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Paul J. Nathanson Davis Polk & Wardwell LLP CONFIDENTIAL
901 15th Street, NW
paul.nathanson@davispolk.com Washington DC 20005
davispolk.com
June 17, 2021
Re: May 27, 2021 Document and Information Request
The Honorable James E. Clyburn
U.S. House of Representatives
274 Cannon House Office Building
Washington, DC 20515
cc: The Honorable Steve Scalise
U.S. House of Representatives
2049 Rayburn House Office Building
Washington, DC 20515
Dear Chairman Clyburn,
On behalf of our client, Kabbage, Inc. (“Kabbage” or the “Company”), we are responding to the
Select Subcommittee’s May 27, 2021 Letter concerning the Paycheck Protection Program (“PPP”).
Kabbage understands and appreciates the Select Subcommittee’s oversight role and looks forward to
working with the Select Subcommittee to address its questions.
The pandemic has been a reckoning for small businesses and the very fabric of our financial
system in America. The smallest, most vulnerable businesses often struggle to receive adequate financial
services in the best of times, and during the pandemic, FinTechs were, and continue to be, uniquely
positioned to best service this segment of the American economy. To that end, Kabbage served a critical
segment of the small business market in the first round of the PPP. The Company disbursed approximately
$6.2 billion in loans for approximately 258,000 small businesses in round one of the PPP. The vast majority
of those loans were under $50,000. Overall, Kabbage’s PPP loan average during this time was
approximately $24,000 and its median loan was approximately $13,000. Approximately one third of loans in
this time period went to businesses in zip codes with an average household income of less than $50,000.
As economists at the Federal Reserve Bank of New York recently confirmed, FinTech lenders overall “likely
served borrowers who would not have received loans otherwise.” “Applicants who approached fintech
lenders for PPP loans were more likely to lack banking relationships, be minority owned, and have fewer
employees,” and “a higher share of applications by Black-owned businesses were approved by fintech
lenders as compared to firms with white, Asian, or Hispanic owners.”1
Moreover, as will be evident through the Company’s responses to your Letter, throughout the
Program, Kabbage 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.
* * *
1 Jessica Battisto, Nathan Godin, Claire Kramer Mills, and Asani Sarkar, “Who Received PPP Loans by Fintech Lenders?,” Federal Reserve Bank of New
York Liberty Street Economics, May 27, 2021, https://libertystreeteconomics.newyorkfed.org/2021/05/who-received-ppp-loans-by-fintech-lenders.html.
CONFIDENTIAL
By way of background, and as previously discussed with your Staff, Kabbage, which today does
business as K Servicing, is now a very different company than it was during the first round of the PPP. In
October 2020, Kabbage closed a series of transactions that resulted in the sale of substantially all of its
assets to American Express Company. Most Kabbage employees became American Express employees,
and substantially all of Kabbage’s data, documents, and systems were transferred to American Express as
part of the transaction. American Express also obtained all rights to use the Kabbage name. Kabbage
retained its PPP business, but the data, documents, and systems supporting that business are now
primarily held by American Express. Today, Kabbage has fewer than a dozen full-time employees, and has
limited contractual use of data and systems now held by American Express in order to service and
administer the PPP portfolio, including to conduct forgiveness-related activities. Accordingly, the
transformation of the Company and its limited resources may complicate its ability to respond to the Select
Subcommittee’s requests. Nonetheless, the Company is fully committed to providing the Select
Subcommittee all responsive documents and information in its possession, custody, or control.
* * *
Kabbage addresses below certain document and information requests as well as certain requests
for written responses. For those requests that are not addressed below, Kabbage anticipates being able to
provide responses on a rolling basis within the next 90 days.
Document and Information Requests
Kabbage is producing herewith copies of the Company’s Enterprise Bank Secrecy Act / Anti-Money
Laundering (“BSA/AML”) and Office of Foreign Assets Control Policy, and Kabbage’s Paycheck Protection
Program BSA/AML and Fraud Procedures as an initial response to Requests 1, 2 and 4 at
KAB_SUBC_0000000001 through KAB_SUBC_0000000085. Kabbage intends to further respond to the
these requests on a rolling basis, and additional responsive documents or information, to the extent they
exist and are within the Company’s possession, custody, or control, will be provided in future productions.
Kabbage is also producing herewith the completed SBA Form 3507 and supporting documentation
in response to Request 6 at KAB_SUBC_0000000086 through KAB_SUBC_0000000099.
Written Response Requests
Kabbage’s responses to the Select Subcommittee’s requests are below.
1. How much is Kabbage’s total revenue from facilitating PPP loans to date?
Consistent with the CARES Act requirements, lenders receive a statutory fee that is a percentage of
the PPP loan amount at the time of disbursement.
To date, Kabbage’s total revenue, on an accrual basis, from facilitating PPP loans is approximately
$321 million.
4. How many Kabbage employees have been dedicated full time and exclusively to AML, BSA,
or fraud compliance, including those employed full time to prevent, detect, or investigate
potential fraud, broken down by week, from January 2019 to the present?
Kabbage does not have information in its possession, custody, or control sufficient to provide a
comprehensive response to Request 4, in particular with respect to the period of time pre-dating the
October 2020 transaction with American Express. To the best of the Company’s knowledge, one Kabbage
employee was dedicated full time and exclusively to AML, BSA, or fraud compliance from October 16, 2020
to May 2021, at which point this employee was transferred to American Express. There are currently no
June 17, 2021 2
CONFIDENTIAL
Kabbage employees that are dedicated full time exclusively to AML, BSA, or fraud compliance. The
Company has contracted, however, with a third-party firm to provide such services, and a number of
Kabbage employees dedicate significant time to AML, BSA, and anti-fraud-related activities in addition to
other responsibilities.
10. Please provide a detailed description of how your company recruited PPP loan applicants,
including marketing strategies and advertising plans.
Kabbage predominantly advertised, marketed, and promoted its PPP Program through its website,
https://www.kservicing.com/, and through https://www.kabbage.com/, which domain is now owned and
operated by American Express. Kabbage has also directed traffic to its website through search engine
optimization. Additionally, Kabbage has marketed its PPP Program through the use of its Twitter account,
@KabbageInc. Finally, Kabbage engaged a number of referral partners who used additional methods for
marketing the PPP Program, including email outreach, homepage banners, and social media posts. The
individuals who managed those relationships and who may be able to provide additional responsive
information are no longer employees of the Company and may be employed by American Express.
11. Please provide a detailed description of any incentives or rewards provided to Kabbage
employees processing PPP loan applications, including monetary bonuses and non-
monetary rewards.
Kabbage does not have information in its possession, custody, or control sufficient to provide a
comprehensive response to Request 11, in particular with respect to the period of time pre-dating the
October 2020 transaction with American Express. To the best of the Company’s knowledge, during the
period following the American Express transaction, Kabbage has not provided any incentives or rewards to
Kabbage employees processing PPP loan applications, including with respect to monetary bonuses and
non-monetary rewards.
