Kabbage / K Servicing

• Type: Atlanta-based fintech small-business lender. Before the pandemic it made working-capital advances and credit lines to small businesses online.¹² During PPP: by its own account, the second-largest PPP lender by application volume.³ After American Express bought its business in October 2020, the PPP loans stayed with the remaining company, which did business as KServicing and filed for Chapter 11 in 2022.
• Legal entities: Kabbage, Inc., a Delaware corporation, which did business as KServicing after October 2020 and is now KServicing Wind Down Corp., the debtor in In re KServicing Wind Down Corp., No. 22-10951 (Bankr. D. Del.). American Express bought substantially all of its assets through Alpha Kabbage, Inc., later renamed American Express Kabbage Inc., a separate company that did not take the PPP portfolio.⁴³
• Founded: 2008 by the company's account; the House Select Subcommittee's 2022 staff report and the estate's 2025 complaint say 2009.³⁵⁶ Atlanta, Georgia. The estate's complaint names Robert ("Rob") Frohwein and Kathryn Petralia as founders, and UGA Today credits Marc Gorlin as a co-founder.⁷
• HQ: 730 Peachtree Street NE, Atlanta, Georgia 30308. Chairman Clyburn's May 27, 2021 letter was addressed to Suite 1100;⁸ the October 2022 bankruptcy petition gives Suite 470 and lists Suite 1100 as the address of American Express Kabbage Inc.⁹
• CEOs: Frohwein (co-founder to the October 2020 sale). At K Servicing, Laquisha Milner, president and CEO at the October 2022 petition; the company said no director or executive officer from before the sale remained.³ Since June 20, 2023 the estate has been run by Wind Down Officer Jeremiah Foster of Resolute Commercial Services.¹⁰¹¹¹²
• Role: Direct SBA PPP lender. It also processed and serviced PPP loans for Cross River Bank in the first round and Customers Bank in both rounds, and was program manager for Celtic Bank, the issuer of Kabbage Funding loans.³¹³ Kabbage said in June 2020, the House Select Subcommittee's report notes, that it was the direct lender for more than half its PPP volume.⁵

In the archive

• Lender page → Kabbage, Inc.
• Case: Carr v. Kabbage, Inc. d/b/a K Servicing — U.S. District Court, N.D. Ga.
• Case: Carr v. Kabbage, Inc. — U.S. District Court, N.D. Ga., No. 1:22-cv-01249
• Case: In re KServicing Wind Down Corp., et al. — U.S. Bankruptcy Court, D. Del.
• Case: KServicing Wind Down Corp. v. Frohwein — Bankr. D. Del., Adv. Pro. No. 25-52372
• Case: Pietschner v. Kabbage, Inc. — U.S. District Court, E.D. Tex., Sherman Division
• Case: United States ex rel. Berteletti v. Kabbage, Inc. — full docket, U.S. District Court, D. Mass.
• Article: How 41 Companies Handled Pandemic Layoffs
• Article: How Much Did TD Bank Make From Pandemic Relief?
• Article: How Much Did Itria Ventures Make From Pandemic Relief?
• Article: How Much Did Customers Bank Make From Pandemic Relief?
• Article: How Much Did Cross River Bank Make From Pandemic Relief?
• Article: How Much Did Womply Make From Pandemic Relief?
• Interactive: 78,257 of 283,560 first-draw borrowers matched a 2021 loan; Kabbage kept 26.1% of its own
• Interactive: Rideshare and delivery workers got PPP a year late: 40,461 loans in 2020, 409,313 in 2021
• Interactive: The lever nobody pulled in court: eight named PPP lenders, no public suit against SBA
• Interactive: The pandemic-relief machine: 50 actors, seven layers, $1.16 trillion, 15 million loans
• Interactive: Where the fee money went
• Interactive: Who delivered PPP: 11.47 million loans and $792.6 billion, lender by lender
• Profile: 1607 Strategies
• Profile: Adam Goller
• Profile: American Bankers Association / BankPac
• Profile: Beth Mueller
• Profile: Dara Khosrowshahi
• Profile: DoorDash
• Profile: Fundbox
• Profile: Gilles Gade
• Profile: Jack Dorsey
• Profile: Jay Sidhu
• Profile: Kevin Chambers
• Profile: Nicole Argentieri
• Profile: Numerated
• Profile: Phil Goldfeder
• Profile: Postmates
• Profile: Reese Howell Jr.
• Profile: Sam Bobley
• Profile: Sam Sidhu
• Profile: Sasan Goodarzi
• Profile: Square
• Profile: Stacy Cowley
• Profile: The Loan Source, Inc.
• Profile: Tony Romm
• Profile: Travis Johnson
• Profile: William H. Orrick III

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Before the pandemic (2008 – March 2020)

Kabbage lent to small businesses online. Its bankruptcy declaration says it used machine-learning algorithms and data from public profiles to shorten loan approval significantly.³ TechCrunch reported at the time of the American Express deal that the company had raised nearly $990 million in debt and equity plus more than $3.5 billion in securitizations, and was valued over $1.2 billion in its 2017 SoftBank-led round.² At the 2022 bankruptcy filing its largest shareholders were SoftBank entities (19.8 percent together), BlueRun Ventures (13.6 percent), MDV (12.1 percent) and Thomvest (11.5 percent).³ It had an office in Bangalore, India, which the relator's complaint says performed data analytics among other tasks and was laid off in the spring-2020 furloughs.¹

TechCrunch reported on August 17, 2020 that Kabbage's business was "dropping off a cliff" in February and March; the company furloughed "a significant proportion of its staff" at the end of March and shut down its credit lines for SMBs in April.² In early April, with the company projected to run out of cash by September or October, Frohwein, Petralia and Robinson cut executive pay by 20 percent, their own included, the government's complaint says.¹⁴ Kabbage's own April 2 statement dates the lending pause to Sunday, March 29.¹³ Four days before that, a March 25 update to the board listed "four potential paths forward." One was to raise about $57 million to last through 2020, and another a roll-up with Silver Lake, TPG "or others." The other two read: "Sell company (conversation with Amex thus far, others to follow)" and "Pre-package BK with DIP financing."¹⁵

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During the pandemic (March 2020 – October 2020)

What Kabbage did, March to October 2020

Kabbage paused its own lending on Sunday, March 29, 2020, and by August 8 had approved 297,587 PPP applications for $7 billion, by its own count.¹³¹⁶ Its customers had borrowed "nearly $3 billion" in all of 2019.¹⁶ The April 2 CEO statement called the switch "the logical, responsible and ethical choice," and said the government's response showed the crisis needed "at least $349 billion in SBA guarantees."¹³ Kabbage Funding loans were issued by Celtic Bank.¹³ A PPP loan carried an SBA guarantee, and the SBA paid the lender a processing fee on each loan.¹⁷

Customer programs. On March 18 Kabbage launched helpsmallbusiness.com, where consumers bought gift certificates of $15 to $500 from local businesses, with proceeds deposited through Kabbage Payments "as soon as the next business day." The release said "Kabbage will not profit."¹⁸ By March 31 it listed 14 partner companies, among them UPS, Gusto, The Hartford and Lendio, and said "hundreds" of small businesses were selling certificates.¹⁹ On April 3 Kabbage said Facebook would surface the offers in its mobile app.²⁰ Kabbage's COVID-19 page of April 3 listed state and city grant programs and gave customers a script for their members of Congress: "Allow FinTechs to work with SBA in the CARES Act."²¹ That page announced no payment deferral, fee waiver or hardship plan for existing Kabbage borrowers.²¹

The PPP ramp, as the company reported it.

New customers were 98% of approvals.¹⁶ On May 18 Frohwein said Kabbage would soon "disburse more dollars to small businesses than we did in all of 2019."²³ In June it added a pre-filled application for Uber drivers, with a $500 minimum loan, and set its $29,000 average against the SBA's $113,000.²⁵²⁶

Automation. The company's August report said more than 75% of approved applications were "processed without human intervention or manual review," and that "for every 790 employees at major U.S. banks, Kabbage has one."¹⁶ Over the same months, the House Select Subcommittee's report says, Kabbage halved its Risk and Account Review staff, from 84 in April to 42 by June.²⁷

Whose name was on the loans. Kabbage said 55% of its loans were funded directly, 23% through Customers Bancorp and 22% through Cross River Bank.²⁴ SBA's public loan data lists Kabbage, Inc. as originating lender on 161,031 first-draw loans with $3,052,727,357 in initial approvals.²⁸ By count, that is 54% of the 297,587 approvals Kabbage reported. A partner bank owed Kabbage fees too: a 2022 Customers Bancorp 8-K records about $65.5 million in previously accrued fees payable by Customers Bank to KServicing. A settlement subject to bankruptcy-court approval would cut that to $58 million, less amounts KServicing owed the bank.²⁹

Other steps. Kabbage made Juneteenth a permanent company holiday on June 18³⁰ and opened Kabbage Checking on July 22 with no monthly fees and a 1.10% APY.³¹

The sale. The October 16 closing note said Kabbage customers had accessed "over $16 billion" through its services.³² American Express's filings describe what it bought: a "recent acquisition of financial technology company Kabbage" (Q3 2020 release), "Completed the acquisition of Kabbage" among 2020 achievements (2021 proxy), and a first business checking account "in part resulting from the Kabbage technology platform" (10-K for 2021).³³³⁴³⁵ The company left behind kept lending. SBA data lists Kabbage, Inc. as originating lender on 18,787 second-draw loans for $264,365,797, nearly all approved from January to March 2021.²⁸

The March 24, 2020 OnDeck letter

Kabbage signed the fintech coalition letter, published under OnDeck's banner and on Womply's own press page, to congressional leadership asking Treasury to route "upwards of $500 billion" to small businesses through online and non-bank lenders, stating, "We seek no gain from this crisis." Frohwein and Petralia are both listed as "Co-Founder, Kabbage" in the signature block (archived letter text).

Who borrowed through Kabbage

Counting both draws, SBA's data list 179,818 loans under Kabbage's own name, and its first-draw loans were 3.1 percent of all first-draw loans dated 2020.²⁸ The loans were small. The median was $10,746, about half the program median of $20,690; 70.5 percent were under $20,000 and 77 percent reported a single job, against 46.3 and 52.5 percent across the program. Self-employed individuals and independent contractors held 62.4 percent of them, and one in five went to a Florida borrower.²⁸

The company's own tally, filed in its bankruptcy, is larger and includes the loans it processed for its two partner banks: 319,000 loans for $7.27 billion across both rounds. Of those, 122,000 ($3.05 billion) were Cross River Bank loans, 99,000 ($2.59 billion) Customers Bank loans and 97,000 ($1.62 billion) loans Kabbage made itself and pledged to the Federal Reserve's PPP Liquidity Facility.³

Kabbage described the same customers in its own terms. Its August 2020 report said about 69 percent of its PPP customers had one employee, a third of its loans went to businesses in zip codes with average household income under $50,000, and more than $1.98 billion went to businesses in low- and moderate-income areas. It estimated that the loans preserved 945,000 jobs. "Helping restore nearly one million jobs has been the greatest privilege to date for me and the entire Kabbage team," Frohwein said in the report.¹⁶ In June 2021 Kabbage's lawyers told the House Select Subcommittee, quoting New York Fed economists, that fintech lenders "likely served borrowers who would not have received loans otherwise" and that their applicants "were more likely to lack banking relationships, be minority owned, and have fewer employees."³⁶ A peer-reviewed study published in 2024 found that the most automated fintech lenders made 26.5 percent of their PPP loans to Black-owned businesses, against 3.3 percent at small banks and 6.2 percent at the four largest. It reports lender types rather than a Kabbage figure, and one of its five authors had run analytics at Kabbage.³⁷ Petralia's version, in a 2021 interview: "These large banks didn't wake up and say, 'We want as few minority-owned businesses as possible'; the system is just set up to generate that outcome, unfortunately."³⁸

The rules Kabbage worked under

Congress passed the CARES Act on March 27, 2020. SBA issued its first PPP rule on April 2, and lenders began approving loans the next day. By April 16 they had approved more than 1.66 million loans for nearly $342.3 billion. The first round's money ran out; Congress added $310 billion on April 24, and SBA reopened the program on April 27. SBA had issued 22 interim final rules by June 30, 2020.³⁹ Its FAQ reached 53 questions by December 9, 2020. They were posted on 21 different days, 39 of them in April, and three answers were later revised.⁴⁰ The loan formula for self-employed borrowers who file a Schedule C, based on 2019 net profit, came in a rule that took effect on April 20, seventeen days into lending.⁴¹

SBA's first PPP rule let lenders rely on borrowers' certifications for eligibility and on the documents borrowers supplied for the loan amount. Lenders "must comply with the applicable lender obligations set forth in this interim final rule, but will be held harmless for borrowers' failure to comply with program criteria."¹⁷ SBA's FAQ asked for "a good faith review, in a reasonable time," of a borrower's payroll calculation, said lenders "may rely on borrower representations, including with respect to amounts required to be excluded from payroll costs," and promised: "The U.S. government will not challenge lender PPP actions that conform to this guidance."⁴² SBA's Inspector General later graded the agency's rollout: "SBA's efforts to hurry capital to businesses were at the expense of controls that could have reduced the likelihood of ineligible or fraudulent business obtaining a PPP loan." About 75 percent of the lenders it surveyed said SBA's first guidance was not clear or timely; about 71 percent said the clarifying guidance that followed improved their ability to make loans.³⁹

Kabbage's bankruptcy declaration gives the company's account: "Speed was the watchword of the PPP." It counts six interim final rules and 42 FAQs in the program's first month, says officials at times asked lenders to process loans for eligible borrowers on the day they applied, and says the company "processed loan applications in good faith, in accordance with the framework established by the CARES Act, SBA's PPP implementing regulations, and the SBA's written guidance." It adds that the company "provided a lifeline to small businesses, sole proprietors, and non-employer firms that historically have had difficulty accessing capital," and that by October 2022 it had "successfully serviced" about 80 percent of the $7 billion by principal, meaning the loans had been repaid, forgiven or bought by SBA under its guaranty.³

How a Kabbage loan was sized

A PPP loan was 2.5 months of the borrower's payroll, counting no more than $100,000 of pay per person, which works out to $20,833 for a one-person business. SBA guaranteed the loan, paid the lender a processing fee of 5 percent on loans up to $350,000, and let lenders rely on the borrower's own certifications.¹⁷³ Every dollar a formula added to a small loan added five cents to the lender's fee.

