DOJ Joins $13M PPP Fraud Suit Against Summer Camp Owner Michael Shabsels

Quick Take: The Justice Department has intervened in a whistleblower False Claims Act suit accusing summer camp owner Michael Shabsels and 27 related entities of improperly obtaining more than $13 million in second-draw PPP loans, all of them forgiven, by concealing common ownership across nine different lenders. The camps and both Shabsels brothers filed Chapter 11 in June.

Every fraud case has a moment where the defendant learns the rule they're about to break. Most of the time, prosecutors have to reconstruct that moment from circumstances. In the government's recent civil complaint against Michael Shabsels, they didn't have to reconstruct anything. They have the emails.

Twenty-six camps, one corporate group

Michael Shabsels and his brother David built a partnership that acquired children's summer camps at a scale most people in this industry never see: Club Getaway in Connecticut, Blue Star Camps in North Carolina, Mohawk Day Camp in White Plains, Camp Lavi in the Poconos, camps across Maine, New Hampshire, New Jersey, Illinois, and New York. According to the government's complaint, filed August 24 in the Southern District of New York, the structure ran through two entities the brothers owned 50/50: SIMAD Holdings, which held majority stakes in most of the camp operating companies, and DAMIS Holdings, which handled management and the underlying real estate. Profits flowed up from the camps, through SIMAD or DAMIS, and into the brothers' personal accounts.

Under the SBA's Corporate Group Rule, that common ownership had a specific consequence for pandemic relief. Businesses majority-owned by a common parent were considered one corporate group, and that corporate group was capped at $4 million in total second-draw PPP loans. Not per camp. Total.

"Understood and thank you"

Here is where the complaint gets remarkable. On January 11, 2021, Shabsels emailed his accountants, attaching the SBA's rules and asking whether his companies could borrow up to $20 million in the aggregate, or whether they were capped at "some (dramatically) lower amount (such as $4,000,000, which is what this banking contact of mine indicated today)." He followed up the same day, relaying that his banking contact was "more convinced than ever" the cap was $4 million, and adding that he was "hoping that this individual (at the bank) is misinterpreting this information."

She wasn't. The next day, an accountant confirmed it in writing: $2 million maximum per company, $4 million for a corporate group, defined as majority ownership by a common parent. The accountant closed with, "I know it is not the answer you were looking for."

Shabsels replied: "Understood and thank you."

Evidence from Complaint

What happened next, per the complaint, was noncompliance. Over the following weeks, Shabsels signed second-draw applications on behalf of the camp companies that answered "no," more than twenty separate times, to the SBA's question about whether the applicant or its owners owned any other business. Applications stopped listing SIMAD Holdings as a 20-percent-plus owner, even though first-draw applications for the very same companies, signed by Shabsels a year earlier when the cap wasn't in play, had listed SIMAD correctly. When the SBA's own system caught one application (Camp Achim's) because it already had SIMAD and DAMIS on file as the owners, the application came back revised to show SIMAD's stake, and still answered "no" to the common-ownership question.

Nine banks, each kept under the cap

The distribution strategy is the part every lender reading this should sit with. The camps spread their applications across nine lenders, including Bank of America, M&T, and a roster of community banks, in a pattern that kept each lender's administered total for the group under $4 million. One bank ran about $89,000 over; the other eight stayed under the line. No single institution could see the group total, PPP underwriting was largely self-certified by design, and lenders were entitled to rely in good faith on a borrower's representations.

If that structure sounds familiar, it should. It's the same logic as stacking: distribute the exposure across enough counterparties that no one lender sees the whole picture.

The complaint's own math shows the group crossing the $4 million cap on January 29, 2021, with roughly $3.97 million disbursed. Every dollar after that, the government says, was over the line.

By the time the last loan funded in April 2021, the defendants had pulled more than $17 million in second-draw money. All of it was later forgiven, based on forgiveness applications Shabsels also signed.

False Claims Act (FCA): The federal statute allowing the government to recover treble damages plus per-claim civil penalties for false claims for federal money. Knowledge includes reckless disregard; no specific intent to defraud is required.

Civil, not criminal, and that's the story

The exposure is real. The FCA allows treble damages, which on $13 million in improperly obtained loans, puts potential liability north of $39 million before per-claim penalties, layered on top of Chapter 11 cases the brothers and their entities filed on June 4. The government has already flagged that the FCA action proceeds despite the bankruptcies, under the police-and-regulatory exemption to the automatic stay.

Notably, the government's complaint names only Michael Shabsels among the brothers; every loan application described in it carries his signature.

But here's the uncomfortable question for anyone who has watched PPP enforcement over the past five years: where are the criminal charges?

The Justice Department has criminally prosecuted thousands of PPP fraud cases, many built on far thinner knowledge evidence than a defendant's own email chain asking about the cap, getting the answer, and acknowledging it in writing before submitting twenty-plus applications that said otherwise. As of the complaint's filing, no criminal charges against Shabsels have been announced.

A civil suit seeking treble damages from entities already in bankruptcy may recover real money for taxpayers. Whether it delivers the deterrence that a criminal case would is a fair question, and one this industry, where PPP-era conduct has put plenty of smaller operators in prison, is entitled to ask.

Forgiveness, it turns out, isn't the end of the file. Five years on, the applications are still being read.

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Source: Complaint-in-Intervention of the United States, U.S. ex rel. Bellotto v. Shabsels et al., No. 7:24-cv-06494 (S.D.N.Y., filed Aug. 24, 2026). Bankruptcy filings referenced therein, D.N.J.