* * *
This response, including the information set forth in this letter and in the documents being produced
herewith, is submitted solely for the use of the Select Subcommittee in connection with the above-
referenced investigation. Because this response contains confidential business information, the disclosure
of which could violate proprietary rights, constitute an invasion of personal privacy, or grant competitors of
Kabbage an unfair advantage, we request confidential treatment to the fullest extent possible for this letter
and the accompanying documents. We further request that the Select Subcommittee (1) refuse to grant
third-party requests for access to the information contained here; (2) notify Kabbage, by undersigned
counsel, of any requests by any person, agency or entity to review, copy or otherwise obtain the information
contained here; and (3) provide Kabbage with an opportunity to substantiate its claims of confidentiality
before any such information may be released. If you have any questions, please do not hesitate to contact
me at or the email address provided above.
Very truly yours,
/s/ Paul J. Nathanson
Paul J. Nathanson
Enclosures (by Secure File Transfer)
June 17, 2021 3
TELEPHONE: 1-212-558-4000
125 Broad Street
FACSIMILE: 1-212-558-3588
WWW SULLCROM.COM New York, New York 10004-2498
______________________
LOS ANGELES • PALO ALTO • WASHINGTON, D.C.
BRUSSELS • FRANKFURT • LONDON • PARIS
BEIJING • HONG KONG • TOKYO
MELBOURNE • SYDNEY
July 28, 2021
CONFIDENTIAL TREATMENT REQUESTED
Via E-mail and FTP
The Honorable James E. Clyburn, Chairman
Select Subcommittee on the Coronavirus Crisis,
2157 Rayburn House Office Building,
Washington, D.C. 20515-6143.
Re: May 27, 2021 Letter Concerning Kabbage, Inc.’s Paycheck Protection
Program
Dear Chairman Clyburn,
I write on behalf of our client, American Express Travel Related Services
Company, Inc. (“American Express”), in connection with your May 27, 2021 letter (the “Letter”)
to Mr. Rob Frohwein, former Chief Executive Officer of Kabbage, Inc. (“Kabbage”), regarding
Kabbage’s Paycheck Protection Program (“PPP”). We are sending you via secure file transfer
production volume AMEX-SSCC-003, containing documents bearing production control numbers
AMEX-SSCC-00001682–2129. In addition, we set forth below responses to Information Request
Nos. 2, 5, 6, and 8 and Request for Documents Nos. 1 and 2. Unless otherwise noted, American
Express’s responses in this letter relate to Kabbage’s business activities until October 16, 2020,
when American Express acquired Kabbage’s general lending platform and certain related assets
and liabilities from Kabbage (the “Acquisition”). The Acquisition did not include Kabbage’s
historical loan portfolio and its loan servicing operations, including its Paycheck Protection
Program portfolio and servicing obligations, which were retained by Kabbage (doing business as
K Servicing since the closing of the Acquisition). American Express generally does not possess
information regarding the post-Acquisition business activities of Kabbage.
As discussed most recently on our July 2, 2021 call, American Express will
continue to search for and provide responsive materials to the extent these materials are in its
possession, custody, or control and readily accessible.
* * *
CONFIDENTIAL TREATMENT REQUESTED
Interrogatory No. 2: How many PPP loan applications and loans have been approved, issued,
or otherwise facilitated by Kabbage, broken down by week, from April 2020 to the present?
Response to Interrogatory No. 2:
Figure 1 below reflects the number and aggregate amount of completed PPP
applications that were processed by Kabbage (including on behalf of Kabbage’s PPP bank
partners, Customers Bank and Cross River Bank) and submitted to the SBA, and for which the
SBA returned a PPP loan number, during round 1 of the PPP. The chart does not include
applications that were never submitted to the SBA. Such applications may include, for example,
those for which the applicants did not provide all required information, or for which Kabbage
identified an issue with the application such as indications of fraud. The chart also does not include
applications that were submitted to the SBA but for which Kabbage never received a PPP loan
number due to a rejection from the SBA or a bank partner, or a submission error.
The loans included in Figure 1 were not necessarily dispersed. After submission to
the SBA and assignment of a PPP loan number, PPP loans could have been canceled by the SBA,
Kabbage, or Kabbage’s PPP bank partners (for example, if duplicate loans for the same applicant
were identified, or due to fraud or other eligibility checks), or abandoned by applicants. Figure 2
below reflects the number and aggregate amount of completed PPP applications that were
processed by Kabbage (including on behalf of its PPP bank partners), submitted to the SBA and
for which the SBA returned a PPP loan number, and for which funds were ultimately dispersed to
borrowers during round 1.
-2-
CONFIDENTIAL TREATMENT REQUESTED
Response to Interrogatory Nos. 5, 6, and 8:
American Express is providing an overview of Kabbage’s fraud-related checks and
suspicious activity reporting, based on discussions with employees and certain Kabbage policy
documents. The controls and processes discussed herein are also described in detail in various
documents that were produced to you on July 9, 2021 and in the enclosed production file, including
Kabbage’s Overview of Paycheck Protection Program BSA/AML Procedures (previously
produced as AMEX-SSCC-00000820–33) and BSA/AML and OFAC Policy (AMEX-SSCC-
00001708–28).
PPP Fraud-Related Checks
Applicants were required to complete Kabbage’s PPP application online, after
creating a user account. Applicants were also required to submit all supporting documentation for
PPP applications online. After a PPP loan applicant completed Kabbage’s PPP application and
submitted it to Kabbage, application information was automatically uploaded to Kabbage’s
internal systems.4
For submitted applications, Kabbage had automated checks for eligibility based on
whether the applicant had a prohibited business type and the SBA’s eligibility criteria (as
determined by applicants’ responses to eligibility questions in the PPP application). For eligible
applicants, Kabbage ran certain automated fraud checks, which included the following and could
result in manual review5 of an application and requests for further documentation from the
applicant:
Checks against Office of Foreign Assets Control (“OFAC”) sanctions
lists and lists of politically exposed persons (“PEPs”) using a tool called
GIACT. Applications that potentially matched to OFAC and PEP lists were
flagged for further review by Kabbage’s Application Review team. If the
match was determined to be a true hit, Kabbage’s policy was to report it to
Kabbage’s PPP bank partners and/or the OFAC hotline within 10 days.
However, American Express understands that no true hits were identified.
If the match was determined to be a false positive, Kabbage’s policy was
for the application to move forward in the application process (the next
stage of which was payroll verification to calculate the loan amount for
which the applicant was eligible).
Know Your Customer/Know Your Business (“KYC/KYB”) checks
conducted through LexisNexis to verify the existence of the relevant
business applying for a PPP loan and validate the information provided
about the business. LexisNexis provided verification scores for the business
applicant, the authorized representative, and up to five ultimate beneficial
owners who owned 20% or more of the relevant business. Applications
4
See AMEX-SSCC-00002042 for further detail about the PPP application flow.
5
Manual review also may have been required if an application could not be processed automatically, separately
from automated fraud checks.
-5-
CONFIDENTIAL TREATMENT REQUESTED
with a verification score below a certain threshold were rejected.