Kabbage's formula took the total wages in Box 1 of a borrower's W-3 and added Boxes 17 and 19, the state and local income tax withheld from those same wages. The tax was already inside Box 1, so it was counted twice.¹⁴ David Berteletti, a Massachusetts accountant who used Kabbage's portal for two clients, did the arithmetic in the whistleblower complaint: $5,000 of wages and a 5 percent state tax became $5,250 of "gross wages."⁴³ According to the government's complaint, two employees with no payroll, accounting or tax background proposed the formula around April 6, 2020, and Spencer Robinson, the head of strategy, approved it.¹⁴ On April 8 Robinson wrote to a colleague, "i'm worried about our calcs."⁴⁴

The warnings arrived within days, the government alleges. A CPA's feedback was posted on Slack on April 11, and a Twitter post on April 12 said Kabbage was "doubling up." The company's own head of tax weighed in, a partner bank complained on April 20, and on April 24 a CPA told Frohwein and Petralia of a "huge, glaring error." The formula was not changed until after a civil investigative demand from the U.S. Attorney in Massachusetts arrived in January 2021.¹⁴⁴⁵ The government counts more than 53,000 inflated loans and more than $111 million of excess principal.¹⁴ In its 2024 Massachusetts settlement, Kabbage's estate admitted the double count and put its reach at "tens of thousands of borrowers" and at least $100 million.⁴⁵

The former executives' filings dispute what they knew. Petralia's motion to dismiss says she was not in the April 11 Slack conversation the government cites.⁴⁶ The April 24 text thread, filed by the defendants, shows Frohwein first doubting the CPA ("Doubt he's accurate - probably is just looking for biz") and minutes later telling the group, "Bottom line let's hear what he has to say." Robinson answered that "we've gone through this with council [sic]," according to Petralia's motion, and another colleague that "we've walked thru all of this with outside counsel."⁴⁷⁴⁶ Frohwein's motion says he told his team to investigate the questions raised with him and was assured there was no error.⁴⁸

The $100,000 cap was handled with a question. Kabbage asked applicants whether anyone earned more than $100,000 and, if the answer was no, went no further; it never built the per-employee check a staff member proposed, the government alleges.¹⁴ SBA's FAQ had told lenders they could rely on borrowers' representations about the pay to be excluded.⁴² On April 28, answering a question from Robinson, a data-team member wrote that the self-reported cap had been switched off in two parts of the application and "is back in now - getting a full list of impacted accounts"; the defendants cite the email as a fix made within hours.⁴⁷⁴⁹ A presentation sent to Robinson on April 29, 2020 described loans where the "correct loan amount is $20K, SBA submission for $2mm."¹⁴ In the Massachusetts settlement the estate admitted that counting pay over $100,000 raised at least 1,900 loans by at least $100 million. It also admitted that asking for IRS Form 940 figures raised more than 700 borrowers' loans by "at least several millions of dollars."⁴⁵ In May 2020, according to the estate's complaint, Robinson summed up the verification of loan amounts on Slack: "[W]e just did a poor job verifying [PPP loan amounts]. . . . [M]aybe they'll be auto forgiven."⁶

The documents give four figures for what Kabbage earned:

• "over $190 million" in processing fees on more than 310,000 applications, in the Texas settlement's recital;⁵⁰
• "over $217 million" from April to August 2020, in the government's complaint;¹⁴
• about $321 million of PPP revenue on an accrual basis, in Kabbage's June 2021 letter to Congress;³⁶
• "at least $330 million," an outside estimate that Chairman Clyburn's letter cited from the Miami Herald.⁸

Fraud controls, in the company's own records

The government alleges that on April 3, 2020 Robinson approved dropping bank-account verification to cut manual review, over an employee's warning that "there will be Soooo much fraud." It also alleges that on March 31 the head of fraud reported a 20 percent fraud rate in Kabbage's existing products against a 5 percent industry average, and on April 12 that about a quarter of incoming PPP applications looked fraudulent. Robinson did not believe the April 12 figures, the complaint says; the head of fraud was reassigned within days and then fired by Petralia.¹⁴ The estate's complaint, filed ten months later, says she resigned.⁶ For applications submitted through April 17, 2020, Kabbage ran its fraud checks after the loan had gone to SBA through the E-Tran system but before disbursement, American Express later told Congress.³⁶

American Express, answering the Subcommittee for Kabbage in July 2021, listed the checks. They included sanctions and politically-exposed-person screening; LexisNexis business and identity scores; Sentilink and Emailage synthetic-identity scores; ThreatMetrix device checks; LexisNexis criminal-history checks on owners of 20 percent or more; and, before the funds went out, knowledge-based questions that borrowers had to answer, four of six correctly. Applications that could not be cleared were to be rejected and reported to FinCEN or a partner bank. It said Kabbage's PPP fraud checks "met SBA guidance, and met a higher threshold than the regulatory requirements for Kabbage's pre-PPP lending activities."³⁶ An American Express spokesperson had earlier told ProPublica that Kabbage complied with all required fraud protocols and reported suspicious loans to SBA.⁵¹ In the estate's lawsuit, the former officers and directors point to a compliance program that predated the pandemic: a board-supervised anti-money-laundering policy, and outside audits by Treliant that in 2019 called it "robust" and "thoughtfully constructed" and rated no element "Insufficient Assurance."⁴⁹

The Subcommittee set the halving of the review team against the volume: Kabbage funded about $1.6 billion of PPP loans in May 2020, $1.5 billion in June and more than $800 million in July. It moved the work to temporary contractors, and executives discussed setting "crystal clear" contractual expectations with them "in terms of output per hour."²⁷ In late April, the report says, the chief technology officer wrote that the review process was "a wreck."⁵² Employees who finished manual reviews received about $24,675 in gift cards, from $50 to $1,400 each; American Express, answering for Kabbage, said the cards were not tied to approvals.³⁶

When Kabbage's BSA/AML officer asked Frohwein on May 15, 2020 to bring in an outside firm, he replied "go for it," the estate's complaint says, and Alvarez & Marsal was engaged on May 18. The estate says the engagement was held to about $70,000 and that Kabbage gave A&M inaccurate or incomplete documents about its fraud reviews.⁶ The report's summary said that "[o]verall, A&M observed a PPP compliance program that generally appears to be consistent with the SBA's PPP Interim Final Rules guidance and applicable BSA/AML and OFAC requirements," and that Kabbage was "in the midst of enhancing controls." Going on what management told it, A&M wrote that the company "appears to be staffed to handle the volume of applications and risk tickets that are being generated," with about six risk analysts.⁴⁷

By June 11, 2020 A&M had found that one of the ten Kabbage-approved loans it tested had failed the automated business-identity check and three of ten lacked a required document. Kabbage had funded more than 120,000 loans by then, and the consultant concluded that "[o]verall" the program complied with SBA rules.⁵³ A consultant's draft risk report, which the estate identifies as Alvarez & Marsal's, drew a different reaction. In a July 23, 2020 text thread filed by the defendants themselves, Frohwein wrote that the report "is going to kill our amex deal," that its findings were "all in red," and: "We're sending fraudulent data to the SBA. We aren't performing calculations correctly." Frohwein told the others to keep it privileged and to have the consultant "update that report and pull it back."⁵⁴⁶ The defendants say the "all in red" remark reacted to a color scheme that marked the categories A&M thought most important, not findings against Kabbage.⁴⁹

A week earlier, on July 16, a reviewer in the #ppp-fraud Slack channel wrote: "I feel like the level of fraud we're reviewing is wildly underestimated." The reviewer, uncomfortable at having to pass almost everyone, cited applications with more than 600 matching devices. A manager answered that "a fundamental difference is the risk here is not ours - it is SBAs risk." Later in the thread the reviewer posted: "Dear Secret Service, Please make sure my dog goes to a good home before I end up in prison."⁵⁴ The next day Frohwein texted a colleague, "We are set up to manage a tolerable amount of fraud, right?" The colleague wrote that the company had weighed tighter fraud rules against losses and "we've come out ahead."⁵⁴

The House report and the government's complaint quote other lines from those months. Robinson wrote on July 8: "Essentially if there is no definitive proof of fraud ... then we have to let it through."⁵⁵ Petralia told a July 2 town hall that "[a]s long as we are following all of the requirements that SBA has for this program we are not liable for that fraud. If we were negligent in our duties, failed to do the checks we were supposed to do on the identity side, then it would be us. But because we are doing everything and more than SBA requests, then that is frankly on the SBA." In October, opposing a tool to flag fraud during forgiveness, Petralia told Frohwein: "we followed the damn rules and if there is fraud the SBA can find it or not. There is no value in doing their jobs for them."¹⁴ In May 2020 Kabbage's head of policy, Sam Taussig, wrote that loans for exactly $20,833, the one-person maximum, were not suspicious "given we're serving these markets"; Kabbage had approved nearly 9,000 of them, worth more than $183 million.⁵⁶ In September Taussig wrote that SBA's rules, not Kabbage, had created the fraud.⁵⁷

The banks receiving the money noticed. On July 17, 2020 a Wells Fargo representative wrote to Kabbage about an increase in fraudulent transactions confirmed by Kabbage, "including $18MM of new transactions that were flagged yesterday." Wells Fargo asked Kabbage to move its fund transfers to another bank.⁵⁸¹⁴ In a separate chain that day, Kabbage's general counsel, L. Scott Askins, joked about one applicant: "OK you got me it was me—I'm behind little piglet soap company."⁵⁸⁶ The Little Piglet Soap Company had received a $414,375 PPP loan. Its purported owner, Ganell Tubbs of Little Rock, pleaded guilty to bank fraud and in March 2021 was sentenced to 41 months; restitution was set at $14,000 because the rest of the nearly $2 million in loans to two companies had been recovered, the Justice Department said.⁵⁹ On July 31 a Citibank fraud executive offered to send back funds still on hold from a $20,833 Kabbage loan to someone who owned no business. On September 22, writing about another loan, the same executive said the funds could no longer be held because no one at Kabbage had responded.⁵⁸

By the end of July 2020 Kabbage had filed 28 suspicious activity reports, the government alleges.¹⁴ American Express later told Congress that, because of the volume, Kabbage began filing them in batches after discussions with FinCEN.³⁶ By September 10 its legal team counted about 50 grand jury subpoenas, 15 of them in the previous few days, and an in-house lawyer called it a "subpoena tornado!"⁶ When the Miami Herald asked about PPP fraud that month, Frohwein wrote that Kabbage needed to "crush" the story. A draft response put Kabbage's rejection rate at 0.2 percent of applications, against an 11 percent average for lenders. Askins asked whether that meant "we let stuff through." American Express objected to including the figure, and it was not given to the reporter, according to the estate.⁶

Fake farms and the loans prosecutors found

ProPublica reported in May 2021 that Kabbage had processed 378 loans worth $7 million to one-person businesses that did not appear in their states' corporate records, most of them self-described farms.⁵¹ The House report's examples include "Deely Nuts," which got $20,833 in August 2020 for "tree nut farming" at an address that turned out to be a beachfront vacation rental in coastal New Jersey. Its papers implied an 82 percent gross margin, against a 13.61 percent average for farms. "Shaila Big Fresh Oranges" was an orange grove at a three-bedroom house in Minnesota, and a strawberry farm was flagged for a "fake passport" two weeks after its loan was approved. Three other purported farms, raising tomatoes, wheat and beef cattle, were confirmed fraudulent in March 2021, seven to eight months after funding, and Kabbage recovered none of the money.⁶⁰⁵⁶ SBA's data list 1,136 Kabbage loans under crop- or animal-production codes.²⁸

A 2021 study by John Griffin, Samuel Kruger and Prateek Mahajan, published in the Journal of Finance in 2023, put Kabbage among the four lenders with the highest share of sampled borrowers with criminal records, all of them fintechs.⁶¹ One of its examples is 13 Kabbage loans to businesses at a single address, 11 of them for $53,229 and 10 jobs each.⁶¹ The government's complaint describes eleven loans, all for $53,229 and each for the same 10 employees, to companies at one address in Park Forest, Illinois, formed in July or August 2020.¹⁴ Chairman Clyburn's May 2021 letter cited a Miami Herald, McClatchy and Anti-Corruption Data Collective investigation that found about 20 percent of the PPP loans it identified as suspicious had been approved by Kabbage.⁸

The same letter tied three criminal cases to Kabbage-approved loans. In one, Jean R. Lavanture (N.D.N.Y.) obtained a $1.3 million loan for a company that "existed only on paper," the letter says, and bought an 18-room Tuscan-style mansion in New Jersey and a riverfront motel outside Branson, Missouri. Lavanture pleaded guilty and was sentenced to 60 months.⁸⁶² The House report adds the May 2022 indictment of the actor who played the Red Power Ranger, whose Kabbage applications, prosecutors said, carried business names that differed across the supporting documents (United States v. Jason Lawrence Geiger, E.D. Tex. No. 4:22-cr-110).⁵ We do not have the outcome of that case. On August 19, 2026 a federal grand jury in the Northern District of Texas indicted two people over about 561 PPP loans of roughly $20,832 each, about $11 million in all, which the indictment says were built on fictitious Schedule C forms and routed through loan processors that included Kabbage.⁶³

The sale to American Express

Most of what is known about the sale comes from the two lawsuits Kabbage's estate filed in October 2025 and the internal records the defendants filed with their motions to dismiss. What the complaints say is allegation.

