Regulators in Minnesota found a hot piece of evidence in an alleged fraud case against a father and son insurance team in a cool place – their refrigerator.

The Minnesota Department of Commerce has charged Duane and Douglas Wolff, owners and operators of Wolff Agency Inc. of Duluth, Minn., with allegedly misappropriating, withholding or converting $3.3 million in funds in the course of running their agency. The pair is scheduled to answer to the allegations at a hearing April 9.

An investigation by the commerce department found that the pair allegedly failed to repay premium loans and/or return premium refunds of more than $2.3 million to Universal Premium Finance Corp. (UPFC). The department alleges that the agency used UPFC as the financing company for clients who paid in installments rather than one lump sum.

Between Jan. 9, 2008, and May 20, 2009, the Wolff Agency allegedly issued 69 checks to UPFC, totaling about $350,000. Those checks were subsequently returned for non-sufficient funds, Minnesota regulators said.

In November 2007, the Wolff Agency allegedly submitted a financing agreement on behalf of one of its customers to First Insurance Funding Corp. (FIFC), which forwarded the funds to the Wolff Agency. The commerce department, however, alleges that no premium was paid to the insurer and no money was returned to FIFC. The agency entered into a promissory note with the financing company for $329,810 to repay the funds forwarded to it, but defaulted on the note, officials said.

Two years earlier, the Wolff Agency obtained two lines of credit, totaling $700,000, from Beacon Bank in Duluth. The agency withdrew “substantial funds” from the lines of credit, regulators said, then defaulted on the loans. As a result of a judgment obtained by the bank this January, all of the Wolff Agency’s assets have been turned over to the bank, which is running the agency.

Last June, when an investigator from the Minnesota Department of Commerce visited the Wolff Agency, Duane Wolff said he did not know what happened to a particular file the investigator sought. When Beacon Bank took control of the agency, bank representatives found the file in Duane Wolff’s refrigerator, according to the department.