DOJ Alleges Simad’s Michael Shabsels Committed PPP Fraud
The Department of Justice filed a civil fraud suit against Michael Shabsels and his companies, Simad Holdings, Damis Holdings and 26 companies, alleging they improperly obtained over $13 million in Paycheck Protection Program funds.
In the lawsuit filed in White Plains federal court on Aug. 24, prosecutors allege Michael Shabsels concealed the web of his companies from the Small Business Administration.
Michael and his brother David led Simad Holdings, which controlled 30 popular U.S. summer camps, until the company collapsed in June and filed for bankruptcy.
Under the PPP program, the government provided forgivable loans to businesses impacted by the Covid-19 pandemic. But after the initial loan, the government offered some businesses a second loan. The program’s rules stipulated a cap of $4 million for large corporations on the second loan.
The government alleges Shabsels and his companies were only entitled to $4 million in funds because the camps were part of a larger corporate group, Simad Holdings. But Shabsels obtained $17 million in PPP loans for his camp properties, including $2 million for Camp Mohawk, $1.38 million for Meadowbrook Country Day Camp, and $1.43 million for Camp Blue Star.
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In over 20 instances, Shabsels made false statements on PPP applications, the DOJ alleges.
Michael Shabsels also used nine different lenders to obtain the PPP loans, with each lender providing under $4 million in funds, according to the DOJ.
The lawsuit seeks damages and civil penalties under the False Claims Act. Michael’s brother David was not named as a defendant in the lawsuit.
“As alleged, the defendants repeatedly lied to the SBA to exploit this program and fund their sprawling network of companies at taxpayer expense, thereby depleting the funds for small businesses that needed the assistance,” said U.S. Attorney Jamie McDonald in a statement.
The government’s civil fraud lawsuit follows a 2024 whistleblower lawsuit by Karla and Ivan Bellotto, the co-owners of Kiwi Country Day Camp.
The lawsuit is the tip of the iceberg for Michael Shabsels’ troubles. The DOJ in July launched a grand jury investigation into Simad Holdings and its controlling shareholders, Michael and David Shabsels, according to a filing on the Tel Aviv Stock Exchange. In that filing, the company also announced an ongoing civil investigation into PPP fraud, but did not disclose any details.
Simad raised about $200 million from Israeli bondholders in December, but missed its first payment in May. The company further revealed that about $34 million of bondholders’ money had been diverted to companies controlled by the Shabselses. The company asked the Shabselses to return the $34 million plus interest, but after agreeing to do so, Michael Shabsels said he could not return the money.
In June, the Shabselses ceded control of Simad to restructuring officers, who put the company into bankruptcy. During bankruptcy, Simad sold 27 of its camps either through private sales or public auctions.
Michael Shabsels did not immediately return a request for comment.
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