On March 29, 2020, the day Kabbage paused its own lending,¹³ Frohwein texted an American Express managing director that "Kabbage is positioned to make many billions ($) of loans" under the PPP.⁶⁴ American Express signed a non-disclosure agreement on April 3 and made its first offer, $450 million, on April 20, as an asset purchase that left out the PPP and older loan books.⁶⁴ Kabbage's head of data science told Frohwein the structure meant "we can say bye felicia to our outstanding bad debt."⁶ An American Express note said the "PPP book and servicing are being left behind in the entity we are not purchasing," while American Express would be able to market to those customers.⁶⁴ On June 9 Frohwein told the board a sale would "mitigate [the] risk of law suites [sic] around PPP." American Express moved to $550 million and then to $625 million plus whatever cash Kabbage held beyond what servicing required.⁶⁶⁴ Its public announcement on August 17 said: "Kabbage's pre-existing loan portfolio is not included in the purchase agreement."⁶⁵

American Express's diligence team asked about fraud. After a May 1 "Fraud Risk Deep Dive" call, Robinson texted colleagues that "it's a difficult spot for me to push back on the questions"; American Express's final readout said Kabbage's historical liability "cannot be precisely assessed."⁶⁶⁴ In early August it asked for a $62 million escrow. Frohwein reported the reply to the deal team: "I explained that if they want $62m in escrow, we want the purchase price increased by $100m."⁵⁴ The escrow settled at $37.5 million, alongside a solvency opinion for the company left behind, representation-and-warranty insurance and indemnities. Frohwein explained American Express's position to colleagues: "This is not about them saving us money. It's about separating legal liability."⁶

The solvency opinion took two tries. Houlihan Lokey, asked to leave out non-recourse assets and debt and to assume the PPP loans would be forgiven, declined the engagement on August 1, 2020; Duff & Phelps signed on August 5.⁶ Its August 11 analysis gave the company keeping the PPP book $15.85 million of cash against a $15.05 million servicing obligation and a possible $300,000 reimbursement to Mastercard, for a net asset value of $503,500.⁵⁴ It rested on management's assumptions of "Blanket Forgiveness" for loans under $150,000 and that lenders could shield themselves from liability through SBA's good-faith provisions.⁵⁴ The sensitivity case reserved $1 million for legal liabilities and $949,000 for PPP put-backs.⁵⁴ Kabbage's chief financial officer described the $1 million to deal counsel as "literally a reserve," with "no projected use of cash."⁵⁴ The complaints note that the $949,000 was less than 0.014 percent of the $7 billion Kabbage had processed.⁶

On October 13, 2020 Kabbage transferred substantially all its assets to Alpha Kabbage, including $120 million of cash earned from the PPP; the estate alleges American Express had that cash moved to itself between October 16 and 19.⁶⁶⁴ The night before closing, Cross River Bank said it would not consent, arguing the solvency opinion ignored Kabbage's contractual liabilities to it. Lawyers for Kabbage and American Express concluded Cross River had no consent right; Frohwein's words, as the complaint gives them, were "Drink ourselves to death."⁶⁴ The merger closed on October 16. Kabbage's bankruptcy schedules list the sale at $750,000,000.⁴ A press report before the announcement, citing a person familiar with the deal, said it could be worth as much as $850 million.⁶⁶

Former shareholders received $730,159,391, the estate alleges. The largest amounts went to SoftBank ($231.7 million), Reverence Capital Partners ($84.9 million), BlueRun ($66.2 million), MDV ($53.4 million) and Thomvest ($51.8 million). Frohwein received $29.9 million and Petralia $12.0 million, and each also received a $13.32 million retention bonus; retention bonuses for five officers came to $30,365,000.⁶ The company left behind kept about $17 million of cash, the PPP loans, and a license to go on using its own corporate name "until wind-down is complete."⁶⁷⁶⁸

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K Servicing (October 2020 – October 2022)

A loan servicer with fewer than a dozen employees

The company that kept the loans traded as K Servicing because, as the estate's complaint against American Express puts it, the Kabbage trademark had gone with the assets.⁶⁴ Its court filings carry the footnote: "Kabbage is a trademark of American Express used under license; Kabbage, Inc. d/b/a KServicing is not affiliated with American Express."⁶⁹ It told the House Select Subcommittee in June 2021 that it had fewer than a dozen full-time employees. One of them had worked full time on anti-money-laundering, Bank Secrecy Act or fraud compliance from October 16, 2020 until May 2021, when that person moved to American Express. After that, some staff did the work part time, alongside a contracted firm.³⁶⁷⁰ Over one 13-week stretch, the Subcommittee reported, Kabbage funded more than 50,000 loans.⁷⁰

Customers Bank signed on again for the 2021 round, and from January 2021 the two originated about $800 million of new PPP loans; Cross River Bank did not take part.⁷¹ Kabbage's counsel said at the first bankruptcy hearing that the second-round loans had been "pretty clean."⁷² In February 2021 SBA suspended Kabbage's certification as a direct PPP lender over the state and local tax double count, according to the estate's complaints, and by late March K Servicing was sending second-draw applicants to SmartBiz, CNBC reported.⁶⁷³

Forgiveness

K Servicing ran forgiveness on American Express's systems under a transition services agreement. When SBA revised the forgiveness form in early 2021, the company says, American Express refused to update the platform; it hired Biz2Credit to build a new portal, and for nearly three months borrowers could not submit forgiveness applications at all.³ American Express's answer, in a 2023 court declaration, is that it "has fulfilled all of its obligations under the TSA, and much more."⁷⁴ On May 3, 2021 Kabbage stopped sending SBA forgiveness decisions on loans hit by the tax double count, and SBA then paused forgiveness on the whole portfolio for about three months and on about 53,000 loans for five months more.⁴⁵³

In April 2021 CNBC reached a K Servicing representative working from a call center in the Philippines who had never worked for Kabbage, and found a Facebook support group for its borrowers with more than 2,000 members.⁷³ By early January 2022, the Miami Herald reported, 54 percent of the 2020 PPP loans Kabbage approved had been forgiven, against 93 percent of all 2020 loans. On some of K Servicing's customer-service calls, the paper reported, "a rooster can clearly be heard crowing repeatedly in the background." K Servicing's CEO told the Herald that a majority of its PPP loans had been forgiven.⁷³

Six borrowers sued in federal court in Atlanta in March 2022 (Carr v. Kabbage, Inc. d/b/a K Servicing). They alleged that K Servicing denied forgiveness applications and then sent borrowers a DocuSign copy of the SBA form with the requested forgiveness amount changed to "$0.00." Representatives, they said, told borrowers who lacked a requested document "to make one up," and loans still under forgiveness review were sent to collections. The complaint added that K Servicing had not joined SBA's direct borrower forgiveness portal for loans of $150,000 or less, which more than 1,400 lenders had joined.⁷⁵ Kabbage answered that SBA's own instructions required lenders to enter $0.00 when forgiveness was denied.⁷⁶ On March 31, 2023 Judge Victoria Marie Calvert dismissed the case with prejudice. The CARES Act gives borrowers no private right of action, SBA rather than the borrowers paid Kabbage's fees, and "it is illogical to conclude that compliance with SBA guidance constitutes an unfair or deceptive practice," the order says.⁷⁷ The plaintiffs did not appeal, according to the estate's wind-down officer.⁷⁸

The $30 million SBA settlement and the investigations

In October 2021 Kabbage paid SBA $30 million over the tax double count, including $12.5 million for excess forgiveness SBA had already paid on about 8,994 loans. The settlement left False Claims Act liability open, and the partner banks contributed nothing.⁴⁵³ By then the investigations had started: civil investigative demands from the U.S. Attorney in Massachusetts in January 2021 and from the Justice Department's Civil Division in June 2021, and one from the Federal Trade Commission in February 2021 about the advertising, underwriting and servicing of PPP loans.⁴⁵⁵⁰³ The Justice Department, alleging $100,000-cap and Form 940 errors, flagged about 6,200 loans, $120 million of principal, and told the company not to process them for forgiveness.³ SBA said it would not guarantee the excess amounts and had placed hold codes on the affected loans by August 11, 2022.³⁴⁵

The company spent about $19 million on professional fees for these disputes in 2022 and about $11 million on staffing firms, and fielded more than 100 subpoenas a week from borrowers' bankruptcies and other cases.³ Its partner bank had stopped paying it. Customers Bank paid about $47 million of first-round fees on time but withheld the second-round referral and servicing fees, citing Kabbage's processing failures, and Kabbage sued the bank in May 2022.⁷¹

Congress

Chairman James Clyburn of the House Select Subcommittee on the Coronavirus Crisis wrote to Frohwein on May 27, 2021, asking for six categories of documents and answers to eleven questions.⁸ Kabbage told the Subcommittee it had disbursed about $6.2 billion to about 258,000 small businesses in the first round, at a median of about $13,000, and that its PPP revenue on an accrual basis was about $321 million. It said it "has used its best efforts to follow the strictures of the CARES Act, the guidance and regulations from Treasury and the SBA, and all applicable requirements under other laws and regulations."³⁶ American Express told the Subcommittee that it "expressly did not acquire" the PPP portfolio's liabilities: "Any regulatory obligations or issues related to Kabbage's PPP loans belong solely to Kabbage."³⁶

The Subcommittee's staff report of December 1, 2022, "We Are Not the Fraud Police," gives Kabbage its own section, drawn from what the Subcommittee said were more than 83,000 pages of internal documents gathered across its fintech inquiry.⁵⁷⁹ Clyburn sent the report to SBA's Inspector General the same day, naming Kabbage among the four fintechs the investigation focused on and asking for a review of PPP lenders and agents.⁸⁰ The report's findings carry no penalty.

Kabbage answered the report the day it came out. In a statement to ProPublica it said it was proud of its role during the pandemic. "Kabbage's existing online lending platform was able to process the sudden flood of loan applications, in a timely manner, in the midst of a national crisis and in light of ever-changing federal lending rules," it said. "Kabbage adhered to the applicable rules and regulations in good faith." The statement, ProPublica reported, accused the committee of reaching a predetermined conclusion and said the report did a "disservice" to the American people.⁸¹

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Chapter 11 (October 2022 – present)

The filing

Kabbage, Inc. and five subsidiaries filed for Chapter 11 in Delaware on October 3, 2022 (Case No. 22-10951, Judge Craig T. Goldblatt).⁹ Two days earlier the Federal Reserve Bank of San Francisco, which had lent the company about $1.6 billion through its PPP Liquidity Facility, sent a notice of default; about $541 million was still outstanding at the end of September.³ The company had about $11 million of unrestricted cash, 18 full-time employees and about 163 contractors, and was servicing about 48,000 PPP loans with $1.3 billion outstanding.³ Its creditor list included about 456,000 current and former borrowers. Mailing them notice would have cost more than $500,000 in postage, so it asked to use email and notices in The New York Times and USA Today instead.³

The first-day declaration said the company "would not have participated in the PPP absent the 'minimal review'" the program required. It called the investigations "hindsight investigations and misdirected scrutiny," and said the company was using bankruptcy "to obtain a respite from having to constantly defend against the Disputes."³ At the first hearing, on October 6, the company's lawyer said it was "like a pinata almost here between all the various agencies" and called the investigations "revisionist history." Judge Goldblatt said the papers told "a compelling story" but that "I don't think any of the relief that you're asking me on the first day asks me to form a judgment on any of this."⁷² The Federal Reserve Bank's lawyer said it had "extended approximately $1.62 billion to Kabbage" and was the largest creditor. Cross River Bank's lawyer said "$750-plus million" had come into the company two years earlier and gone out to its shareholders, while "some pocket change was left behind."⁷² American Express objected to every statement about it in the first-day declaration, and the judge struck them from that day's record: "It doesn't mean it's false or that it's true."⁷²

