EDEN PRAIRIE, Minn. — An Eden Prairie family is suspected of stealing $504,000 from the U.S. government by obtaining fraudulent business loans through the Paycheck Protection Program.
Harold B. Kaeding, his wife, Zoraida Franco, and their adult son Ben Kaeding were named in a civil forfeiture filed last week in U.S. District Court in Minnesota. The government already has seized an SUV and some $223,000 from 10 bank accounts, which prosecutors say are connected to wire fraud.
No related criminal charges appeared in a search Thursday of the federal court’s records system.
According to the civil filing, the three applied for at least seven PPP loans starting in April 2020, soon after the coronavirus business relief program became law.
Ben Kaeding received the first $47,000 after claiming he owned Harbor Holdings Corp., which purportedly had four employees. But IRS and state records showed the company had no record of paying taxes or wages to any employee last year, and the quarterly tax return he included in his application never was filed with the IRS.
On May 13, Franco applied for, and later received, $215,000 on behalf of Harbor Corp., again using fraudulent tax documentation, the filing alleges.
And on May 21, Franco applied for a $242,000 loan on behalf of AutoPay, Inc., submitting tax and bank records prosecutors say were fraudulent.
The three loans were approved by Royal Credit Union, Sunrise Bank and BlueVine Capital, respectively.
The filing states that Benjamin Kaeding and Franco each applied for at least two additional PPP loans, which either were denied or were initially funded but later recalled because the bank suspected fraud.
In a brief phone conversation Thursday, Franco denied stealing any money and declined to answer questions about receiving PPP loans. Ben Kaeding could not be reached.
In March 2020, just before his son filed the first PPP loan application, Harold Kaeding sued the IRS in search of an $8,465 refund for overpaying his 2013 taxes.
According to his complaint, Kaeding didn’t file his 2013 return until 2017. He was suing because the IRS had denied his refund because the three-year statute of limitations had expired.
Kaeding voluntarily dismissed the lawsuit in July. Court records don’t indicate whether he ever received the refund.