Pietschner v. Kabbage, Inc. — U.S. District Court, E.D. Tex., Sherman Division

Case summary

Pietschner v. Kabbage, Inc., No. 4:21-cv-00110 in the U.S. District Court for the Eastern District of Texas, began as a qui tam complaint filed February 5, 2021 by relator Paul Pietschner against Kabbage, Inc. and its executives Kathryn Petralia, Robert Frohwein and Spencer Robinson under the federal False Claims Act, 31 U.S.C. §§ 3729 et seq. The United States filed a complaint in intervention against the three individual defendants, seeking treble damages and civil penalties under the False Claims Act and damages for unjust enrichment and payment by mistake over Paycheck Protection Program loans originated and facilitated by Kabbage. The defendants moved to dismiss on March 11, 2025, and on March 19, 2026 the court granted their joint motion to stay discovery pending resolution of those motions.

Case at a glance

What does the United States allege?

That under the direction and control of the defendants, Kabbage knowingly inflated the loan amounts of tens of thousands of PPP loans by systematically double-counting employees' state and local taxes and by including annual per-employee compensation above $100,000 in calculating borrowers' average monthly payroll, contrary to statute and SBA regulations. These are the complaint's allegations.

Why was discovery stayed?

The order of March 19, 2026 states that the court found good cause, noting that jurisdictional issues should be determined early and that the question of personal jurisdiction was before it, while also noting that a discovery stay is the exception rather than the rule.

What is the status?

The case is pending as of March 19, 2026; the charges are allegations.

Summary written from the documents on this page; every sentence is sourced.