The schedules and statement of financial affairs fill in the rest. They list the 2020 sale to American Express Kabbage Inc. at $750,000,000, and revenue of $250.1 million in 2020 and $222.7 million in 2021.⁴ Total assets were $686.2 million against scheduled liabilities of $536.7 million, almost all of it owed to the Federal Reserve Bank; the claims of the Justice Department, the FTC, SBA and the two partner banks were left "undetermined."⁶⁸ The post-sale management paid four executives retention bonuses totaling $527,250, dated September 30, 2022, three days before the petition; the court was asked to approve payments only to the non-executive employees.⁴⁸² The petition's list of the largest unsecured creditors names the Small Business Administration as "Small Business Bureau."⁹ No creditors' committee was formed; the U.S. Trustee recorded an "[i]nsufficient response."⁸³ In the order that let it use cash, KServicing admitted it owed the Reserve Bank about $536,450,940 and waived any challenge to the debt.⁸⁴

The fee fight with Customers Bank

An early contest in the case was with a bank that owed the company money. On October 27, 2022 KServicing settled with Customers Bank for $58 million against a receivable of about $65.5 million. The bank would pay about $23 million in cash, and Kabbage would keep the roughly $34 million of the bank's collections and fees it already held.⁷¹⁸⁵ Cross River Bank objected that the deal let Customers Bank keep $8 million it owed and that the bank's withholding had "starved the Debtors of needed liquidity and helped precipitate this bankruptcy." Cross River, which had prepaid Kabbage for servicing, called itself "likely the largest unsecured creditor of the Debtors."⁸⁶ The company's CEO testified that without the settlement cash it would run out of money by the end of December.⁸⁷ Judge Goldblatt approved the deal on November 7. The ruling noted that the deal let Customers Bank keep about $8 million the company said it was owed, and that "what is reasonable for someone to do when they are over a barrel may be different from what is reasonable to do in other circumstances."⁸⁷⁸⁸

The payment then became its own dispute. Customers Bank wired $20,499,683; KServicing said it was owed $23,780,786.63.⁸⁹ The bank said the company could not produce a reconciled trial balance and that its figures "camouflage a deep rot in the internal financial accounting function."⁹⁰ KServicing said it had double-counted $925,242.87 of payments to SBA on the bank's loans and repaid the amount in December.⁹¹ A January 2023 stipulation made Customers Bank solely responsible to SBA and borrowers for post-petition overpayments on its loans, with KServicing passing the bank's collections to it monthly.⁹² KServicing's claim for the $3.28 million balance was adjourned without a date and does not reappear in the filings we have.⁹²

The plan, the vote and the ten-dollar loan sale

The liquidation plan's disclosure statement estimated that the Federal Reserve Bank would recover 90.5 to 99 percent of its $536 million claim. For general unsecured creditors the recovery was "TBD," depending on "any proceeds that may be recovered on account of any Causes of Action."⁹² The chief ones concerned the sale. The company told creditors that American Express had paid about $750 million, "of which it appears approximately $668 million was paid directly to former shareholders instead of the Company."⁹² The plan kept claims against American Express, former officers and directors and former shareholders out of its releases, and its schedule of retained claims reserved those against the sale's outside advisers.⁹³⁹⁴ FT Partners, Kabbage's banker on the sale, had collected a fee "in excess of $12 million" and produced 60 documents; the court ordered it to produce the rest by March 31, 2023.⁹⁵ Cross River and Customers Bank asked to examine American Express, saying parts of their loan files had been transferred to it in 2020 "without Cross River's knowledge or consent."⁹⁶

The company's liquidation analysis projected nothing for unsecured creditors under the plan or in a Chapter 7, before any lawsuit recoveries.⁹⁷ The unsecured creditors who voted rejected the plan, 24 to 18, holding 66.3 percent of the dollars voted. The Reserve Bank voted its $536,450,940 claim to accept,⁹⁸ and the plan was confirmed on March 15, 2023.¹² The U.S. Trustee had objected that a permanent injunction for a liquidating company amounted to a discharge the Bankruptcy Code forbids.⁶⁹ Judge Goldblatt agreed, and the injunction became temporary. The letter ruling explained that "bankruptcy law will treat as a duck that which quacks like a duck."⁹⁹

On April 11, 2023 the court approved the transfer of 14,959 PPP loans pledged to the Federal Reserve, ownership and servicing both, to Lendistry SBLC, LLC. The cash purchase price was ten dollars, plus the benefit to the estate of Lendistry taking over the servicing; the Reserve Bank kept its liens.¹⁰⁰ SBA's data now list 13,815 Kabbage loans under the servicer "Lendistry-Federal Reserve Contract."²⁸

The plan took effect on June 20, 2023.¹² Jeremiah Foster of Resolute Commercial Services runs the estate as Wind Down Officer, at $30,000 a month.¹⁰¹¹ The wind-down officer's report for the quarter ending March 31, 2026 shows $16.4 million disbursed since the effective date and nothing paid on $246,770,917 of allowed general unsecured claims.¹²

Borrowers as creditors

PPP borrowers filed claims too. In September 2024 the estate objected to them on the ground that forgiveness disputes belong to SBA, a lender being "merely a processer who compiles information from the PPP Borrower." It cited the Carr dismissal for the rule that borrowers have no private right of action.¹⁰¹ On November 1, 2024 the court disallowed 168 borrower claims with stated amounts totaling $4,840,237.01, among them claims filed by three of the Carr plaintiffs.¹⁰²¹⁰³

The Juneau Group, whose connection to the case was a $2,223 PPP loan, asked for a $499,999.99 administrative claim for "TIME" it said it had sold the debtors, plus $20,833 a month. Judge Goldblatt ruled that "'time' is not a 'good' that may give rise to an administrative claim."¹⁰⁴ A claimant named Wiggins, whose two 2020 Kabbage loans went to Wiggins & Graham Enterprises ($1,828,568) and Pink Lady Line ($1,819,577), filed a $260 million "personal claim."⁷⁸ The court disallowed it in February 2024.¹⁰⁵ Both companies were on the list of sixteen entities whose records the House Select Subcommittee had asked American Express to produce first.³⁶ In January 2026 the court disallowed indemnification claims by seven individuals, because the plan rejected the company's indemnification obligations.¹⁰⁶

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The False Claims Act cases

Two whistleblowers

Two sealed False Claims Act complaints came first. David Berteletti, the Massachusetts CPA, filed in Boston in November 2020 (United States ex rel. Berteletti v. Kabbage, Inc.), alleging the tax double count.⁴³ Paul Pietschner, a legal analyst in Kabbage's Atlanta collections department who had been furloughed in March 2020 and recalled in June, filed in Sherman, Texas, in February 2021 against Kabbage, Petralia, Frohwein and Robinson (United States ex rel. Pietschner v. Kabbage, Inc.).¹ The Pietschner complaint describes a "fund now, verify later" approach, a payments-fraud reviewer with a backlog of 500 cases, and thousands of loans returned overnight as SBA duplicates in what staff called the "Wednesday Night Massacre."¹

Two settlements, May 2024

The Justice Department settled both cases with Kabbage's estate in agreements signed May 7, 2024 and announced May 13.^4550107 Neither pays cash. The Massachusetts agreement gives the United States an allowed unsecured claim of $63,294,270.43, and in it the estate admits the $100,000-cap, Form 940 and tax double-count errors.⁴⁵ The Texas agreement allows $56,705,729.57 for alleged fraud-control failures and contains no admission: the United States "contends" that Kabbage set substandard fraud thresholds, cut fraud staff and instructed staff to submit loans already flagged as fraudulent.⁵⁰ The two claims total $120,000,000, and $15.25 million of that is payable only after every other unsecured creditor has been paid in full.⁴⁵⁵⁰ The Massachusetts agreement credits the estate with the $12.5 million Kabbage had paid SBA for excess forgiveness in 2021 and commits the United States to pay Berteletti $2,343,750, the relator's 18.75 percent share of that credit.⁴⁵

DOJ's announcement added that the government alleged Kabbage knew of the errors "as early as April 2020"; that line is in the press release, not in either agreement.¹⁰⁷⁴⁵ In February 2025 the U.S. Attorney's office in Massachusetts, reporting its year's results, described "a $120 million settlement" with Kabbage as "the largest federal civil settlement involving the PPP program."¹⁰⁸ The $120 million is an allowed claim, paid only from what the estate recovers; as of December 2024 Kabbage had made no cash payment, the government's complaint says.¹⁴ The estate has also allowed SBA a $92 million claim and settled Cross River Bank's claim for $30 million, and it estimates total allowed claims at no less than $270 million. Its complaint says the Justice Department had offered in August 2023 to settle for about $212 million.⁶

The case against Frohwein, Petralia and Robinson

On December 20, 2024 the United States filed its own complaint in the Texas case against Frohwein, Petralia and Robinson; Kabbage is not a defendant.¹⁴¹⁰⁹ The 98-page complaint pleads False Claims Act presentment, false records and conspiracy, plus unjust enrichment and payment by mistake, and seeks treble damages and civil penalties of $13,946 to $27,894 per claim, with no total stated.¹⁴ It quotes the early internal view of the program. An employee called the PPP a "money making machine! . . . Plus no risk of loss," and Robinson called it revenue "that we're going to take as much of as we can." Petralia urged approvals for the value of being "the fintech that deployed more $ faster." On July 9, 2020 Frohwein asked Petralia whether donating "$10 million of our PPP fees to some cause" might help "if we're ever under the microscope on the PPP program."¹⁴ Petralia answered that "[t]he best thing we can do right now is actively and aggressively provide fraudulent applicants and recipients to the authorities," and in the following weeks told employees to report specific fraudulent borrowers to law enforcement; the complaint adds that she did not support pausing new submissions to improve fraud screening.¹⁴ The complaint says each defendant invoked the Fifth Amendment on every question about Kabbage and the PPP in sworn examinations in 2024: Robinson on April 25, Petralia on May 16 and Frohwein on June 3.¹⁴ Its claims are allegations; no court has found liability.

The defendants moved to dismiss in March 2025. They argued that SBA required only a minimal good-faith review and kept paying claims while knowing of widespread fraud, that invoking the Fifth Amendment cannot supply the detail fraud pleading requires, and that the case belongs in another district. Robinson's motion describes the tax error as an innocent mistake by two employees.¹¹⁰¹¹¹ The joint motion, using the Inspector General's counts, puts that at 71 guidance documents in 89 days and quotes the Inspector General on SBA's haste. It argues that the government knew of the tax double count from the Berteletti complaint in November 2020, yet SBA kept processing forgiveness on Kabbage's loans until after the January 2021 demand, which, the defendants say, means the errors were not material to SBA's payments. They say they invoked the Fifth Amendment while a parallel criminal investigation was open in Massachusetts, and that they "do not intend to invoke their Fifth Amendment privilege in this litigation."¹¹⁰ Frohwein's motion says he never lived or worked in Texas and that the complaint pleads "next to no facts" specific to him.⁴⁸ Petralia's says she was not directly involved in the loan calculation or the compliance systems, which the complaint places with employees reporting to Robinson, and that she passed the concerns that reached her to him. For the motion's purposes, it says, she is not relying on an advice-of-counsel defense.⁴⁶ The United States answered that it was "not at this time asking this Court to rule that any of the Defendants' Fifth Amendment invocations warrant an adverse inference."¹¹² While the motions were pending, a May 2025 scheduling order set trial for April 2027 in Plano.¹¹³ Petralia and Robinson had exchanged settlement offers with the government; no offer had passed between the government and Frohwein.¹¹⁴ In January 2026 the defendants said they would point to the involvement of Kabbage's in-house lawyers, naming Askins and two others.¹¹⁵ On March 19, 2026 Judge Sean D. Jordan stayed the whole case until the court rules on the motions to dismiss, which, the order says, "provide substantial arguments for dismissal of many, if not all, of Plaintiff's claims."¹¹⁶

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The estate's lawsuits (October 2025)

Against the founders, directors and investors

On October 16, 2025 KServicing Wind Down Corp. sued 25 defendants in the Delaware bankruptcy court (KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372). They are five former officers (Frohwein, Petralia, general counsel L. Scott Askins, Robinson and Sam Taussig, the head of global policy), six former directors, and the funds that received most of the sale money, among them SoftBank Vision Fund, Reverence Capital Partners, BlueRun, MDV and Thomvest.⁶ The 109-page complaint alleges that Kabbage "knowingly or recklessly" approved "tens of thousands of fraudulent or otherwise ineligible" loan applications to earn "tens of millions of dollars" in fees; its first-round PPP fees exceeded $217 million. The sale, in the estate's telling, sent the value to American Express and the shareholders and left the liabilities with a company that could not pay them. The counts are breach of fiduciary duty against the officers and directors, recovery of the October 13, 2020 transfer as a fraudulent transfer, and disallowance or subordination of the defendants' own claims; damages are put at "hundreds of millions of dollars."⁶ Like the government, the estate says co-founders Frohwein and Petralia and strategy head Robinson pleaded the Fifth when the Justice Department questioned them: "A reasonable inference to draw from their refusal to answer questions is that they knew."⁶ Frohwein, Petralia, Askins, Robinson and four of the directors had filed indemnification claims against the same estate; the complaint asks the court to disallow them.⁶

The defendants moved to dismiss, and on April 9, 2026 filed a joint appendix of internal records in support: board materials, text messages, the #ppp-fraud Slack thread and the Duff & Phelps solvency analysis quoted above.¹⁵⁵⁴

