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UNOPPOSED MOTION FOR EXTENSION OF TIME TO FILE INTERVENTION COMPLAINT - Page 1
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
UNITED STATES OF AMERICA
ex rel. PAUL PIETSCHNER,
Plaintiff,
v.
KATHRYN PETRALIA; ROBERT
FROHWEIN; and SPENCER ROBINSON,
Defendants.
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Civil Action No.: 4:21-cv-110-SDJ
THE UNITED STATES OF AMERICA’S UNOPPOSED MOTION TO EXTEND
DEADLINE TO FILE INTERVENTION COMPLAINT
The United States of America, by and through the undersigned counsel, hereby files this
unopposed motion to extend its deadline to file its Complaint in Intervention, from November 25,
2024, through and including December 26, 2024, of the period during which the Government may
continue good faith settlement discussions with one or all Defendants. Relator Paul Pietschner
(“Relator”) has been contacted through his attorney and concurs in relief requested.
I. INTRODUCTION
This is an action filed under the qui tam provisions of the False Claims Act (“FCA”), 31
U.S.C. § 3730(b), brought by Relator on behalf of the United States against Defendants Kabbage,
Inc., Robert Frohwein, Kathryn Petralia, and Spencer Robinson. Relator filed the Complaint in
camera and under seal and served the United States Attorney’s Office on or about February 10,
2021. On August 27, 2024, the Court ordered the United States to file its Complaint in Intervention
as to Defendants Robert Frohwein, Kathryn Petralia, and Spencer Robinson by November 25,
2024. (Docket #35). The United States now respectfully requests that this Court allow a brief
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UNOPPOSED MOTION FOR EXTENSION OF TIME TO FILE INTERVENTION COMPLAINT - Page 2
thirty-day extension of time to file its Intervention Complaint, extending its deadline from
November 25, 2024 to December 26, 2024, so that the Government may continue good faith
settlement discussions with one or all Defendants. Government counsel respectfully submits that
good cause exists for the United States’ request for a brief extension of the filing deadline.
II. BACKGROUND
Relator alleges Defendants submitted and caused the submission of false claims in
connection with Paycheck Protection Program (“PPP”) loans approved and processed by
Defendant Kabbage Inc. Congress enacted the PPP as part of the Coronavirus Aid, Relief, and
Economic Security Act (“CARES Act”) to provide loans fully guaranteed by the United States
Small Business Administration (“SBA”) to eligible small businesses impacted by the coronavirus
pandemic and COVID-19. Defendant Kabbage originated and processed PPP loans on behalf of
two other PPP lenders. According to Relator, Defendant Robert Frohwein was co-founder and
CEO of Kabbage. Defendant Kathryn Petralia served as co-founder and President of Kabbage.
Defendant Spencer Robinson served as Kabbage’s Head of Strategy and was substantially
involved in Kabbage’s participation in PPP. Relator alleges each Defendant knowingly caused the
submission of fraudulent PPP loan and loan forgiveness applications.
Specifically, Relator alleges Defendants engaged in the following fraudulent conduct in
connection with PPP loans: (1) misleading borrowers as to the COVID relief money available to
them and encouraging borrowers to apply for loans even though they did not have a business or
had no intention of applying for PPP loans; (2) intentionally ignoring reports of suspicious activity
with respect to PPP loan applications; (3) submitting PPP loan applications without having
conducted the basic loan application checks, such as social security number checks, customer
identity checks, or requesting W-2s to support unverified payroll data; (4) failing to implement
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UNOPPOSED MOTION FOR EXTENSION OF TIME TO FILE INTERVENTION COMPLAINT - Page 3
Bank Secrecy Act/Anti-Money Laundering controls to verify borrowers’ banks to which PPP
funds were being sent as required by the National Automated Clearing House Association to
combat fraud; and (5) depositing funds into accounts that were not owned or controlled by eligible
business owners. As a result of Kabbage’s false certifications, Relator claims, the Government
disbursed millions of dollars in PPP loan processing fees to Kabbage and forgiveness and guaranty
payments related to the fraudulent PPP loans that it approved.
On May 7, 2024, the United States entered into a settlement with Kabbage, Inc. (now
KServicing Wind Down Corp.) to resolve allegations made by Relator on behalf of the United
States. On May 9, 2024, the United States filed its Notice of Partial Intervention for Purposes of
Settlement as to Defendant Kabbage, Inc. only. (Docket #28). Therefore, the United States and
Relator moved to dismiss Kabbage, Inc. only.