Specifically:
o If the LexisNexis Business Verification Index (“BVI”) score or
Customer Verification Index (“CVI”) score was greater than or
equal to 40, the application was permitted to move forward in the
application process.
o Applications with a BVI of less than 40 but greater than 20 were
subject to additional KYC/KYB checks through a tool called
CLEAR. If the business’s CLEAR score was greater than 70, the
application was permitted to move forward in the application
process. If the CLEAR score was less than or equal to 70, the
application was flagged for further review by Kabbage’s Account
Review team.
o Applications with a CVI score less than or equal to 30 (or less than
or equal to 20 prior to April 24, 2020) were flagged for further
review by the Account Review team.
o Applications with a BVI score of 20 or 30 and a CVI score equal to
30 (or 20 prior to April 24, 2020) were flagged for further review.
Such applications first went through Sentilink and Emailage checks,
described further below. If an application’s scores for both Sentilink
and Emailage were medium or low, the application was able to move
forward in the application process.
o If either the Sentilink or Emailage score was very high or high, the
application was flagged for further review by the Account Review
team.
o If an application’s BVI and CVI were 0 to 10, the application was
flagged for further review by the Account Review team.
o If an application failed Kabbage’s checks after a manual review by
the Application Review team, Kabbage rejected the application.
o For manual application reviews, if LexisNexis data was not
available, Kabbage used a tool called TLO that provides business,
personal, and social media records for KYC/KYB.
Checks for a synthetic identity using Sentilink and Emailage. Sentilink is
a tool used to identify fabricated or manipulated identities. Emailage is a
tool used to identify suspicious email addresses, for example email
addresses used to commit fraud in the past or recently created (potentially
for the purpose of obtaining a PPP loan). If either Sentilink or Emailage
returned a high score for a synthetic identity, Kabbage’s Fraud Review team
would further review the application. Kabbage permitted the application to
-6-
CONFIDENTIAL TREATMENT REQUESTED
move forward in the application process while under review by the Fraud
Review team, but PPP funds could not be disbursed to the applicant unless
a Fraud Review team member reviewed and cleared the flag on the
application.
Checks through ThreatMatrix (provided by LexisNexis) of an applicant’s
digital identity (based on device information, IP address, and email
address). Kabbage used ThreatMatrix to create a profile for each device
used to apply for a PPP loan. If Kabbage detected multiple applications
originating from the same device, or if a device was linked to another
application that previously had been flagged as suspicious, all applications
associated with that device would be escalated for manual review. If
Threatmetrix results indicated that the device had been associated with other
applicants with a high Emailage or Sentilink score, Kabbage’s Fraud
Review team would further review the associated applications.
Checks to identify falsified documents. Kabbage used Inscribe specifically
for manual application reviews to identify electronic documents that may
have been falsified, for example because they were manually edited or
modified.6
Beginning in July 2020, a required manual review for PPP applications
for loan amounts greater than $150,000.
Beginning in August 2020, checks for fraudulent documentation used
OCR technology. Kabbage used OCR to extract information from certain
supporting tax documentation submitted with PPP loan applications.
Kabbage implemented checks to detect, for example, if multiple
applications were submitted with similar copies of Form 1040C
(specifically if Box 7 and Box 31 of one application matched another) or
W-3 (specifically if Box 1 and Box 3 or Box 5 of one application matched
another), or if Kabbage detected a pattern of similar applications based on
which fields were left blank or the formatting of Form 1040C or W-3. Such
applications would be escalated for manual review.
More detail is provided about the scoring and other factors taken into account by
the checks above in Kabbage’s Overview of Paycheck Protection Program BSA/AML Procedures.
These fraud-related checks were rolled out or enhanced over the course of round 1 of the PPP. For
all applications submitted on or prior to April 17, 2020, these checks were completed after
submission to the SBA through E-Tran but prior to loan disbursement. After that point, the checks
were conducted prior to submission through E-Tran.
6
American Express understands that Inscribe was also used for this purpose for certain batch uploads of payroll
documents performed early in the PPP test the optimal use of Inscribe.
-7-
CONFIDENTIAL TREATMENT REQUESTED
Kabbage also conducted criminal history checks using LexisNexis RiskView on
any authorized representatives or any owners with 20% or greater interest in the business to
identify any criminal history in the prior five years, which would render an applicant ineligible
under the SBA’s rules. These checks were run before submission of an application to the SBA
through E-Tran. If a potential criminal history were identified, a flag would be placed on the
application to stop it from proceeding, if the SBA provided a loan number for the application. If
the criminal history was confirmed following secondary checks, Kabbage would cancel the PPP
loan application.
As noted above, following fraud checks, applications may have been flagged for
manual review and would have needed to be cleared before continuing in the application process.
In some cases, Kabbage might need to request further documentation before resolving the issue.
If the applicant submitted sufficient documentation to resolve the issues, the applicant could
resume the application process. If the issues with the applications could not be resolved,
Kabbage’s policy was to reject the application and file a suspicious activity report (“SAR”) with
FinCEN and/or a questionable activity report (“QAR”) with a bank partner (which might then file
a SAR), as discussed further below.
In addition, further identity verification was required for all PPP loan recipients in
order to complete the PPP loan guarantee. Kabbage conducted Knowledge-Based Authentication
(“KBA”). When logging into Kabbage’s PPP dashboard, if Kabbage detected a login from a
device other than the one used to create the account, the customer was required to complete multi-
factor authentication. In addition, applicants were required to complete the guarantee using
DocuSign in order to obtain the PPP funds. To complete the DocuSign process, applicants had to
answer four or more of six KBA questions. This check was intended to prevent individuals using
a stolen identity to obtain PPP loan disbursements from completing the DocuSign process. If a
customer was not able to answer the KBA questions after three attempts, the issue was escalated
to the Account Review team for further review.
American Express is working to obtain additional information in response to
Interrogatory No. 8, specifically regarding applications rejected by Kabbage (also responsive to
Interrogatory No. 3) and applications escalated for manual review.
Non-PPP Fraud-Related Checks
American Express understands that Kabbage’s fraud checks implemented for the
PPP met SBA guidance, and met a higher threshold than the regulatory requirements for Kabbage’s
pre-PPP lending activities. Accordingly, although Kabbage conducted KYC/KYB for non-PPP
customers, it implemented higher thresholds for KYC/KYB for PPP applicants. For example, for
non-PPP customers, the applicable thresholds for KYC/KYB before requiring Emailage and
Sentilink checks were a CVI greater than or equal to 30 and BVI greater than or equal to 20. As
described above, these thresholds were increased for the PPP. In addition, KYC/KYB
requirements were applied to pre-PPP ultimate beneficial owners with a 25% or greater ownership
interest in a loan applicant; for the PPP, such requirements applied to beneficial owners with 20%
or greater ownership of a business.7 Kabbage’s risk rating process also differed for the PPP.
7
See AMEX-SSCC-00001708 at -20.