In a joint brief, the founders, three directors and several of the venture funds that backed Kabbage say it, "[a]nswering the government's call," became one of the largest PPP lenders under rules written "at breakneck speed," in which lenders that relied on borrowers' documents and attestations "would be held harmless for borrowers' inaccuracies." Then, "as the immediacy of the crisis passed, lawmakers reversed course." Kabbage had maintained that "the government's claims and investigations were baseless," they say, and the wind-down officer's settlements with the Justice Department, SBA and Cross River Bank are "questionable settlements" over "the government's unproven allegations."⁴⁹ On the sale, they say the October 13 transfer satisfied Kabbage's obligation to American Express, an arm's-length buyer, under the merger agreement, and was therefore made for reasonably equivalent value.⁴⁹ Askins's motion says the SBA lender form she signed on April 9, 2020 certified compliance only "[t]o the best of its knowledge," that A&M's review of the same weeks found the program consistent with the rules, and that the $1 million litigation reserve was not hers to set.¹¹⁷ Kabbage's outside counsel had answered the reserve figure with "OK. As long as there is something, and it takes into account legal spend and potential settlement cost," and the chief financial officer had written that "$1mm is a lot because we have just general reserves as well that are unallocated."⁵⁴

Against American Express

The same day the estate sued American Express Kabbage Inc. and American Express Travel Related Services Company. The 97-page complaint seeks to recover "over $746 million" as actual and constructive fraudulent transfers, to avoid American Express's release and indemnification rights under the merger agreement, and to disallow its claims against the estate.⁶⁴ It alleges American Express knew Kabbage was leaving cash only for servicing, not for litigation, and did not take the transfer in good faith.⁶⁴ The complaint does not show how the $746 million is calculated; the figures it gives are the $120 million of PPP cash and the more than $730 million paid to shareholders.⁶⁴ American Express disclosed the suit in its 2025 annual report as seeking "up to approximately $746 million." The report adds that the former directors, officers and shareholders sued in the companion case "have taken the position that we must indemnify them for any resulting liability (which we dispute)."¹¹⁸ Its quarterly report for the period ended June 30, 2026 repeats the same description.¹¹⁹

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What became of the loans

SBA's loan data, current through September 30, 2024, record a status for each loan; for 13,209 Kabbage loans the status field reads only "Exemption 4."²⁸ Forgiveness covered 62.2 percent of Kabbage's loan dollars, the lowest share among the 20 lenders with the most PPP loans; across the program it was 96.3 percent.²⁸

The same file shows who holds the loans now. Cross River Bank services 75,837 of them and Customers Bank 8,114; 13,815 sit with "Lendistry-Federal Reserve Contract," and 81,999 with a servicer the file lists as "Fed ¿ Kabbage," stray character included.²⁸

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What American Express did with the platform

American Express announced in August 2020 that it would acquire "Kabbage's team and its full suite of financial technology products";⁶⁵ its Form 10-K for 2020 reports its own PPP lending separately, at "$0.6 billion of gross PPP loans outstanding as of December 31, 2020."¹²⁰ The Kabbage Funding line of credit continued as the American Express Business Line of Credit, and in 2023 American Express retired the Kabbage brand with the launch of Business Blueprint, Finovate reported.¹²¹¹²² Frohwein stayed at American Express Kabbage as a senior vice president until December 2021. Robinson later served as American Express's chief credit officer for commercial non-card lending, from 2021 to 2023, according to the estate's complaint.³⁶⁶

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Where Kabbage doesn't appear

• SBA's December 8, 2022 statement on the House report suspended Blueacorn and Womply; it does not name Kabbage.¹²³
• The company disclosed a February 2021 civil investigative demand from the FTC about its PPP advertising, underwriting and servicing.³ We found no FTC order or complaint against Kabbage.
• The Justice Department's case against Frohwein, Petralia and Robinson is a civil False Claims Act case. We found no criminal indictment of any Kabbage executive.
• No court has ruled on the merits of the government's fraud-control allegations. The company resolved them in 2024 without an admission, and the case against the three former executives is stayed pending their motions to dismiss.⁵⁰¹¹⁶

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Current posture (as of September 2026)

• KServicing Wind Down Corp. is in liquidation under the plan confirmed on March 15, 2023, and had paid nothing to general unsecured creditors through March 2026.¹²
• The Justice Department's allowed claims can be paid only from what the estate recovers.⁴⁵⁵⁰
• The Texas case against Frohwein, Petralia and Robinson is stayed until the court rules on the motions to dismiss.¹¹⁶
• In the estate's suit against the insiders and investors, the defendants moved to dismiss in April 2026; the suit against American Express is pending.¹⁵¹¹⁹
• Frohwein and Petralia founded Keep Financial Technologies after the American Express deal;¹²⁴ Petralia's biography says Keep was sold to Apprenta.¹²⁵

