The legal pressure on Simad Holdings and its founders, brothers David and Michael Shabsels, escalated this week after the Department of Justice launched a grand jury investigation into the bankrupt summer camp operator, The Real Deal first reported.
The probe is being run out of the U.S. Attorney’s Office for the Eastern District of New York, which has already requested documents from the company. Simad also disclosed awareness of a separate civil investigation by the U.S. Attorney’s Office for the Southern District of New York into potential Paycheck Protection Program fraud. The company says it is cooperating with both.
Michael Shabsels and his wife Alyssa serve on the US National Board of United Hatzalah.
The collapse has been fast and ugly. Simad raised roughly $200 million from Israeli bondholders in December, then missed its first payment in May. It later emerged that about $34 million of that money had been funneled to companies controlled by the Shabsels brothers. The company demanded repayment. Michael Shabsels agreed, then said he couldn’t follow through.
Both the company and the brothers personally filed for bankruptcy in June. Simad, now run by a restructuring officer, is in the process of selling off its camps, including Mohawk Day Camp, Camp Chen-A-Wanda, and Camp Achim.
The Shabselses built their empire almost entirely on borrowed money. They held over 80 real estate assets and structured deals to achieve near-100-percent financing. They also accumulated more than $230 million from merchant cash advance lenders, the kind that can pull funds directly from a company’s bank account if payments stop. The bankruptcy filings stopped those withdrawals. Prosecutors are still piecing together what happened to the rest.