-8-
CONFIDENTIAL TREATMENT REQUESTED
Kabbage had a customer risk rating methodology for non-PPP products used at the time of on-
boarding based on four factors: entity type, industry type, geographic location, and marketing
channel.8 For the PPP, rather than using these four factors to determine customer risk ratings,
Kabbage relied on LexisNexis risk scores and, depending upon the score, escalated applications
for manual review or used additional risk scoring tools as described above. As to device checks,
Kabbage stopped PPP applications from any suspicious device, as described above, but for non-
PPP customers only blocked onboarding for devices linked to known previous fraudulent activity.
Kabbage also conducted Emailage checks on the front end of the application for the PPP, whereas
such checks were conducted later in the onboarding process for non-PPP customers. The checks
for applications with similar documents using OCR and the required manual review of applications
for loan amounts greater than $150,000 were implemented specifically for the PPP.
PPP SAR Filing Process
American Express provides additional information regarding Kabbage’s SAR filing
process for suspicious PPP applications and loans. This information provides additional context
for the process of addressing and reporting fraud in the PPP and Request for Documents No. 2,
which seeks “[a]ll documents and policies related to: (a) any system of preventive controls that
Kabbage has used to deter and minimize fraud related to PPP loans; and (b) any system of detective
controls Kabbage had in place to identify and respond to PPP loan fraud after it had occurred.”
For any applications that were processed on behalf of a PPP bank partner, Kabbage
submitted a QAR to the bank if it identified an application as suspicious. Kabbage also file SARs
with FinCEN, in line with its obligations as a PPP lender. Initially, Kabbage filed individual SARs
for each PPP application or loan identified as suspicious. Due to the volume of such issues,
following discussions with FinCEN, Kabbage began filing SARs in batches addressing a
population of applications or loans identified with similar indications of fraud, such as applications
originating from suspicious devices. These batch SARs included rejected applications, pre-
disbursement approved applications, and loans that had been disbursed and later identified as
suspicious based on new information. In addition to filing a SAR, if Kabbage learned about fraud
or suspicious activity after a loan had been disbursed, Kabbage’s practice was to cooperate with
any law enforcement requests and to file a request through its Financial Operations team with the
relevant recipient bank to recall the PPP funds.
* * *
Request for Documents No. 1: All documents and policies establishing or governing the process
that Kabbage used to review and approve PPP loan applications.
Request for Documents No. 2: All documents and policies related to: (a) any system of
preventive controls that Kabbage has used to deter and minimize fraud related to PPP loans; and
(b) any system of detective controls Kabbage had in place to identify and respond to PPP loan
fraud after it had occurred.
8
See AMEX-SSCC-00001708 at -24–25.
-9-
CONFIDENTIAL TREATMENT REQUESTED
Supplemental Response to Request for Documents Nos. 1 & 2:
As a supplement to American Express’s July 9, 2021 production, the enclosed
production volume includes additional policies and procedures concerning the topics identified in
Request for Documents Nos. 1 and 2, bearing production control numbers AMEX-SSCC-
00001682–2129. These documents were identified based on a review of centrally available
materials provided by Kabbage to American Express in connection with the Acquisition.
American Express will supplement this production if additional responsive materials are identified
from other sources.
* * *
American Express continues to collect information and documents responsive to
the Subcommittee’s Letter and will produce additional responsive materials to you on a rolling
basis.
* * *
The information in this letter and in the enclosed production includes confidential
business and financial information that American Express considers proprietary and competitively
sensitive, and that American Express actually and customarily treats as private. Disclosure of such
information would harm American Express and undermine the competitive financial marketplace.
These materials are labeled as “Confidential Treatment Requested,” and American Express
respectfully requests that these materials be treated as confidential under all applicable House and
Subcommittee rules. If the Subcommittee should nonetheless consider publicly releasing such
materials, American Express respectfully requests that it be given advance notice and an
opportunity to discuss the matter with you, so that American Express may explain the basis for
objecting to public release. Such treatment would be consistent with the respect for sensitive and
proprietary business information the Subcommittee has shown in the past.
Additionally, this information and American Express’s productions to the
Subcommittee may contain material nonpublic information. Pursuant to the Stop Trading on
Congressional Knowledge Act of 2012 (“STOCK Act”), Pub. L. 112-105, 126 Stat. 291, non-
public information derived from a person’s position as a Member of Congress or employee of
Congress or gained from the performance of such person’s official responsibilities may not be used
as a means for making a private profit. Misuse of such information, including unauthorized
disclosures to third parties outside of the Congress, may also give rise to liability under the
securities laws, including section 10(b) of the Securities Exchange Act of 1934 and Rule 10b–5
thereunder.
If this letter or any of the enclosed materials become the subject of a request for
public release, please contact me at , and we will provide further information in
support of American Express’s request for confidential treatment.
Sincerely,
/s/ Amanda Flug Davidoff
Amanda Flug Davidoff
-10-
TELEPHONE: 1-212-558-4000
125 Broad Street
FACSIMILE: 1-212-558-3588
WWW.SULLCROM.COM New York, New York 10004-2498
______________________
LOS ANGELES • PALO ALTO • WASHINGTON, D.C.
BRUSSELS • FRANKFURT • LONDON • PARIS
BEIJING • HONG KONG • TOKYO
MELBOURNE • SYDNEY
August 9, 2021
CONFIDENTIAL TREATMENT REQUESTED
Via E-mail
The Honorable James E. Clyburn, Chairman
Select Subcommittee on the Coronavirus Crisis,
2157 Rayburn House Office Building,
Washington, D.C. 20515-6143.
Re: May 27, 2021 Letter Concerning Kabbage, Inc.’s Paycheck Protection
Program
Dear Chairman Clyburn,
I write on behalf of our client, American Express Travel Related Services
Company, Inc. (“American Express”), in connection with your May 27, 2021 letter (the “Letter”)
to Mr. Rob Frohwein, former Chief Executive Officer of Kabbage, Inc. (“Kabbage”), regarding
Kabbage’s Paycheck Protection Program (“PPP”). We set forth below responses to Information
Request Nos. 4 and 11. Unless otherwise noted, American Express’s responses in this letter relate
to Kabbage’s business activities until October 16, 2020, when American Express acquired
Kabbage’s general lending platform and certain related assets and liabilities from Kabbage (the
“Acquisition”). The Acquisition did not include Kabbage’s historical loan portfolio and its loan
servicing operations, including its Paycheck Protection Program portfolio and servicing
obligations, which were retained by Kabbage (doing business as K Servicing since the closing of
the Acquisition). American Express generally does not possess information regarding the post-
Acquisition business activities of Kabbage.
As discussed most recently on our July 2, 2021 call, American Express will
continue to search for and provide responsive materials to the extent these materials are in its
possession, custody, or control and readily accessible.
* * *
CONFIDENTIAL TREATMENT REQUESTED
PPP applications who completed the manual review of a packet of approximately 50 applications
on a weekend day. Gift cards were offered to both salaried employees and employees paid by the
hour. Gift cards were awarded for completing manual application reviews and was not based on
approving applications. Such incentives were not offered for completing KYB/KYC or fraud-
related reviews, which were handled by separate teams, as described above. In total, Kabbage
distributed approximately $24,675 in gift cards ranging in value from $50 to $1,400. Some
employees received more than one gift card during that time period.