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Notes

1. Qui tam complaint, United States ex rel. Pietschner v. Kabbage, Inc., No. 4:21-cv-00110 (E.D. Tex.), Doc 1 (February 5, 2021), ¶¶ 2, 7, 11, 96, 129, 136. ↩
2. TechCrunch, "Amex acquires SoftBank-backed Kabbage after tough 2020 for the SMB lender" (August 17, 2020) — original: https://techcrunch.com/2020/08/17/amex-acquires-softbank-backed-kabbage-after-tough-2020-for-the-smb-lender/ local copy ↩
3. Declaration of Deborah Rieger-Paganis in support of the Chapter 11 petitions and first-day pleadings, No. 22-10951, Doc 13 (October 4, 2022), ¶¶ 9, 11–21, 25, 28, 35–38, 41–42, 44, 46–58, 63–67, 77, 90 and nn.3, 5, 12. ↩
4. Statement of financial affairs for Kabbage, Inc., No. 22-10951, Doc 145 (October 24, 2022), questions 1, 4 and 13 (pp. 18, 45–56, 76). ↩
5. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 63, Section III.E. ↩
6. Complaint, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 1 (October 16, 2025), ¶¶ 1, 7–10, 17, 22, 34–53, 95–96, 123, 160–162, 170–171, 208–229, 237–249, 257–261, 270–288, 311, 339–358. ↩
7. Marc Gorlin, the Founder and CEO of Roadie — Named a 2021 Entrepreneur of the Year by Ernst & Young — original: https://news.uga.edu/marc-gorlin-thats-his-story/ Marc Gorlin, the Founder and CEO of Roadie — Named a 2021 Entrepreneur of the Year by Ernst & Young (stored capture) ↩
8. Chairman James E. Clyburn to Rob Frohwein, Kabbage, Inc., on fintech PPP fraud (May 27, 2021), pp. 1, 3–7 — original: https://coronavirus-democrats-oversight.house.gov/sites/evo-subsites/coronavirus-democrats-oversight.house.gov/files/2021-05-27.Clyburn%20to%20Kabbage%20re%20FinTech%20PPP%20Fraud.pdf Clyburn Letter to Kabbage CEO Frohwein (May 27, 2021) (stored capture) ↩
9. Voluntary petition, In re Kabbage, Inc. d/b/a KServicing, No. 22-10951 (Bankr. D. Del.), Doc 1 (October 3, 2022), pp. 1, 10–11. ↩
10. Debtors' memorandum in support of confirmation and omnibus reply, No. 22-10951, Dkt 637 (March 9, 2023), ¶ 79. ↩
11. Notice of executed Wind Down Agreement, No. 22-10951, Dkt 814 (May 11, 2023). ↩
12. Post-confirmation report for the quarter ending March 31, 2026 (UST Form 11-PCR), No. 22-10951, Doc 1202 (April 23, 2026), Part 3. ↩
13. Kabbage, "CEO Statement: Kabbage Funding Update" (April 2, 2020) — original: https://newsroom.kabbage.com/news/ceo-statement-kabbage-funding-update/ ↩
14. United States' complaint in intervention, United States ex rel. Pietschner v. Petralia, No. 4:21-cv-00110 (E.D. Tex.), Doc 40 (December 20, 2024), ¶¶ 56, 62, 64–66, 75, 103, 110–114, 145–146, 155–174, 206, 228–230, 256, 267–291, 306, 326, 337 and pp. 25 nn.2–3. ↩
15. Joint declaration and joint appendix of all defendants, Exhibits 1–10, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372, Doc 97-1 (April 9, 2026), ¶¶ 1–5 and Ex. 6 (board update, March 25, 2020). ↩
16. Kabbage, "Kabbage PPP Results: A Historic Feat for FinTech" (updated as of August 8, 2020), pp. 1–5 — original: https://newsroom.kabbage.com/wp-content/uploads/2020/08/Kabbage-Paycheck-Protection-Program-PPP-Report.pdf ↩
17. SBA, Paycheck Protection Program interim final rule, 85 Fed. Reg. 20811 (April 15, 2020), "What fees will lenders be paid?" ↩
18. Kabbage, "Kabbage Launches Online Hub to Help Boost Sales for U.S. Small Businesses" (March 18, 2020) — original: https://newsroom.kabbage.com/news/company/kabbage-launches-online-hub-to-help-boost-sales-for-u-s-small-businesses-impacted-by-covid-19/ ↩
19. Kabbage, "Major U.S. Companies Partner with Kabbage to Increase Sales for U.S. Small Businesses" (March 31, 2020) — original: https://newsroom.kabbage.com/news/company/major-u-s-companies-partner-with-kabbage-to-increase-sales-for-u-s-small-businesses-during-crisis/ ↩
20. Kabbage, "Kabbage Collaborates with Facebook to Help Small Businesses Sell Online Gift Certificates" (April 3, 2020) — original: https://newsroom.kabbage.com/news/kabbage-collaborates-with-facebook-to-help-small-businesses-sell-online-gift-certificates/ ↩
21. Kabbage, "Updates during the COVID-19 outbreak" (April 3, 2020) — original: https://www.kabbage.com/covid-19/ ↩
22. Kabbage, "Kabbage Partners with SBA-Authorized Bank to Deliver Paycheck Protection Program Loans to Small Businesses" (April 7, 2020) — original: https://newsroom.kabbage.com/news/kabbage-partners-with-sba-authorized-bank-to-deliver-paycheck-protection-program-loans-to-small-businesses/ ↩
23. Kabbage, "Over 110,000 Small Businesses Approved to Receive More Than $3.5 Billion" (May 18, 2020) — original: https://newsroom.kabbage.com/news/company/over-one-hundred-ten-thousand-small-businesses-approved-for-three-billion-in-ppp-funding-through-kabbage/ ↩
24. Kabbage, "Kabbage Soars to Over 209,000 Approved Paycheck Protection Program Applications for $5.8 Billion" (July 1, 2020) — original: https://newsroom.kabbage.com/news/kabbage-soars-to-over-209000-approved-paycheck-protection-program-applications-for-5-8-billion/ ↩
25. Kabbage, "Kabbage Launches a Streamlined PPP Application for Drivers and Delivery People" (June 16, 2020) — original: https://newsroom.kabbage.com/news/kabbage-launches-a-streamlined-ppp-application-for-drivers-and-delivery-people-using-uber/ ↩
26. Kabbage, "SBA PPP loan application for earners who use Uber" (June 22, 2020) — original: https://www.kabbage.com/ppp-loans-uber ↩
27. U.S. House Select Subcommittee on the Coronavirus Crisis, "We Are Not the Fraud Police" (December 1, 2022), printed p. 66, Section III.E.1.b. ↩
28. SBA PPP FOIA loan-level data, release through September 30, 2024, OriginatingLender "Kabbage, Inc." Measured 2026-09-26. ↩
29. Customers Bancorp, Form 8-K, Item 8.01, settlement and release agreement with KServicing (October 2022) — original: https://www.sec.gov/Archives/edgar/data/1488813/000148881322000100/cubi-20221027.htm ↩
30. Kabbage, "Juneteenth will forever be a holiday at Kabbage" (June 18, 2020) — original: https://newsroom.kabbage.com/news/community/juneteenth-will-forever-be-a-holiday-at-kabbage/ ↩
31. Kabbage, "Kabbage Launches Full-Service Business Checking Accounts Designed and Built for Small Businesses" (July 22, 2020) — original: https://newsroom.kabbage.com/news/kabbage-launches-kabbage-checking/ ↩
32. Kabbage, "Start Spreading the News: Kabbage Joins American Express" (October 16, 2020) — original: https://newsroom.kabbage.com/news/kabbage-to-join-american-express/ ↩
33. American Express, Q3 2020 earnings release, Form 8-K Exhibit 99.1 — original: https://www.sec.gov/Archives/edgar/data/4962/000000496220000094/q320exhibit991.htm ↩
34. American Express, 2021 proxy statement (DEF 14A) — original: https://www.sec.gov/Archives/edgar/data/4962/000119312521087284/d919404ddef14a.htm ↩
35. American Express, Form 10-K for 2021 (filed February 11, 2022), Item 1 ↩
36. House Select Subcommittee on the Coronavirus Crisis, Kabbage document production: letters from Kabbage, Inc. (June 17 and November 15, 2021), American Express (July 28 and August 9, 2021; May 20, 2022), KServicing and Cross River Bank. ↩
37. Sabrina T. Howell, Theresa Kuchler, David Snitkof, Johannes Stroebel and Jun Wong, "Lender Automation and Racial Disparities in Credit Access," The Journal of Finance, vol. 79, no. 2 (April 2024), introduction; Snitkof's earlier Kabbage role: Ocrolus author page, David Snitkof. ↩
38. Morning Consult, Claire Williams, "The Paycheck Protection Program Was Fintech's 'Moment to Shine.' That Spotlight Also Revealed the Problems With Those Loans" (November 10, 2021) — original: https://pro.morningconsult.com/articles/ppp-kabbage-fintech-lending ↩
39. SBA Office of Inspector General, "Inspection of SBA's Implementation of the Paycheck Protection Program," Report No. 21-07 (January 14, 2021), executive summary and pp. 1–2, 7, 15, 19. ↩
40. SBA and Treasury, "Paycheck Protection Program Loans: Frequently Asked Questions (FAQs)" (as of December 9, 2020), publication notes to Questions 1–53. ↩
41. SBA, interim final rule on additional eligibility criteria and requirements for certain pledges of loans, 85 Fed. Reg. 21747 (April 20, 2020), § III.1 (individuals with self-employment income who file a Form 1040, Schedule C). ↩
42. SBA and Treasury, "Paycheck Protection Program Loans: Frequently Asked Questions (FAQs)" (April 13, 2020), preamble and Question 1. ↩
43. Qui tam complaint, United States ex rel. Berteletti v. Kabbage, Inc., No. 1:20-cv-12114 (D. Mass.), Doc 1 (November 25, 2020), pp. 5, 28, 30–32. ↩
44. Joint appendix, Exhibits 11–20, Adv. No. 25-52372, Doc 97-2 (April 9, 2026), Ex. 16 (message of April 8, 2020). ↩
45. Settlement agreement among the United States, KServicing Wind Down Corp. and David Berteletti (signed May 7, 2024), Recitals F and L, ¶¶ 1–2. ↩
46. Kathryn Petralia's motion to dismiss, Pietschner, Doc 65 (March 11, 2025), Background and Argument § III.B.2–3, n.11. ↩
47. Joint appendix, Exhibits 21–30, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 97-3 (April 9, 2026): Ex. 21 (text messages, April 24, 2020), Ex. 24 (email, April 28, 2020), Ex. 30 (Alvarez & Marsal risk assessment report, June 2020). ↩
48. Robert Frohwein's motion to dismiss, Pietschner, Doc 68 (March 11, 2025), Introduction, Background § II and Argument § III.B.1–2. ↩
49. Memorandum of law of the D&O and shareholder defendants in support of their motion to dismiss, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 96 (April 9, 2026), pp. 3–4, 6, 15–17, 39–41, 47. ↩
50. Settlement agreement among the United States, the Kabbage wind-down estates and Paul Pietschner (signed May 7, 2024), Recitals B, E, L and M, ¶ 1. ↩
51. ProPublica, Derek Willis and Lydia DePillis, "An Online Lender Gave Hundreds of PPP Loans to Fake Farms. Now Congress Is Investigating." (May 28, 2021) — original: https://www.propublica.org/article/an-online-lender-gave-hundreds-of-ppp-loans-to-fake-farms-now-congress-is-investigating An Online Lender Gave Hundreds of PPP Loans to Fake Farms (stored capture) ↩
52. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 68. ↩
53. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 64. ↩
54. Joint appendix, Exhibits 31–40, Adv. No. 25-52372, Doc 97-4 (April 9, 2026): Ex. 31 (#ppp-fraud Slack channel, July 16, 2020), Exs. 32–33 (text messages, July 17 and July 23, 2020), Ex. 36 (email, August 4, 2020), Ex. 38 (emails, August 10–11, 2020), Ex. 39 (Duff & Phelps solvency analysis, August 11, 2020). ↩
55. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 67. ↩
56. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 71. ↩
57. U.S. House Select Subcommittee on the Coronavirus Crisis, staff report, "We Are Not the Fraud Police": How Fintechs Facilitated Fraud in the Paycheck Protection Program (December 1, 2022), printed pp. 18–19. ↩
58. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 69. ↩
59. U.S. Attorney's Office for the Eastern District of Arkansas, "Little Rock Woman Sentenced to 41 Months in Prison For COVID Relief Fraud" (March 12, 2021) — original: https://www.justice.gov/usao-edar/pr/little-rock-woman-sentenced-41-months-prison-covid-relief-fraud ↩
60. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 70. ↩
61. John M. Griffin, Samuel Kruger and Prateek Mahajan, "Did FinTech Lenders Facilitate PPP Fraud?" (conference version, August 13, 2021), p. 22 and Exhibit 1; published in The Journal of Finance, vol. 78, no. 3 (2023). ↩
62. U.S. Attorney's Office for the Northern District of New York, "Ulster County Man Sentenced to 60 Months for Conspiring to Commit COVID-19 Relief Fraud" (January 26, 2022) — original: https://www.justice.gov/usao-ndny/pr/ulster-county-man-sentenced-60-months-conspiring-commit-covid-19-relief-fraud ↩
63. U.S. Attorney's Office for the Northern District of Texas, "Grand jury indicts pair in $11 million pandemic relief fraud scheme" (August 21, 2026) — original: https://www.justice.gov/usao-ndtx/pr/grand-jury-indicts-pair-11-million-dollar-pandemic-relief-fraud-scheme ↩
64. Complaint, KServicing Wind Down Corp. v. American Express Kabbage Inc. and American Express Travel Related Services Company, Inc. (Bankr. D. Del., October 16, 2025; filed in the main case as Doc 1177), ¶¶ 1, 3, 14, 28, 69–72, 103–117, 175, 201, 219–221, 237–309. ↩
65. American Express, announcement of its agreement to acquire Kabbage (August 17, 2020). ↩
66. Banking Dive on the reported $850 million valuation of Kabbage (August 2020). ↩
67. First Day Hearing Presentation, No. 22-10951, Doc 64-1 (October 6, 2022), p. 8. ↩
68. Schedules of assets and liabilities for Kabbage, Inc., No. 22-10951, Doc 144 (October 24, 2022), pp. 27–28, 87. ↩
69. U.S. Trustee's limited objection to confirmation of the plan, No. 22-10951, Doc 590 (February 28, 2023), ¶ 1 and n.1. ↩
70. House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed pp. 72–73, Section III.E.3. ↩
71. Debtors' motion to approve the settlement with Customers Bank, No. 22-10951, Doc 172 (October 27, 2022), ¶¶ 11–17. ↩
72. Transcript of the first-day hearing, October 6, 2022, No. 22-10951, Doc 91, pp. 17–47. ↩
73. Press articles filed as an exhibit to the Carr complaint (Miami Herald, March 8, 2022; CNBC, April 7, 2021), Doc 1-1, pp. 18–29. ↩
74. Declaration of Regina Sorin in support of American Express's objection to the Rule 2004 motion, No. 22-10951, Doc 684 (March 15, 2023), ¶ 4. ↩
75. Class action complaint, Carr v. Kabbage, Inc. d/b/a K Servicing, No. 1:22-cv-01249 (N.D. Ga.), Doc 1 (March 30, 2022), ¶¶ 15, 106, 120, 122, 134, 189. ↩
76. Memorandum in support of Kabbage's motion to dismiss, Carr, Doc 12-1 (May 31, 2022). ↩
77. Order granting the motion to dismiss, Carr, Doc 22 (March 31, 2023), pp. 11, 13, 19. ↩
78. Declaration of Jeremiah Foster in support of claim objections, No. 22-10951, Doc 1001 (December 28, 2023), ¶¶ 10, 13–14. ↩
79. House Select Subcommittee on the Coronavirus Crisis, press release on the fintech report (December 1, 2022). ↩
80. Chairman James E. Clyburn to SBA Inspector General Hannibal Ware on the fintech report's recommendations (December 1, 2022). ↩
81. ProPublica, Ken Schwencke, "Fintechs Made 'Massive Profits' on PPP Loans and Sometimes Engaged in Fraud, House Committee Report Finds" (December 1, 2022) — original: https://www.propublica.org/article/ppp-loans-paycheck-protection-fraud-profits-report ProPublica, "Fintechs Made 'Massive Profits' on PPP Loans and Sometimes Engaged in Fraud, House Committee Report Finds" (stored capture) ↩
82. Motion to approve an employee retention program for non-executive employees, No. 22-10951, Doc 253 (November 15, 2022), ¶ 19. ↩
83. U.S. Trustee's statement that no committee of unsecured creditors has been appointed, No. 22-10951, Doc 156 (October 25, 2022). ↩
84. Final order on use of cash collateral and adequate protection, No. 22-10951, Doc 225 (November 7, 2022), ¶ D(ii). ↩
85. Settlement agreement between KServicing and Customers Bank (October 27, 2022), No. 22-10951, Doc 232-1. ↩
86. Cross River Bank's objection to the Customers Bank settlement, No. 22-10951, Doc 206 (November 4, 2022), ¶ 1 and ¶ 14 n.3. ↩
87. Transcript of the November 7, 2022 hearing and bench ruling on the Customers Bank settlement, No. 22-10951, Doc 228, pp. 34, 96–99. ↩
88. Order approving the Customers Bank settlement, No. 22-10951, Doc 232 (November 9, 2022). ↩
89. KServicing's letter to the court on the Customers Bank settlement payment, No. 22-10951, Doc 287 (November 25, 2022), p. 2. ↩
90. Customers Bank's opposition to the debtors' motion to enforce the settlement, No. 22-10951, Doc 356 (December 21, 2022), ¶ 5. ↩
91. Debtors' objection to Customers Bank's motion to compel, No. 22-10951, Doc 355 (December 21, 2022). ↩
92. Amended disclosure statement for the joint Chapter 11 plan of liquidation, No. 22-10951, Dkt 467 (January 19, 2023), § I.C, n.11, § V. ↩
93. Amended joint Chapter 11 plan of liquidation, No. 22-10951, Dkt 627 (March 9, 2023), §§ 1.102, 5.4. ↩
94. Third plan supplement, Exhibit B: revised schedule of retained causes of action, No. 22-10951, Doc 630-1 (March 9, 2023), § III. ↩
95. Debtors' Rule 2004 motion directed to Financial Technology Partners, No. 22-10951, Doc 576 (February 24, 2023); order granting the motion, Doc 658 (March 13, 2023). ↩
96. Joint motion of Cross River Bank and Customers Bank for a Rule 2004 examination of American Express Kabbage Inc., No. 22-10951, Doc 622 (March 8, 2023). ↩
97. Declaration of Deborah Rieger-Paganis in support of confirmation, with liquidation analysis, No. 22-10951, Dkt 634 (March 9, 2023). ↩
98. Declaration on the solicitation and tabulation of votes, No. 22-10951, Dkt 635 (March 9, 2023), ¶ 10. ↩
99. Letter ruling of Judge Craig T. Goldblatt on confirmation, In re KServicing Wind Down Corp., No. 22-10951 (Bankr. D. Del.), Doc 681 (March 15, 2023), p. 3. ↩
100. Order approving the loan transfer agreement with Lendistry SBLC, LLC and the Federal Reserve Bank of San Francisco, No. 22-10951, Dkt 764 (April 11, 2023); Loan Transfer Agreement, Doc 764-1, § 2.02(a). ↩
101. KServicing Wind Down Corp.'s third omnibus objection to PPP borrower claims, No. 22-10951, Doc 1053 (September 30, 2024), ¶¶ 6, 28. ↩
102. Order sustaining the third omnibus objection, No. 22-10951, Doc 1073 (November 1, 2024), Schedule 1. ↩
103. Order sustaining the fourth omnibus objection, No. 22-10951, Doc 1074 (November 1, 2024), Schedule 1. ↩
104. Order denying the Juneau Group's motion for an administrative claim, No. 22-10951, Doc 583 (February 27, 2023), p. 2; debtors' objection, Dkt 547, ¶ 7. ↩
105. Order sustaining the objection to the Wiggins claim, In re KServicing Wind Down Corp., No. 22-10951, Doc 1022 (February 2, 2024). ↩
106. Order sustaining the fifth omnibus objection to indemnification claims, No. 22-10951, Doc 1192 (January 2026). ↩
107. U.S. Department of Justice, "Kabbage Agrees to Pay Up to $120 Million to Resolve Allegations That It Defrauded the Paycheck Protection Program" (May 13, 2024) — original: 2024 05 13 Kabbage Agrees To Pay Up To 120 Million To Resolve Allegations That It D 9be0b47f (original: justice.gov · stored capture) ↩
108. U.S. Attorney's Office for the District of Massachusetts, "U.S. Attorney's Office Collects More than $60 Million in Civil and Criminal Actions in Fiscal Year 2024" (February 13, 2025) — original: https://www.justice.gov/usao-ma/pr/us-attorneys-office-collects-more-60-million-civil-and-criminal-actions-fiscal-year-2024 ↩
109. U.S. Department of Justice, "United States Joins Lawsuit Against Former Executives of Kabbage Inc. Alleging False Claims Act Violations" (December 20, 2024) — original: https://www.justice.gov/archives/opa/pr/united-states-joins-lawsuit-against-former-executives-kabbage-inc-alleging-false-claims-act U.S. Joins FCA Suit Against Former Kabbage Executives (stored capture) ↩
110. Defendants' joint motion to dismiss, Pietschner, Doc 66 (March 11, 2025). ↩
111. Spencer Robinson's motion to dismiss, Pietschner, Doc 67 (March 11, 2025). ↩
112. United States' omnibus opposition to the motions to dismiss, Pietschner, Doc 72 (April 17, 2025). ↩
113. Scheduling order, Pietschner, Doc 96 (May 30, 2025), p. 4. ↩
114. Joint Rule 26(f) conference report, Pietschner, Doc 87 (May 2, 2025), p. 10. ↩
115. Defendants' notice of an involvement-of-counsel defense, Pietschner, Doc 107 (January 16, 2026). ↩
116. Order staying the case pending rulings on the motions to dismiss, Pietschner, Doc 109 (March 19, 2026). ↩
117. Memorandum of law in support of L. Scott Askins's motion to dismiss, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 103 (April 9, 2026), pp. 6–9, 25–26. ↩
118. American Express Company, Form 10-K for 2025 (filed February 6, 2026), note on legal proceedings — original: https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/axp-20251231.htm ↩
119. American Express Company, Form 10-Q for the quarter ended June 30, 2026 (filed July 24, 2026), note on legal proceedings — original: https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/axp-20260630.htm ↩
120. American Express Company, Form 10-K for 2020 (filed February 12, 2021) — original: American Express Company Form 10-K for fiscal year 2020 (original: sec.gov · stored capture) ↩
121. Finder, "American Express Business Line of Credit Review for 2026" — original: https://www.finder.com/business-loans/american-express-business-line-of-credit-review American Express Business Line of Credit Review for 2026 (stored capture) ↩
122. Finovate, "American Express Retires the Kabbage Brand with the Launch of Business Blueprint" (2023) — original: https://finovate.com/american-express-retires-the-kabbage-brand-with-the-launch-of-business-blueprint/ local copy ↩
123. U.S. Small Business Administration, statement on the House Select Subcommittee on the Coronavirus Crisis report (December 8, 2022). ↩
124. American Banker, "Kabbage founders launch Keep". ↩
125. Kathryn Petralia, public biography (Keep, 2022–2025; sold to Apprenta). ↩

