Short Message Report — Exhibit 1, Case 4:21-cv-00110 (Document 65-1)
What This Document Is
A three-page exhibit to Kathryn Petralia's March 11, 2025 motion to dismiss (Doc. 65): a forensic "Short Message Report" export of a five-message thread from Kabbage's internal "sba-loans" Slack channel, dated April 11, 2020, produced to DOJ from American Express's files (Bates AMEX-DOJ-00031128).
Factual Summary
In the thread, Kabbage employee Pete Steger relays feedback from a CPA who reviewed a PPP application: the application asked for Box 1 of the W-3 when it "[s]hould be Box 5," and also asked for state withholding from the W-3, which the CPA said should not be included (only state unemployment). Kabbage's Syed Ashekeen responds that W-3 Box 5 is Medicare wages so he doubts the Box 1 critique, and — in the thread's most substantive message — explains Kabbage's contemporaneous reasoning for the SALT inclusion: quarterly state unemployment returns would be "prohibitively manual labor intensive" to check across 50 states (defeating automation), and the Treasury guidance's phrase "payment of state and local taxes assessed on compensation of employees" was read as state and local income taxes, "exactly what we are capturing from box 17, 19 in W-3," which is "standard for all customers" and easier to automate. He adds: "Could we be missing something? Sure. But, I'd need to know more about what the thinking was." The 23 listed channel participants are Kabbage staff; neither Petralia, Frohwein, nor Robinson appears as a message author in the excerpt.
Key Facts
- Exhibit 1 to Petralia's individual motion to dismiss (Doc. 65), filed 2025-03-11; messages dated 2020-04-11 — one week into PPP round one.
- Documents Kabbage's real-time internal reasoning behind the W-3 box 17/19 approach that produced the "SALT error" (state/local tax duplication), the defect later resolved by the $30 million SBA voluntary agreement.
- Sourced from the American Express production to DOJ (AMEX-DOJ-00031128); AmEx acquired Kabbage's core business in late 2020.
- The three individual defendants do not author any message in this thread; the exchange is among operational staff (Steger, Lee, Goel, Ashekeen).
- Date
- 2025-03-11
Cite this document
“Short Message Report — Exhibit 1, Case 4:21-cv-00110 (Document 65-1).”
Original at ecf.txed.uscourts.gov, dated 2025-03-11. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-03-11-kyc-company-litigation/
, SHA-256 c1077e77b2a10746036804913cc4092b41b1385bf00d840678ff2cf53e26ee23.Full text
Case 4:21-cv-00110-SDJ Document 65-1 Filed 03/11/25 Page 1 of 3 PageID #: 460
Exhibit 1
Case 4:21-cv-00110-SDJ Document 65-1 Filed 03/11/25 Page 2 of 3 PageID #: 461
Short Message Report
Conversations: 1 Participants: 23
Total Messages: 5 Date Range: 4/11/2020
Outline of Conversations
sba-loans - 1586619918.050100 - 2020/04/11 5 messages on 4/11/2020 _ Alfredo Jimenez - Brandon
Browning • Brandon Browning <bbrowning@kabbage.com> $ David McGowan $ James Collins $ Johnny
Render • Kaden Lee - Kaden Lee <klee@kabbage.com> Kristel Adler <kadler@kabbage.com> • Nan Siler
x
Nipun Goel • Nipun Goel <ngoel@kabbage.com> Patrick Watson - Paul Bernardini • Pete Steger • Pete
n
Steger <psteger@kabbage.com> • Russell Babb <rbabb@kabbage.com> Sam Taussig • Shaun Roberts
8
<sroberts@kabbage.com> Syed Ashekeen • Syed Ashekeen <sashekeen@kabbage.com> • Taylor
Madison Yin Li
FOIA Confidential Treatment Requested AMEX-DOJ-00031128
Case 4:21-cv-00110-SDJ Document 65-1 Filed 03/11/25 Page 3 of 3 PageID #: 462
Messages in chronological order (times are shown in GMT +00:00)
sba-loans - 1586619918.050100 - 2020/04/11
Pete Steger <psteger@kabbage.com> 4/11/2020, 3:45 PM
Feedback from a CPA - Application we did yesterday around 6p asked us for Box 1 on W3.
Should be Box 5.
Also asked for state W/H from w3 but that shouldnt be included. Only state unemployment.
Kaden Lee <klee@kabbage.com> 3:45 PM
Syed Ashekeen Nipun Goel
Nipun Goel <ngoel@kabbage.com> 3:46 PM
I'm fairly certain that's not true but will take a look
Syed Ashekeen <sashekeen@kabbage.com> 3:47 PM
W-3 box 5 is medicare wages and tips...so, highly doubt that's true. box 1 is wages, which we
asked for. On the state W/H, we'll check.
Syed Ashekeen <sashekeen@kabbage.com> 3:53 PM
You can get state and local tax from the quarterly state unemployment reports, but we opted not to
because it's prohibitively manual labor intensive to check 50 states quarterly state unemployment
return (so cant automate quickly). The treasury guidance says "payment of state and local taxes
assessed on compensation of employees". We read that as state and local income taxes because
that's on the compensation of employees that are non-bonus or fringe benefit related, which is
exactly what we are capturing from box 17, 19 in W-3 and is a lot easier (because it standard for
all customers). Could we be missing something? Sure. But, I'd need to know more about what the
thinking was.
FOIA Confidential Treatment Requested AMEX-DOJ-00031129
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- gov.uscourts.txed.204031.65.1.pdf
- Size
- 951,837 bytes
- SHA-256
- c1077e77b2a10746036804913cc4092b41b1385bf00d840678ff2cf53e26ee23
- Original
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