* * *
American Express continues to collect information and documents responsive to
the Subcommittee’s Letter and will produce additional responsive materials to you on a rolling
basis.
* * *
The information in this letter and in the enclosed production includes confidential
business and financial information that American Express considers proprietary and competitively
sensitive, and that American Express actually and customarily treats as private. Disclosure of such
information would harm American Express and undermine the competitive financial marketplace.
These materials are labeled as “Confidential Treatment Requested,” and American Express
respectfully requests that these materials be treated as confidential under all applicable House and
Subcommittee rules. If the Subcommittee should nonetheless consider publicly releasing such
materials, American Express respectfully requests that it be given advance notice and an
opportunity to discuss the matter with you, so that American Express may explain the basis for
objecting to public release. Such treatment would be consistent with the respect for sensitive and
proprietary business information the Subcommittee has shown in the past.
Additionally, this information and American Express’s productions to the
Subcommittee may contain material nonpublic information. Pursuant to the Stop Trading on
Congressional Knowledge Act of 2012 (“STOCK Act”), Pub. L. 112-105, 126 Stat. 291, non-
public information derived from a person’s position as a Member of Congress or employee of
Congress or gained from the performance of such person’s official responsibilities may not be used
as a means for making a private profit. Misuse of such information, including unauthorized
disclosures to third parties outside of the Congress, may also give rise to liability under the
securities laws, including section 10(b) of the Securities Exchange Act of 1934 and Rule 10b–5
thereunder.
If this letter or any of the enclosed materials become the subject of a request for
public release, please contact me at , and we will provide further information in
support of American Express’s request for confidential treatment.
Sincerely,
/s/ Amanda Flug Davidoff
Amanda Flug Davidoff
-4-
Paul J. Nathanson Davis Polk & Wardwell LLP CONFIDENTIAL
901 15th Street, NW
paul.nathanson@davispolk.com Washington DC 20005
davispolk.com
November 15, 2021
Re: May 27, 2021 Document and Information Request
The Honorable James E. Clyburn
U.S. House of Representatives
274 Cannon House Office Building
Washington, DC 20515
cc: The Honorable Steve Scalise
U.S. House of Representatives
2049 Rayburn House Office Building
Washington, DC 20515
Dear Chairman Clyburn,
On behalf of our client, Kabbage, Inc. (“Kabbage” or the “Company”), we are responding to the
Select Subcommittee’s May 27, 2021 Letter concerning the Paycheck Protection Program (“PPP”).
Kabbage addresses below certain requests for written responses. The Company is continuing to work
diligently to prepare a response to Request 7, and we will produce responsive information as soon as it is
available.
* * *
Written Response Requests
9. Please provide a detailed description of Kabbage’s relationship with any non-bank or bank
partners involved in PPP loans, including the name of each entity, revenue sharing and
liability sharing agreements.
Kabbage had two PPP lending partners: Customers Bank and Cross River Bank. Kabbage
provided certain PPP loan-related services as an SBA-approved lender service provider of Customers Bank
and Cross River Bank in connection with the PPP, including marketing, processing, and servicing PPP
loans funded and issued by Customers Bank and Cross River Bank. Customers Bank and Cross River
Bank have also purchased certain PPP loans originated by Kabbage. In addition, Kabbage customized its
lending platform for Customers Bank and Cross River Bank in order to support their PPP lending programs.
With respect to revenue sharing agreements, Kabbage was entitled to receive certain one-time fees
under its agreements with Customers Bank and Cross River Bank as compensation for the services that it
provided with respect to the PPP loans that it processed and serviced on their behalf. These fees included
“Agent Fees,” as set forth in the CARES Act and Economic Aid Act, and software as a service, or SaaS,
fees. The fees were typically calculated as a percentage of the amount of the underlying loan being
processed or serviced by Kabbage, or as a percentage of the associated loan processing fees. In addition,
with respect to the loans that Customers Bank purchased from Kabbage, Kabbage was obligated under its
agreements with Customers Bank to pay a portion of any loan processing fees that it received from the SBA
CONFIDENTIAL
in connection with the purchased loans to Customers Bank, which, depending on the amount of the
underlying loan, was typically calculated as either a percentage of the associated loan processing fees or a
percentage of the undisbursed principal balance of the purchased loan.
With respect to liability sharing agreements, Kabbage entered into certain agreements with
Customers Bank and Cross River Bank related to the PPP, which, among other things, allocate certain
liabilities between the parties and identify the circumstances under which the parties would indemnify one
another with respect to certain liabilities arising under those agreements.
* * *
This response, including the information set forth in this letter, is submitted solely for the use of the
Select Subcommittee in connection with the above-referenced investigation. Because this response
contains confidential business information, the disclosure of which could violate proprietary rights, constitute
an invasion of personal privacy, or grant competitors of Kabbage an unfair advantage, we request
confidential treatment for this letter to the fullest extent possible. We further request that the Select
Subcommittee (1) refuse to grant third-party requests for access to the information contained here; (2) notify
Kabbage, by undersigned counsel, of any requests by any person, agency or entity to review, copy or
otherwise obtain the information contained here; and (3) provide Kabbage with an opportunity to
substantiate its claims of confidentiality before any such information may be released. If you have any
questions, please do not hesitate to contact me at or the email address provided above.
Very truly yours,
/s/ Paul J. Nathanson
Paul J. Nathanson
November 15, 2021 2
TELEPHONE: 1-212-558-4000
125 Broad Street
FACSIMILE: 1-212-558-3588
WWW.SULLCROM.COM New York, New York 10004-2498
______________________
LOS ANGELES • PALO ALTO • WASHINGTON, D.C.
BRUSSELS • FRANKFURT • LONDON • PARIS
BEIJING • HONG KONG • TOKYO
MELBOURNE • SYDNEY
May 20, 2022
CONFIDENTIAL TREATMENT REQUESTED
Via E-mail and FTP
The Honorable James E. Clyburn, Chairman
Select Subcommittee on the Coronavirus Crisis,
2157 Rayburn House Office Building,
Washington, D.C. 20515-6143.
Re: May 27, 2021 Letter Concerning Kabbage, Inc.’s Paycheck Protection
Program
Dear Chairman Clyburn,
I write on behalf of our client, American Express Travel Related Services
Company, Inc. (“American Express”), in connection with your May 27, 2021 letter (the “Letter”)
to Mr. Rob Frohwein,1 former Chief Executive Officer of Kabbage, Inc. (“Kabbage”), regarding
Kabbage’s Paycheck Protection Program (“PPP”), and your April 5 and May 6, 2022 e-mails with
certain follow-up requests. Your April 5 e-mail requested that in connection with Document
Request No. 3, American Express produce “all communications, records, and files related to”
sixteen entities (the “Requested Entities”).2 We are sending you via secure file transfer production
volumes AMEX-SSCC-011 and AMEX-SSCC-012, containing materials bearing production
1
Mr. Frohwein departed American Express on December 17, 2021.