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Related profiles

• Robert Frohwein — co-founder and CEO; defendant in the U.S. and estate cases
• Kathryn Petralia — co-founder and president; defendant in the U.S. and estate cases
• L. Scott Askins — general counsel; estate defendant
• Marc Gorlin — co-founder
• Cross River Bank — first-round partner bank; objector in the bankruptcy
• Customers Bank — partner bank in both rounds; $65.5 million fee dispute
• Celtic Bank — issuer of Kabbage Funding loans
• Lendistry — took over 14,959 Federal Reserve–pledged Kabbage loans in 2023
• SmartBiz — where K Servicing sent second-draw applicants in 2021, CNBC reported
• Biz2Credit — built K Servicing's 2021 forgiveness portal, K Servicing says
• Craig T. Goldblatt — bankruptcy judge
• Sean D. Jordan — district judge in the Texas False Claims Act case
• James Clyburn — chairman of the House Select Subcommittee on the Coronavirus Crisis
• Brian M. LaMacchia, Diane Seol, Sarah E. Loucks and Alastair Gesmundo — Justice Department lawyers on the Kabbage matters
• Derek Willis and Lydia DePillis — ProPublica reporters on the fake-farm loans
• Jenny Surane and Zeke Faux — Bloomberg reporters on Kabbage's 2020 credit-line cuts
• Caitlin Mullen — Banking Dive, on the 2024 settlements
• Blueacorn, Lendio, OnDeck and BlueVine — other fintechs in the PPP record
• Betty Young — Eastern District of Texas prosecutor on the Kabbage PPP False Claims Act settlement and on the suit against three former Kabbage executives.
• LexisNexis Risk Solutions — its identity data and risk scores sat inside Kabbage's PPP onboarding.
• Stanton McManus — DOJ bankruptcy lawyer for the United States in Kabbage's Chapter 11.

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Sources

Primary documents in this archive

• Kabbage, "CEO Statement: Kabbage Funding Update" (April 2, 2020) — original: https://newsroom.kabbage.com/news/ceo-statement-kabbage-funding-update/
• Kabbage, "Kabbage PPP Results: A Historic Feat for FinTech" (updated as of August 8, 2020), pp. 1–5 — original: https://newsroom.kabbage.com/wp-content/uploads/2020/08/Kabbage-Paycheck-Protection-Program-PPP-Report.pdf
• Kabbage, "Kabbage Launches Online Hub to Help Boost Sales for U.S. Small Businesses" (March 18, 2020) — original: https://newsroom.kabbage.com/news/company/kabbage-launches-online-hub-to-help-boost-sales-for-u-s-small-businesses-impacted-by-covid-19/
• Kabbage, "Major U.S. Companies Partner with Kabbage to Increase Sales for U.S. Small Businesses" (March 31, 2020) — original: https://newsroom.kabbage.com/news/company/major-u-s-companies-partner-with-kabbage-to-increase-sales-for-u-s-small-businesses-during-crisis/
• Kabbage, "Kabbage Collaborates with Facebook to Help Small Businesses Sell Online Gift Certificates" (April 3, 2020) — original: https://newsroom.kabbage.com/news/kabbage-collaborates-with-facebook-to-help-small-businesses-sell-online-gift-certificates/
• Kabbage, "Updates during the COVID-19 outbreak" (April 3, 2020) — original: https://www.kabbage.com/covid-19/
• Kabbage, "Kabbage Partners with SBA-Authorized Bank to Deliver Paycheck Protection Program Loans to Small Businesses" (April 7, 2020) — original: https://newsroom.kabbage.com/news/kabbage-partners-with-sba-authorized-bank-to-deliver-paycheck-protection-program-loans-to-small-businesses/
• Kabbage, "Over 110,000 Small Businesses Approved to Receive More Than $3.5 Billion" (May 18, 2020) — original: https://newsroom.kabbage.com/news/company/over-one-hundred-ten-thousand-small-businesses-approved-for-three-billion-in-ppp-funding-through-kabbage/
• Kabbage, "Kabbage Soars to Over 209,000 Approved Paycheck Protection Program Applications for $5.8 Billion" (July 1, 2020) — original: https://newsroom.kabbage.com/news/kabbage-soars-to-over-209000-approved-paycheck-protection-program-applications-for-5-8-billion/
• Kabbage, "Kabbage Launches a Streamlined PPP Application for Drivers and Delivery People" (June 16, 2020) — original: https://newsroom.kabbage.com/news/kabbage-launches-a-streamlined-ppp-application-for-drivers-and-delivery-people-using-uber/
• Kabbage, "SBA PPP loan application for earners who use Uber" (June 22, 2020) — original: https://www.kabbage.com/ppp-loans-uber
• Customers Bancorp, Form 8-K, Item 8.01, settlement and release agreement with KServicing (October 2022) — original: https://www.sec.gov/Archives/edgar/data/1488813/000148881322000100/cubi-20221027.htm
• Kabbage, "Juneteenth will forever be a holiday at Kabbage" (June 18, 2020) — original: https://newsroom.kabbage.com/news/community/juneteenth-will-forever-be-a-holiday-at-kabbage/
• Kabbage, "Kabbage Launches Full-Service Business Checking Accounts Designed and Built for Small Businesses" (July 22, 2020) — original: https://newsroom.kabbage.com/news/kabbage-launches-kabbage-checking/
• Kabbage, "Start Spreading the News: Kabbage Joins American Express" (October 16, 2020) — original: https://newsroom.kabbage.com/news/kabbage-to-join-american-express/
• American Express, Q3 2020 earnings release, Form 8-K Exhibit 99.1 — original: https://www.sec.gov/Archives/edgar/data/4962/000000496220000094/q320exhibit991.htm
• American Express, 2021 proxy statement (DEF 14A) — original: https://www.sec.gov/Archives/edgar/data/4962/000119312521087284/d919404ddef14a.htm

Company, investor and press records:

• TechCrunch, "Amex acquires SoftBank-backed Kabbage after tough 2020 for the SMB lender" (August 17, 2020) — original: https://techcrunch.com/2020/08/17/amex-acquires-softbank-backed-kabbage-after-tough-2020-for-the-smb-lender/ local copy
• Banking Dive on the reported $850 million valuation of Kabbage (August 2020).
• American Express, announcement of its agreement to acquire Kabbage (August 17, 2020).
• American Express Company, Form 10-K for 2020 (filed February 12, 2021) — original: American Express Company Form 10-K for fiscal year 2020 (original: sec.gov · stored capture)
• American Express Company, Form 10-K for 2025 (filed February 6, 2026), note on legal proceedings — original: https://www.sec.gov/Archives/edgar/data/4962/000000496226000080/axp-20251231.htm
• American Express Company, Form 10-Q for the quarter ended June 30, 2026 (filed July 24, 2026), note on legal proceedings — original: https://www.sec.gov/Archives/edgar/data/4962/000000496226000322/axp-20260630.htm
• Finder, "American Express Business Line of Credit Review for 2026" — original: https://www.finder.com/business-loans/american-express-business-line-of-credit-review American Express Business Line of Credit Review for 2026 (stored capture)
• Finovate, "American Express Retires the Kabbage Brand with the Launch of Business Blueprint" (2023) — original: https://finovate.com/american-express-retires-the-kabbage-brand-with-the-launch-of-business-blueprint/ local copy
• American Banker, "Kabbage founders launch Keep".
• Marc Gorlin, the Founder and CEO of Roadie — Named a 2021 Entrepreneur of the Year by Ernst & Young — original: https://news.uga.edu/marc-gorlin-thats-his-story/ Marc Gorlin, the Founder and CEO of Roadie — Named a 2021 Entrepreneur of the Year by Ernst & Young (stored capture)
• Kathryn Petralia, public biography (Keep, 2022–2025; sold to Apprenta).
• ProPublica, Derek Willis and Lydia DePillis, "An Online Lender Gave Hundreds of PPP Loans to Fake Farms. Now Congress Is Investigating." (May 28, 2021) — original: https://www.propublica.org/article/an-online-lender-gave-hundreds-of-ppp-loans-to-fake-farms-now-congress-is-investigating An Online Lender Gave Hundreds of PPP Loans to Fake Farms (stored capture)
• John M. Griffin, Samuel Kruger and Prateek Mahajan, "Did FinTech Lenders Facilitate PPP Fraud?" (conference version, August 13, 2021), p. 22 and Exhibit 1; published in The Journal of Finance, vol. 78, no. 3 (2023).
• ProPublica, Ken Schwencke, "Fintechs Made 'Massive Profits' on PPP Loans and Sometimes Engaged in Fraud, House Committee Report Finds" (December 1, 2022) — original: https://www.propublica.org/article/ppp-loans-paycheck-protection-fraud-profits-report ProPublica, "Fintechs Made 'Massive Profits' on PPP Loans and Sometimes Engaged in Fraud, House Committee Report Finds" (stored capture)
• Morning Consult, Claire Williams, "The Paycheck Protection Program Was Fintech's 'Moment to Shine.' That Spotlight Also Revealed the Problems With Those Loans" (November 10, 2021) — original: https://pro.morningconsult.com/articles/ppp-kabbage-fintech-lending
• Sabrina T. Howell, Theresa Kuchler, David Snitkof, Johannes Stroebel and Jun Wong, "Lender Automation and Racial Disparities in Credit Access," The Journal of Finance, vol. 79, no. 2 (April 2024) — original: https://pages.stern.nyu.edu/~jstroebe/PDF/HKSSW_PPP_Minorities_JF.pdf
• Ocrolus author page, David Snitkof — original: https://www.ocrolus.com/blog/author/david-snitkof/

Congressional record:

• Chairman James E. Clyburn to Rob Frohwein, Kabbage, Inc., on fintech PPP fraud (May 27, 2021), pp. 1, 3–7 — original: https://coronavirus-democrats-oversight.house.gov/sites/evo-subsites/coronavirus-democrats-oversight.house.gov/files/2021-05-27.Clyburn%20to%20Kabbage%20re%20FinTech%20PPP%20Fraud.pdf Clyburn Letter to Kabbage CEO Frohwein (May 27, 2021) (stored capture)
• House Select Subcommittee on the Coronavirus Crisis, Kabbage document production: letters from Kabbage, Inc. (June 17 and November 15, 2021), American Express (July 28 and August 9, 2021; May 20, 2022), KServicing and Cross River Bank.
• House Select Subcommittee staff report, "We Are Not the Fraud Police" (December 1, 2022), printed p. 63, Section III.E.
• House Select Subcommittee on the Coronavirus Crisis, press release on the fintech report (December 1, 2022). The House report is a partisan staff document released by the Democratic majority's staff in the final weeks of the 117th Congress, with no public hearing and no sworn testimony; an arbitrator refused it as "rank hearsay" that relied on companies then in arbitration with Womply, and a federal judge declined to take judicial notice of its findings (about the report).
• U.S. Small Business Administration, statement on the House Select Subcommittee on the Coronavirus Crisis report (December 8, 2022).
• Chairman James E. Clyburn to SBA Inspector General Hannibal Ware on the fintech report's recommendations (December 1, 2022).