On August 26, 2024, the United States filed its Notice of Intervention, informing the court
of its intention to proceed with this qui tam action as to Defendants Robert Frohwein, Kathryn
Petralia, and Spencer Robinson. (Docket #34). On August 27, 2024, the Court entered an order,
ordering the United States to file its Complaint by November 25, 2024. (Docket #35).
III. ARGUMENT
Trial courts have broad discretion in extending filing deadlines when good cause exists.
See, e.g., Macklin v. City of New Orleans, 293 F.3d 237, 240 (5th Cir. 2002) (extending filing
deadlines for the city not a violation of the other party’s right to equal protection under the law in
the summary judgment context); Monterrosa-Flores v. Bible, 2018 WL 7291383 at *1 (W.D. Tex.
Nov. 8, 2018) (granting motion to extend deadlines in a scheduling order when good cause permits,
there is no substantial reason to deny the request, and it is in the interest of justice).
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UNOPPOSED MOTION FOR EXTENSION OF TIME TO FILE INTERVENTION COMPLAINT - Page 4
Good cause exists to briefly extend the Government’s deadline to file its Complaint in
Intervention. Certain of the defendants has recently requested the opportunity to engage in
settlement discussions. Thus far, the Government feels that the parties have made progress, and
the requested brief extension would allow these discussions to continue before suit is filed.
Granting the requested thirty-day extension will promote conservation of the court’s and the
parties’ resources and could streamline litigation by potentially eliminating any settling parties
from the case. The Government further submits that the parties will not be prejudiced by this brief
extension.
Relator does not oppose the proposed extension and concurs with the relief sought herein.
IV. CONCLUSION
WHEREFORE PREMISES CONSIDERED, the United States respectfully requests that
this Court grant this motion and enter an order extending the United States’ deadline to file its
Complaint in Intervention to December 26, 2024.
Respectfully submitted,
BRIAN M. BOYNTON
Principal Deputy Assistant Attorney General
DAMIEN M. DIGGS
United States Attorney
Eastern District of Texas
/s/ Betty Young____________
BETTY S. YOUNG, Texas Bar #24102498
Assistant U.S. Attorney
Eastern District of Texas
Texas State Bar # 24102498
110 N. College Street; Suite 700
Tyler, Texas 75702
E-mail: Betty.Young@usdoj.gov
(903) 590-1400
(903) 590-1436 (fax)
/s/_Sarah Loucks___________
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UNOPPOSED MOTION FOR EXTENSION OF TIME TO FILE INTERVENTION COMPLAINT - Page 5
JAMIE A. YAVELBERG
COLIN M. HUNTLEY
SARAH E. LOUCKS
Attorneys, Civil Division
United States Department of Justice
P.O. Box 261
Ben Franklin Station
Washington, D.C. 20044
Email: Sarah.E.Loucks@usdoj.gov
(202) 616-2921
ATTORNEYS FOR THE
UNITED STATES OF AMERICA
CERTIFICATE OF SERVICE
I hereby certify that November 22, 2024, I caused copies of the United States of America’s
Unopposed Motion to Extend Deadline to File Intervention Complaint, and proposed order, to be
served by email on:
Sarah Frazier
Law Office of Sarah Frazier, PLLC
1919 Decatur Street
Houston, TX 77007
Telephone: (346) 283-9158
sarah@sarahfrazierlaw.com
Julie Bracker
Bracker & Marcus LLC
3225 Shallowford Road, Suite 1120
Marietta, Georgia 30062
Telephone: (770) 988-5035
Facsimile: (678) 648-5544
Julie@fcacounsel.com
Because this action is under seal pursuant to 31 U.S.C. §§ 3729–3733, Defendants have
not been served with copies of the foregoing Motion.
/s/ Betty Young______
BETTY YOUNG
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UNOPPOSED MOTION FOR EXTENSION OF TIME TO FILE INTERVENTION COMPLAINT - Page 6
CERTIFICATE OF CONFERENCE
I hereby certify on the 22nd of November 2024, I complied with the meet and confer
requirements of Local Rule CV-7(h) as to Relator’s counsel, and Relator concurred in the relief
sought by this Motion. Since Defendants have not been served, Defendants were not contacted.
/s/ Betty Young______
BETTY YOUNG
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