2
The Requested Entities are: Passport Pizza; Marvel Media LLC; Passport USA Inc.; Consolidated Brand
Operations; Deely Nuts; Ritter Wheat Club; Seaweed Bleiman; Shaila Big Fresh Oranges; Tomato Cramber;
D-Brands Inc.; Wiggins & Graham Enterprise LLC; Pink Lady Line; 114 Macon LLC; Beefy King; Bruce
Reifenrath; and Strawberry Joseph Schrempp.
CONFIDENTIAL TREATMENT REQUESTED
control numbers AMEX-SSCC-00023524–23839 and AMEX-SSCC-00023840–23942, which are
responsive to this follow-up request, as described further below.
In addition, following our April 27 and May 11, 2022 phone calls, and to ensure
that you have relevant information concerning Kabbage’s retained obligations and access to its
Paycheck Protection Program (“PPP”) business records, American Express is providing additional
information regarding the terms of the October 16, 2020 acquisition (the “Acquisition”).
In the years preceding the onset of the COVID-19 pandemic, Kabbage developed
an online financial services platform to serve small and medium-sized business (“SMB”)
customers (the “Kabbage Platform”). The principal focus of the Kabbage Platform was to process
and service loans originated by Kabbage’s partner, Celtic Bank, to SMB customers with an
innovative and customer-friendly interface and experience. The Kabbage Platform also provided
payment acceptance, customer invoicing and cash flow visualization tools to Kabbage’s SMB
customers, as well as point-of-sale financing for purchases made by Kabbage’s SMB customers
through Alibaba. In addition, Kabbage developed a business checking account product to be
offered through the Kabbage Platform, which was launched in beta by the time of the Acquisition,
and a credit card product, which ultimately was not launched broadly to Kabbage customers or
acquired by American Express. Following the onset of the COVID-19 pandemic, Kabbage ceased
new lending of its traditional SMB and point-of-sale loans on the Kabbage Platform (although
Kabbage continued to service pre-existing loans). However, following the establishment of the
PPP, Kabbage made modifications to the Kabbage Platform to enable the processing and,
ultimately, direct lending of PPP loans by Kabbage and its PPP partner banks through August
2020. Upon the Acquisition, the Kabbage Platform was largely dormant for new lending. Rather,
it was used for continued support to Kabbage Platform users’ payment acceptance, customer
invoicing and cash flow visualization tools.
In connection with the Acquisition, American Express expressly did not acquire
any rights or interests in Kabbage’s historical loan portfolio or its loan servicing operations,
including the PPP portfolio and servicing obligations. These obligations were retained by Kabbage
(doing business as K Servicing since the Acquisition). American Express also expressly did not
acquire Kabbage’s liabilities arising under, resulting from or related to Kabbage’s historical loan
portfolio or the PPP portfolio. Any regulatory obligations or issues related to Kabbage’s PPP loans
belong solely to Kabbage; American Express has had no communications with the SBA related to
Kabbage’s PPP loans or servicing obligations. Kabbage continues to operate today, and following
the Acquisition, it participated in the second round of the PPP and the PPP forgiveness process,
and it continues to service its PPP loan portfolio.
In connection with the Acquisition, Kabbage negotiated a license to access its
historical business records for servicing the legacy Kabbage SMB and PPP loans and responding
to government requests concerning specific PPP applicants and other customers, which we
understand that Kabbage does regularly in the ordinary course of business. In contrast, American
Express does not use Kabbage’s loan records for any loan servicing-related purposes. Unlike
Kabbage, American Express does not have, and never has had, any need to access specific PPP
loan files on a regular basis, so such files are not readily accessible and require time to collect.
-2-
CONFIDENTIAL TREATMENT REQUESTED
American Express has and will continue to cooperate with and respond to your
requests and has sought to focus resources on information that may be available only to American
Express, and not Kabbage, since the Acquisition so as to assist in providing information as quickly
as possible. To provide further context, as part of the negotiated terms of the Acquisition, Kabbage
represented that it had the resources it needed to fulfill the obligations that it retained following
closing, including the servicing of its historical loan portfolios (including PPP loans). In fact, prior
to closing, Kabbage was required to (i) develop a detailed program outlining how Kabbage would
be able to satisfy its loan servicing obligations through a combination of retained employees, new
hires, and outsourcing; and (ii) negotiate and execute an agreement with a third-party firm that
would provide such outsourced resources to Kabbage following the closing. Pursuant to a
Transition Services Agreement (“TSA”) negotiated between the parties prior to closing, American
Express trained Kabbage personnel in how to access Kabbage’s business records and use the
systems required to perform its loan servicing obligations. American Express also agreed to
provide certain non-management former Kabbage employees who would be employed by
American Express, primarily in customer services and collections, for a transitional period
following the closing of the Acquisition to help Kabbage set up its independent servicing
operations with its own employees and outsourced resources. American Express fulfilled all of its
obligations under the TSA through the transitional period, which largely ended in March 2021. As
a result of the training provided and Kabbage’s own transition plan, Kabbage has personnel
knowledgeable about retrieving PPP loan records, in part for the purpose of responding to
government requests. American Express understands that since the end of the transitional period,
Kabbage has in fact produced loan files and other PPP-loan related documents and data to various
government agencies.
As noted in our May 13, 2022 e-mail, American Express will continue to collect
and produce documents responsive to your April 5 follow-up requests on a rolling basis, to the
extent these materials are in its possession, custody, or control and accessible. As noted above and
discussed on our April 27, 2022 call, many documents concerning the Requested Entities,
including the loan files and related records, are not readily available to American Express.
Therefore, American Express has prioritized responding to your April 5 follow-up requests with
information and documents that are readily available.
* * *
Document Request No. 3: All communications concerning potential fraud or other financial crime
related to PPP loans, including, but not limited to, emails, persistent chat room logs and transcripts,
direct electronic messages, and minutes of senior leadership meetings.
Follow-Up Request on April 5, 2022: As part of your continued response to Document Request 3,
please prioritize the provision of all communications, records, and files related to Passport Pizza,
Marvel Media LLC, Passport USA Inc., Consolidated Brand Operations, Deely Nuts, Ritter Wheat
Club, Seaweed Bleiman, Shaila Big Fresh Oranges, Tomato Cramber, D-Brands Inc., Wiggins &
Graham Enterprise LLC, Pink Lady Line, 114 Macon LLC, Beefy King, Bruce Reienrath, and
Strawberry Joseph Schrempp. In addition to any communications concerning potential fraud related
to these entities, please also produce documents and communications reflecting the date and time
applications from these entities were received, the date and time the crime flags triggered, and the date
and time the application received approval or were referred onward by Kabbage to a lender.