In re KServicing Wind Down Corp., No. 22-10951 (Bankr. D. Del.):

• Voluntary petition, In re Kabbage, Inc. d/b/a KServicing, No. 22-10951 (Bankr. D. Del.), Doc 1 (October 3, 2022), pp. 1, 10–11.
• Declaration of Deborah Rieger-Paganis in support of the Chapter 11 petitions and first-day pleadings, No. 22-10951, Doc 13 (October 4, 2022), ¶¶ 9, 11–21, 25, 28, 35–38, 41–42, 44, 46–58, 63–67, 77, 90 and nn.3, 5, 12.
• Transcript of the first-day hearing, October 6, 2022, No. 22-10951, Doc 91, pp. 17–47.
• First Day Hearing Presentation, No. 22-10951, Doc 64-1 (October 6, 2022), p. 8.
• Schedules of assets and liabilities for Kabbage, Inc., No. 22-10951, Doc 144 (October 24, 2022), pp. 27–28, 87.
• Statement of financial affairs for Kabbage, Inc., No. 22-10951, Doc 145 (October 24, 2022), questions 1, 4 and 13 (pp. 18, 45–56, 76).
• U.S. Trustee's statement that no committee of unsecured creditors has been appointed, No. 22-10951, Doc 156 (October 25, 2022).
• Motion to approve an employee retention program for non-executive employees, No. 22-10951, Doc 253 (November 15, 2022), ¶ 19.
• Final order on use of cash collateral and adequate protection, No. 22-10951, Doc 225 (November 7, 2022), ¶ D(ii).
• Debtors' motion to approve the settlement with Customers Bank, No. 22-10951, Doc 172 (October 27, 2022), ¶¶ 11–17.
• Settlement agreement between KServicing and Customers Bank (October 27, 2022), No. 22-10951, Doc 232-1.
• Cross River Bank's objection to the Customers Bank settlement, No. 22-10951, Doc 206 (November 4, 2022), ¶ 1 and ¶ 14 n.3.
• Transcript of the November 7, 2022 hearing and bench ruling on the Customers Bank settlement, No. 22-10951, Doc 228, pp. 34, 96–99.
• Order approving the Customers Bank settlement, No. 22-10951, Doc 232 (November 9, 2022).
• KServicing's letter to the court on the Customers Bank settlement payment, No. 22-10951, Doc 287 (November 25, 2022), p. 2.
• Customers Bank's opposition to the debtors' motion to enforce the settlement, No. 22-10951, Doc 356 (December 21, 2022), ¶ 5.
• Debtors' objection to Customers Bank's motion to compel, No. 22-10951, Doc 355 (December 21, 2022).
• Amended disclosure statement for the joint Chapter 11 plan of liquidation, No. 22-10951, Dkt 467 (January 19, 2023), § I.C, n.11, § V.
• Amended joint Chapter 11 plan of liquidation, No. 22-10951, Dkt 627 (March 9, 2023), §§ 1.102, 5.4.
• Third plan supplement, Exhibit B: revised schedule of retained causes of action, No. 22-10951, Doc 630-1 (March 9, 2023), § III.
• Debtors' Rule 2004 motion directed to Financial Technology Partners, No. 22-10951, Doc 576 (February 24, 2023); order granting the motion, Doc 658 (March 13, 2023).
• Joint motion of Cross River Bank and Customers Bank for a Rule 2004 examination of American Express Kabbage Inc., No. 22-10951, Doc 622 (March 8, 2023).
• Declaration of Regina Sorin in support of American Express's objection to the Rule 2004 motion, No. 22-10951, Doc 684 (March 15, 2023), ¶ 4.
• Declaration of Deborah Rieger-Paganis in support of confirmation, with liquidation analysis, No. 22-10951, Dkt 634 (March 9, 2023).
• Declaration on the solicitation and tabulation of votes, No. 22-10951, Dkt 635 (March 9, 2023), ¶ 10.
• Debtors' memorandum in support of confirmation and omnibus reply, No. 22-10951, Dkt 637 (March 9, 2023), ¶ 79.
• U.S. Trustee's limited objection to confirmation of the plan, No. 22-10951, Doc 590 (February 28, 2023), ¶ 1 and n.1.
• Letter ruling of Judge Craig T. Goldblatt on confirmation, In re KServicing Wind Down Corp., No. 22-10951 (Bankr. D. Del.), Doc 681 (March 15, 2023), p. 3.
• Order approving the loan transfer agreement with Lendistry SBLC, LLC and the Federal Reserve Bank of San Francisco, No. 22-10951, Dkt 764 (April 11, 2023); Loan Transfer Agreement, Doc 764-1, § 2.02(a).
• Notice of executed Wind Down Agreement, No. 22-10951, Dkt 814 (May 11, 2023).
• Post-confirmation report for the quarter ending March 31, 2026 (UST Form 11-PCR), No. 22-10951, Doc 1202 (April 23, 2026), Part 3.
• KServicing Wind Down Corp.'s third omnibus objection to PPP borrower claims, No. 22-10951, Doc 1053 (September 30, 2024), ¶¶ 6, 28.
• Order sustaining the third omnibus objection, No. 22-10951, Doc 1073 (November 1, 2024), Schedule 1.
• Order sustaining the fourth omnibus objection, No. 22-10951, Doc 1074 (November 1, 2024), Schedule 1.
• Declaration of Jeremiah Foster in support of claim objections, No. 22-10951, Doc 1001 (December 28, 2023), ¶¶ 10, 13–14.
• Order sustaining the objection to the Wiggins claim, In re KServicing Wind Down Corp., No. 22-10951, Doc 1022 (February 2, 2024).
• Order denying the Juneau Group's motion for an administrative claim, No. 22-10951, Doc 583 (February 27, 2023), p. 2; debtors' objection, Dkt 547, ¶ 7.
• Order sustaining the fifth omnibus objection to indemnification claims, No. 22-10951, Doc 1192 (January 2026).

Estate lawsuits (Bankr. D. Del.):

• Complaint, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 1 (October 16, 2025), ¶¶ 1, 7–10, 17, 22, 34–53, 95–96, 123, 160–162, 170–171, 208–229, 237–249, 257–261, 270–288, 311, 339–358.
• Complaint, KServicing Wind Down Corp. v. American Express Kabbage Inc. and American Express Travel Related Services Company, Inc. (Bankr. D. Del., October 16, 2025; filed in the main case as Doc 1177), ¶¶ 1, 3, 14, 28, 69–72, 103–117, 175, 201, 219–221, 237–309.
• Joint declaration and joint appendix of all defendants, Exhibits 1–10, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372, Doc 97-1 (April 9, 2026), ¶¶ 1–5 and Ex. 6 (board update, March 25, 2020).
• Joint appendix, Exhibits 11–20, Adv. No. 25-52372, Doc 97-2 (April 9, 2026), Ex. 16 (message of April 8, 2020).
• Joint appendix, Exhibits 21–30, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 97-3 (April 9, 2026): Ex. 21 (text messages, April 24, 2020), Ex. 24 (email, April 28, 2020), Ex. 30 (Alvarez & Marsal risk assessment report, June 2020).
• Joint appendix, Exhibits 31–40, Adv. No. 25-52372, Doc 97-4 (April 9, 2026): Ex. 31 (#ppp-fraud Slack channel, July 16, 2020), Exs. 32–33 (text messages, July 17 and July 23, 2020), Ex. 36 (email, August 4, 2020), Ex. 38 (emails, August 10–11, 2020), Ex. 39 (Duff & Phelps solvency analysis, August 11, 2020).
• Memorandum of law of the D&O and shareholder defendants in support of their motion to dismiss, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 96 (April 9, 2026), pp. 3–4, 6, 15–17, 39–41, 47.
• Memorandum of law in support of L. Scott Askins's motion to dismiss, KServicing Wind Down Corp. v. Frohwein, Adv. No. 25-52372 (Bankr. D. Del.), Doc 103 (April 9, 2026), pp. 6–9, 25–26.

False Claims Act cases:

• Qui tam complaint, United States ex rel. Berteletti v. Kabbage, Inc., No. 1:20-cv-12114 (D. Mass.), Doc 1 (November 25, 2020), pp. 5, 28, 30–32.
• Qui tam complaint, United States ex rel. Pietschner v. Kabbage, Inc., No. 4:21-cv-00110 (E.D. Tex.), Doc 1 (February 5, 2021), ¶¶ 2, 7, 11, 96, 129, 136.
• Settlement agreement among the United States, KServicing Wind Down Corp. and David Berteletti (signed May 7, 2024), Recitals F and L, ¶¶ 1–2.
• Settlement agreement among the United States, the Kabbage wind-down estates and Paul Pietschner (signed May 7, 2024), Recitals B, E, L and M, ¶ 1.
• U.S. Department of Justice, "Kabbage Agrees to Pay Up to $120 Million to Resolve Allegations That It Defrauded the Paycheck Protection Program" (May 13, 2024) — original: https://www.justice.gov/usao-ma/pr/kabbage-agrees-pay-120-million-resolve-allegations-it-defrauded-paycheck-protection local copy
• United States' complaint in intervention, United States ex rel. Pietschner v. Petralia, No. 4:21-cv-00110 (E.D. Tex.), Doc 40 (December 20, 2024), ¶¶ 56, 62, 64–66, 75, 103, 110–114, 145–146, 155–174, 206, 228–230, 256, 267–291, 306, 326, 337 and pp. 25 nn.2–3.
• U.S. Attorney's Office for the District of Massachusetts, "U.S. Attorney's Office Collects More than $60 Million in Civil and Criminal Actions in Fiscal Year 2024" (February 13, 2025) — original: https://www.justice.gov/usao-ma/pr/us-attorneys-office-collects-more-60-million-civil-and-criminal-actions-fiscal-year-2024
• U.S. Department of Justice, "United States Joins Lawsuit Against Former Executives of Kabbage Inc. Alleging False Claims Act Violations" (December 20, 2024) — original: https://www.justice.gov/archives/opa/pr/united-states-joins-lawsuit-against-former-executives-kabbage-inc-alleging-false-claims-act DOJ 2024 12 20 U.S. Intervenes Kabbage Executives Fca (stored capture)
• Defendants' joint motion to dismiss, Pietschner, Doc 66 (March 11, 2025).
• Kathryn Petralia's motion to dismiss, Pietschner, Doc 65 (March 11, 2025).
• Robert Frohwein's motion to dismiss, Pietschner, Doc 68 (March 11, 2025).
• Spencer Robinson's motion to dismiss, Pietschner, Doc 67 (March 11, 2025).
• United States' omnibus opposition to the motions to dismiss, Pietschner, Doc 72 (April 17, 2025).
• Joint Rule 26(f) conference report, Pietschner, Doc 87 (May 2, 2025), p. 10.
• Scheduling order, Pietschner, Doc 96 (May 30, 2025), p. 4.
• Defendants' notice of an involvement-of-counsel defense, Pietschner, Doc 107 (January 16, 2026).
• Order staying the case pending rulings on the motions to dismiss, Pietschner, Doc 109 (March 19, 2026).

Borrower litigation:

• Class action complaint, Carr v. Kabbage, Inc. d/b/a K Servicing, No. 1:22-cv-01249 (N.D. Ga.), Doc 1 (March 30, 2022), ¶¶ 15, 106, 120, 122, 134, 189.
• Press articles filed as an exhibit to the Carr complaint (Miami Herald, March 8, 2022; CNBC, April 7, 2021), Doc 1-1, pp. 18–29.
• Memorandum in support of Kabbage's motion to dismiss, Carr, Doc 12-1 (May 31, 2022).
• Order granting the motion to dismiss, Carr, Doc 22 (March 31, 2023), pp. 11, 13, 19.

Prosecutions:

• U.S. Attorney's Office for the Northern District of New York, "Ulster County Man Sentenced to 60 Months for Conspiring to Commit COVID-19 Relief Fraud" (January 26, 2022) — original: https://www.justice.gov/usao-ndny/pr/ulster-county-man-sentenced-60-months-conspiring-commit-covid-19-relief-fraud
• U.S. Attorney's Office for the Eastern District of Arkansas, "Little Rock Woman Sentenced to 41 Months in Prison For COVID Relief Fraud" (March 12, 2021) — original: https://www.justice.gov/usao-edar/pr/little-rock-woman-sentenced-41-months-prison-covid-relief-fraud
• U.S. Attorney's Office for the Northern District of Texas, "Grand jury indicts pair in $11 million pandemic relief fraud scheme" (August 21, 2026) — original: https://www.justice.gov/usao-ndtx/pr/grand-jury-indicts-pair-11-million-dollar-pandemic-relief-fraud-scheme

External references:

• SBA, Paycheck Protection Program interim final rule, 85 Fed. Reg. 20811 (April 15, 2020)
• SBA and Treasury, "Paycheck Protection Program Loans: Frequently Asked Questions (FAQs)" (April 13, 2020)
• SBA and Treasury, "Paycheck Protection Program Loans: Frequently Asked Questions (FAQs)" (as of December 9, 2020)
• SBA, interim final rule on additional eligibility criteria and requirements for certain pledges of loans, 85 Fed. Reg. 21747 (April 20, 2020)
• SBA Office of Inspector General, "Inspection of SBA's Implementation of the Paycheck Protection Program," Report No. 21-07 (January 14, 2021)
• OnDeck letter to Congress Mar. 24, 2020, the coalition letter published under OnDeck's banner — original: OnDeck letter to Congress Mar. 24, 2020 (original: ondeck.com) Fintech Coalition Letter to Congress (March 24, 2020)
• SBA PPP loan-level data: SBA PPP FOIA loan-level data, release through September 30, 2024.