date of W-ire
Count (on or about) Wi,re
Wire commun-ication of PPP Application 3 sent
1 May 2I,2020 and caused to be sent bV KAEDING from
Minnesota through interstate servers located
outside of Minnesota.

AII in violation of Title 18, United States Code, Section 1343.

COUNT 2
(A4oney Laundering)

26. Paragraphs 1 through 23 are incorporated by reference as if fully set
.forth herein.

27. On or about June 3, 2020, in the State and District of Minnesota, the
defendant,

HAROLD BENNIE KAEDING;

did knowingly engage and attempt to engage in a monetary transaction by, through,

or to a financial institution, affecting interstate commerce, in criminally derived

property of a value greater than $10,000-namely, KAEDING wired $51,000 from a

Harbor Holdings Corporation bank account ht Bank of America to a bank account at

Citibank held in his spouss'g n2ps-lyhich money was derived from a specified

unlawful activity-namely, wire fraud-atl in violation of Title 18, United States

Code. Section 1957.

I
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United States v. Harold Bennie Kaeding

FORFEITURE ALLEGATIONS

28. Cbunts 1 and 2 of this Indictment are incorporated by reference for the
+

purpose of alleging forfeiture pursuant to Title 18, United States Code, Section

981(a)(1)(C), ih conjunction with Title 28, United States Code, Section 246L(c), and

Title 18, United States Code, Section 982(a)(1).

29. Upon convicfion of the offense alleged in Count 1, as set forth in this
Indictment, defendant shall forfeit to the United States of America, pursuant to Title

18, United States Code, Section 981(aX1XC) and Title 28, United States Code, Section

246L(c), any property, real or personal, which constitutes or is derived from proceeds

traceable to the violation. The property subject to forfeiture includes, but is not

limited to, the following:

a. $91,207.00 seized January 13,202I from'the residence at757I Atherton
Wuy, Eden Prairie, Minnesota;

b. the real property and irremises located at 7571 Atherton Wuy, Eden
Prairie, Minnesota, 55346, legally described as Lot 1, Block 4, Round
Lake Estates, Second Addition, Hennepin County, with property tax ID
number 08- 1 16 -22-32-0033:

c. a 20L7 GMC Acadia with VIN 1GKKNXLS2HZ256796 seized June 30,
202L:

d. $1,018:92 seized from Royal Credit Union Account 4569474440 held in
the name of Harbor Holdings Corporation;

. e. $21,983.16 seized from Bhnk of America account number
37 4004337463 held in the name of Harbor Holdings Corporation;

f. $11,144.50 seized from NorthOne/Radius Bank account number
5110103119 held in the name of AutoPay, Inc.;

10
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United States v. Harold Bennie Kaeding

g.. $13,297.00 seized from NorthOne/Radius Bank account number
7160013442}rreld in the name of Voyager;

h. $34,200.00 seized from Royal Credit Union account number
4561219975 held in the name of Zoraida E. Franco:

i. $119,164.27 seized from Citibank account number 162119187 held in
the name of.Zoraida Franco;

j. $4,031.02 seized from Spire Credit Union checking account number
10100000776062he1d in the name of Voyager Shipping Corp;

k. $5,016.23 seized from Spire Credit Union savings account number
10000000776062 held in the name of Voyager Shipping Corp;.

1. $8,321.74 seized frbm Key Bank account number 776920002263 held
in the name of Ben Kaeding; and

m. $5,039.36 seized from Key Bank account number 354153030680 held
in the ndme of Ben Kaeding.

, 30. Upon conviction of the offense alleged in Count 2, as set forth in this
Ind.ictment, d.efendant shall forfeit to the United States of America, pursuant to Title

18, United States Code, Section 982(a)(1), any property, real or personal, involved in

such offense, or any property traceable to such property.

31. If any of the above-described forfeitable property is unavailable for
forfeiture, the United States intends to seek the forfeiture of substitute property as

provided for in Title 21, United States Code, Section 853(p), as incorporated by Title

28, United States Code, Section 2a6lk).

A TRUE BILL

ACTING UNITED STATES ATTORNEY FOREPERSON

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