-3-
CONFIDENTIAL TREATMENT REQUESTED
Response to Document Request No. 3:
In further response to Document Request 3, the accompanying production includes
non-privileged communications concerning the Requested Entities, bearing production control
numbers AMEX-SSCC-00023526–23839 and AMEX-SSCC-000023840–23942. 3
The enclosed production file also contains a spreadsheet (the “PPP Loan Data
Spreadsheet”), bearing production control number AMEX-SSCC-00023524. Tab 1 of the PPP
Loan Data Spreadsheet contains the data for the Requested Entities’ PPP loan applications from
Round 1 of the PPP that were (i) completed and submitted to Kabbage, and (ii) decisioned by
Kabbage (“Round 1 Data”). The Round 1 Data reflects information for the Requested Entities
processed by Kabbage, including those for which a PPP Lending Partner served as the lender, and
includes information from (i) Kabbage’s PPP loan platform, including information self-reported
by the Requested Entities as part of the application process, and (ii) information from the decision
file for the Requested Entities, which reflects information from the automated calculation and
decision system including the inputs, intermediate values, and outputs that led to the final PPP
loan amount. In some cases, a PPP loan application may have been submitted more than once.
Where the PPP loan application received at least one SBA number, the PPP Loan Data Spreadsheet
includes all submissions with SBA Loan Numbers.
Column F (“segment”) of the Round 1 Data reflects that the PPP loan applications
for the Requested Entities were all submitted to the SBA and received an SBA loan number in
Round 1 of the PPP. Column D (“status”) of the Round 1 Data reflects the final status in Kabbage’s
system of each PPP loan application. For the Requested Entities, the “status” of the loan
application is either “Success” or “Expired.” “Success” means that the loan application was
accepted by the SBA and received a PPP loan number. “Expired” means that the PPP loan
application expired because the customer did not complete authentication and signing of their PPP
loan documents within the required timeframe. Each expired PPP loan received an SBA loan
number, as indicated in Columns C (“sbaloannumber”) and F (“segment”).
Column I (“date”) provides the date on which Kabbage executed its decision on
each of the Requested Entities’ PPP loan application, meaning when the PPP loan amount was
calculated. Columns J through AM reflect payroll information obtained from payroll
documentation, either via OCR or manual review or input. Columns AN through AT reflect data
calculated or determined by Kabbage. Columns AU through BH reflect information derived from
a PPP loan application for purposes of validation checks at the time that Kabbage executed its
decision on the PPP loan application. Columns BI through BN reflect data points that were used
in Kabbage’s payroll calculation. Columns BO through BQ reflect records from the decisioning
system from the time that Kabbage executed its decision on the PPP loan application. Columns
BS through CJ reflect information provided to the PPP loan applicant during the application
3
American Express’s November 18, 2021 letter provides further information about the scope of its review in
responsive to Document Request No. 3.
-4-
CONFIDENTIAL TREATMENT REQUESTED
process. A value of “1” in Column CL (“customerdisbursedflag”) indicates that the PPP loan was
disbursed to the applicant.
Tab 2 of the PPP Loan Data Spreadsheet contains K Servicing’s PPP Round 2 loan
data (“Round 2 Data”). The Round 2 Data is formatted in a manner substantially similar to the
Round 1 Data, and the explanations regarding the Round 1 Data apply to the Round 2 Data. 4
Column F (“segment”) reflects that the application for the Requested Entity that applied in Round
2 of the PPP was never submitted to the SBA.
The enclosed production volume also contains a second spreadsheet, bearing
production control number AMEX-SSCC-00023525, that reflects any flags Kabbage placed on the
account of a Requested Entity (the “Fraud Flags Spreadsheet”). 5 Flags may have been placed on
an account before the PPP, and may have related to suspected fraud or other issues. The Requested
Entities may have had multiple flags placed at the same time, and therefore could have been
suspended, rejected, or canceled for more than one reason. Tab 1 of the Fraud Flags Spreadsheet
identifies, by applicant, the fraud flags that appeared on the Requested Entities’ account, which
reflect whether Kabbage was continuing to process the loan. Column D (“ReasonID”) corresponds
with Column E and reflects the numerical code that aligns win the system for a given flag reason.
Column E (“ReasonName”) reflects the reason a flag was placed. Column F (“FlagPlacedDate”)
reflects the date a flag was first placed on a given applicant. Column G (“FlagClearedDate”)
reflects the date a flag was removed after manual review and investigation. If a flag was not
cleared, the column says “Null.” Tab 2 of the Fraud Flags Spreadsheet provides a definition for
each fraud flag.
As explained on our April 27, 2022 call, American Express does not have access to
Kabbage’s written customer communications, including the communications with the Requested
Entities, which were done through Salesforce, a third-party customer service ticketing platform.
Salesforce contains information about consumer communications, including written e-mail
communications and telephone calls. E-mail correspondence to customer-facing e-mail addresses
was also routed to Salesforce. The e-mail correspondence, any subsequent correspondence with
customers, and related internal communications are stored in Salesforce. American Express does
not control Kabbage’s Salesforce platform, which remained with Kabbage following the
Acquisition.
* * *
As explained in American Express’s November 18, 2021 letter, American Express
is mindful of privacy and/or confidentiality issues associated with documents concerning
individual PPP applications and loans, and legal restrictions on sharing information related to
Suspicious Activity Reports (“SARs”) and Questionable Activity Reports (“QARs”). In an effort
to cooperate with your investigation and provide documents concerning the Requested Entities,
without running afoul of these legal restrictions, American Express has redacted or withheld
4
American Express understands that there are certain additional fields included in the Round 2 Data that Kabbage
did not capture or include in its loan amount calculation for Round 1.
5
The underlying data in the Fraud Flag Spreadsheet is current as of mid-2021. Therefore, any subsequent 2021 data
may not be complete as to Kabbage’s continuing loan servicing activities.
-5-
CONFIDENTIAL TREATMENT REQUESTED
non-public, personally identifying information (“PII”) of PPP applicants and information
concerning SARs and QARs. The enclosed privilege log contains additional information on the
documents that have been redacted or withheld. Redactions of PII for the Requested Entities are
labeled with an anonymized identifier unique to each entity. Redactions concerning PPP
applicants other than the Requested Entities, or related to SAR or QAR information, indicate the
reason for redaction only.
* * *
American Express continues to review documents responsive to the
Subcommittee’s April 5 requests and will produce additional responsive materials to you on a
rolling basis.
* * *
The information in this letter and in the enclosed production includes confidential
business and financial information that American Express considers proprietary and competitively
sensitive, and that American Express actually and customarily treats as private. Disclosure of such
information would harm American Express and undermine the competitive financial marketplace.
Kabbage, which owns the loans to which the information pertains, likely also considers this
information to be proprietary and competitively sensitive; and we believe that Kabbage also treats
the information as private and considers that its disclosure would harm Kabbage and undermine
competition. These materials are labeled as “Confidential Treatment Requested,” and American
Express respectfully requests that these materials be treated as confidential under all applicable
House and Subcommittee rules. If the Subcommittee should nonetheless consider publicly
releasing such materials, American Express respectfully requests that it be given advance notice
and an opportunity to discuss the matter with you, so that American Express may explain the basis
for objecting to public release. Such treatment would be consistent with the respect for sensitive
and proprietary business information the Subcommittee has shown in the past.
If this letter or any of the enclosed materials become the subject of a request for
public release, please contact me at , and we will provide further information in
support of American Express’s request for confidential treatment.
