U.S. Attorney Files Civil Fraud Suit Against Network Of Companies For Fraudulently Obtaining COVID Relief Money

Press release — U.S. Attorney Files Civil Fraud Suit Against Network Of Companies For Fraudulently Obtaining COVID Relief Money, dated 2026-08-25, issued by U.S. Attorney’s Office, Southern District of New York.

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United States Attorney for the Southern District of New York, Jamie McDonald, announced today that the United States has filed a Complaint against MICHAEL SHABSELS, SIMAD HOLDINGS LLC, DAMIS HOLDINGS LLC, and 26 related entities (the “Shabsels Companies” and, collectively, the “Defendants”), alleging that the Defendants concealed their interrelationship from the Small Business Administration (“SBA”) in order to improperly obtain PPP funds. The lawsuit seeks damages and civil penalties under the False Claims Act as well as a recovery of government funds under the common law. “Congress enacted the Paycheck Protection Program during a national crisis to help small businesses,” said U.S. Attorney Jamie McDonald. “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. The civil process to recover taxpayer funds remains ongoing.” The following allegations are based on the Complaint filed in White Plains federal court on August 24, 2026: To promote the availability of PPP loans to the largest number of borrowers, the SBA limited businesses in a single corporate group to a maximum aggregate loan amount of $4 million for second-draw PPP loans (the “Corporate Group Rule”). The Shabsels Companies were part of a large corporate group that was subject to the Corporate Group Rule’s cap of $4 million. Indeed, the vast majority of the Shabsels Companies were directly majority-owned by a single company. The Defendants, however, sought and obtained over $17 million in second-draw PPP loans for the Shabsels Companies, improperly obtaining over $13 million in PPP loans, all of which were forgiven, as follows: Defendant Camp Name Loan and Forgiveness Amount ACHIM OPERATINGCO LLC Camp Achim, New York $79,527.00 BAHS OPERATING INC CAMP Camp Chen-A-Wanda, Pennsylvania $1,072,529.00 BANNER OPERATINGCO LLC Banner Day Camp, Illinois $1,394,904.00 BELGRADE LAKES SUMMER CAMPS LLC New England Tennis and Golf Camp, Maine $167,415.00 BLUESTAR OPERATINGCO, LLC Blue Star Camps, North Carolina $1,425,091.00 CAMP MED-O-LARK, INC Camp Med-O-Lark, Maine $454,719.00 CLUB GETAWAY OPERATINGCO, LLC Club Getaway, Connecticut $592,039.00 COUNTRY ROADS OPERATINGCO, LLC Country Roads Day Camp, New Jersey $1,134,437.50 DAMIS HOLDINGS, LLC (not a camp at all, but a holding company) $179,730.00 EAGLE'S LANDING DAY CAMP LLC Eagle’s Landing, New Jersey $591,804.00 GREEN LANE OPERATINGCO, LLC Camp Green Lane, Pennsylvania $175,836.00 IAFA OPERATING CO, LLC Indian Acres and Forest Acres, Maine $469,105.00 KIWI OPERATINGCO, LLC Kiwi Country Day Camp, New York $768,410.00 LAVCO LLC Camp Lavi, Pennsylvania $689,132.00 MAINE WEKEELA CO, LLC Camp Wekeela, Maine $424,343.00 MALKA OPERATINGCO LLC Camp Malka, New York $163,628.00 MEADOWBROOK OPERATINGCO, LLC Meadowbrook Country Day Camp, New Jersey $1,380,766.00 MESORAHCO, LLC Camp Mesorah, New York $469,829.00 MOGENAVCO LLC Camp Mogen Av, New York $1,091,353.62 MOHAWKCAMPCO LLC Mohawk Day Camp, New York $2,000,000.00 POLAND CAMPCO LLC Camp North Star, Maine $224,350.00 RDM CAMPS LLC Camp Lokanda, New York $719,446.00 SHAB OPERATING INC Camp Echo, New York $326,893.00 STONY CREEK OPERATING CO, LLC 1000 Acres Ranch, New York $142,015.00 SUMMIT CAMP, LLC Summit Camp, Pennsylvania $613,833.50 WAUKEELA OPERATINGCO LLC Camp Waukeela, New Hampshire $268,170.00 WM CAMP LLC Windsor Mountain Summer Camp, New Hampshire $399,273.00 SHABSELS signed numerous second-draw PPP applications on behalf of the Shabsels Companies. On over 20 occasions, SHABSELS falsely answered “no” to the following question in PPP applications submitted on behalf of the Shabsels Companies: “[i]s the Applicant or any owner of the Applicant an owner of any other business, or have common management (including a management agreement) with any other business.” In fact, SHABSELS and SIMAD HOLDINGS, LLC were owners of the applicants for PPP loans and also owners of various other businesses. The Defendants have all filed for bankruptcy in the District of New Jersey. In this action, the United States seeks to determine the extent of the Defendants’ liability and will then coordinate any recovery for the taxpayers in conjunction with the bankruptcy proceedings. * * * The Government intervened in a whistleblower lawsuit before U.S. District Judge Kenneth M. Karas that had previously been filed under seal pursuant to the False Claims Act, and which was unsealed on August 17, 2026. Mr. McDonald thanked the SBA for its assistance with the case. This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney David J. Kennedy is in charge of the case.

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