Sincerely,
/s/ Amanda Flug Davidoff
Amanda Flug Davidoff
-6-
TELEPHONE: 1-212-558-4000
125 Broad Street
FACSIMILE: 1-212-558-3588
WWW.SULLCROM.COM New York, New York 10004-2498
______________________
LOS ANGELES • PALO ALTO • WASHINGTON, D.C.
BRUSSELS • FRANKFURT • LONDON • PARIS
BEIJING • HONG KONG • TOKYO
MELBOURNE • SYDNEY
May 20, 2022
CONFIDENTIAL TREATMENT REQUESTED
Via E-mail and FTP
The Honorable James E. Clyburn, Chairman
Select Subcommittee on the Coronavirus Crisis,
2157 Rayburn House Office Building,
Washington, D.C. 20515-6143.
Re: May 27, 2021 Letter Concerning Kabbage, Inc.’s Paycheck Protection
Program
Dear Chairman Clyburn,
I write on behalf of our client, American Express Travel Related Services
Company, Inc. (“American Express”), in connection with your May 27, 2021 letter (the “Letter”)
to Mr. Rob Frohwein,1 former Chief Executive Officer of Kabbage, Inc. (“Kabbage”), regarding
Kabbage’s Paycheck Protection Program (“PPP”), and your April 5 and May 6, 2022 e-mails with
follow-up requests. We are sending you via secure file transfer production volume
AMEX-SSCC-013, containing materials bearing production control numbers
AMEX-SSCC-00023943–23947, which are responsive to the follow-up requests to Information
Request Nos. 1 and 11.
Unless otherwise noted, American Express’s responses in this letter relate to
Kabbage’s business activities until October 16, 2020, when American Express acquired Kabbage’s
general lending platform and certain related assets and liabilities from Kabbage (the
“Acquisition”). The Acquisition did not include Kabbage’s historical loan portfolio and its loan
servicing operations, including its Paycheck Protection Program (“PPP”) portfolio and servicing
obligations, which were retained by Kabbage (doing business as K Servicing since the closing of
1
Mr. Frohwein departed American Express on December 17, 2021.
CONFIDENTIAL TREATMENT REQUESTED
the Acquisition). American Express generally does not possess information regarding the
post-Acquisition business activities of Kabbage.
* * *
Information Request No. 1: How much is Kabbage’s total revenue from facilitating PPP loans
to date?
April 5, 2022 Follow-Up Request to Information Request No. 1: To understand the full context
of your response to Information Request 1, please provide a list of all owners of Kabbage, a full
accounting of all ownership percent interest, and details of all past management roles of all
owners. Include relevant information about vesting schedules, dates corresponding to the
assumption of equity stakes, caveats/conditions of cashing out, and any borrowing against equity
stakes. Please provide this information for the time period from 2019 to the completion of the
acquisition and include details of all instances in which ownership, ownership percent interest, or
management roles changed.
Response to Information Request No. 1:
In response to your follow-up request to Information Request No. 1, the enclosed
production includes spreadsheets containing information on the equity ownership of Kabbage in
2019 and prior to the Acquisition in 2020, bearing production control numbers
AMEX-SSCC-00023943–23947. These spreadsheets were generated by Kabbage, and the
information reflected in them has not been independently verified by American Express.
American Express understands that the only shareholders who held management
roles at Kabbage at the time of the Acquisition were Robert Frohwein (Chief Executive Officer
and Co-Founder), Kathryn Petralia (President and Co-Founder), and Jon Hoffman (Head of Credit
Operations).
American Express reserves the right to supplement this response if additional
responsive information is identified.
* * *
Information Request No. 11: Please provide a detailed description of any incentives or rewards
provided to Kabbage employees processing PPP loan applications, including monetary bonuses
and non-monetary rewards.
April 5, 2022 Follow-Up Request to Information Request No.11: To follow up on your response
to Information Request 11, please provide details of the compensation, including salary, bonuses,
and equity, of Robert Frohwein, , , , ,
, , and , for the years 2019, 2020, and 2021. Please
provide the current salary and full compensation of any of the aforementioned individuals that are
currently employed by American Express.
-2-
CONFIDENTIAL TREATMENT REQUESTED
notice and an opportunity to discuss the matter with you, so that American Express may explain
the basis for objecting to public release. Such treatment would be consistent with the respect for
sensitive and proprietary business information the Subcommittee has shown in the past.
If this letter or any of the enclosed materials become the subject of a request for
public release, please contact me at , and we will provide further information in
support of American Express’s request for confidential treatment.
Sincerely,
/s/ Amanda Flug Davidoff
Amanda Flug Davidoff
-5-
Page 2 of 3
Enclosed please find documents Bates-numbered KAB_SUBC_0000004188 through
KAB_SUBC_0000004192, which provide further information regarding the establishment and
organization of KServicing. Please note that KServicing did not have a formal budget for 2019
through 2022.
2. Provide K Servicing’s capitalization tables, articles of incorporation, bylaws, and all other
similar formation and governance documents in effect from August 2020 to the present.
Enclosed please find documents Bates-numbered KAB_SUBC_0000004193 through
KAB_SUBC_0000004210, which reflect capitalization tables, bylaws, and additional formation
and governance information for KServicing.
7. K Servicing told the SSCC that it had “data sharing issues” with American Express,
including the inability to quickly or fully access certain borrower information. K Servicing
said that these issues were due to the actions, inactions, or policies of American Express.
Please provide additional details about these issues, including when and for how long your
activities were disrupted and the impact that these issues had on PPP applicants or
forgiveness seekers.
In connection with the October 16, 2020, transaction between Kabbage and Amex, a
significant amount of data was transferred from Kabbage to Amex for holding. Amex continues
to hold PPP-related data and documents as a repository for KServicing. Some PPP-related
information is available only to Amex, some is available only to KServicing (e.g., forgiveness-
related documents), and some is available to both. In the event that KServicing needs certain PPP-
related information to conduct its business operations or respond to government inquiries,
KServicing must request access to that data from Amex, which has been cooperative in these
matters. Access can be slowed, however, by technology-related issues. No KServicing activities
have been “disrupted” by these issues, and the data-sharing arrangement between Amex and
KServicing has not impacted Kabbage borrowers.
* * *
The production of these materials is not intended to and does not waive any applicable
privilege or other legal basis under which this information may be protected from disclosure.
Kabbage reserves all rights and privileges with respect to the documents and information
produced. Kabbage requests confidential treatment of this letter and the above-described
materials, each of which has been designated “Confidential Treatment Requested,” pursuant to
all applicable statutes and regulations. This letter and the above-described materials are being
provided in connection with your investigation and contain highly confidential business
information, the release or publication of which would substantially harm Kabbage’s business.
CONFIDENTIAL TREATMENT REQUESTED BY KABBAGE
Question: On what date did CR B's partnership with Kabbage for PPP loans conclude, and for what
reason(s)?
Response: The partnership with Kabbage ended on August 8, 2020 at the conclusion of PPP Round 1.
Based on several factors including change of ownership, process and documentation issues, and ongoing
servicing challenges, the Bank decided that it was a prudent risk management decision not to work with
Kabbage during the 2021 PPP (Round 2).
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