News
08/25/26 | Firm News
Government Intervenes in Kirby McInerney Whistleblower Case Alleging More Than $13 Million in Falsely Obtained COVID Relief PPP Loans
NEW YORK—The Office of the United States Attorney for the Southern District of New York has intervened in a False Claims Act qui tam lawsuit filed by Kirby McInerney LLP on behalf of its whistleblower clients concerning allegations that Michael Shabsels and his collection of summer camp businesses falsely obtained more than $13 million in Paycheck Protection Program ("PPP") loans.
On August 24, 2026, the United States filed a complaint against Michael Shabsels and companies that he and his brother David Shabsels owned and controlled, including Simad Holdings LLC, Damis Holdings LLC, and 26 related entities. The government alleges that the defendants concealed the common ownership of the companies to evade a rule limiting a single corporate group to an aggregate of $4 million in second-draw PPP loans.
According to the government’s complaint-in-intervention, the related companies obtained more than $17 million in second-draw PPP loans—over $13 million more than the limit—and all of the loans were forgiven. The government seeks damages and civil penalties under the False Claims Act, as well as recovery of government funds under common law. The allegations have not yet been proven and the Shabsels and many of their companies have sought protection under the bankruptcy laws.
In 2024, Kirby McInerney filed the whistleblower action under seal on behalf of its clients who have been in a business relationship with the Shabasels. The action was unsealed on August 17, 2026, and the government subsequently filed its notice of intervention and its complaint-in-intervention.
Kirby McInerney Partners Randall Fox and David Kovel, along with Associate Rohan Kulkarni represent the whistleblowers. The firm has a vibrant whistleblower practice. Mr. Fox is a nationally recognized whistleblower attorney and the former founding Bureau Chief of the New York Attorney General’s Taxpayer Protection Bureau.
The U.S. Attorney’s Office for the Southern District of New York announced the intervention and filing of the government’s complaint in a press release available here.
The PPP loan program was rolled out rapidly during the COVID-19 pandemic to provide a life-line to small businesses. Kirby McInerney is actively examining potential False Claims Act liability of persons alleged to have falsely represented their eligibility for the loans and their forgiveness by the government.
On August 24, 2026, the United States filed a complaint against Michael Shabsels and companies that he and his brother David Shabsels owned and controlled, including Simad Holdings LLC, Damis Holdings LLC, and 26 related entities. The government alleges that the defendants concealed the common ownership of the companies to evade a rule limiting a single corporate group to an aggregate of $4 million in second-draw PPP loans.
According to the government’s complaint-in-intervention, the related companies obtained more than $17 million in second-draw PPP loans—over $13 million more than the limit—and all of the loans were forgiven. The government seeks damages and civil penalties under the False Claims Act, as well as recovery of government funds under common law. The allegations have not yet been proven and the Shabsels and many of their companies have sought protection under the bankruptcy laws.
In 2024, Kirby McInerney filed the whistleblower action under seal on behalf of its clients who have been in a business relationship with the Shabasels. The action was unsealed on August 17, 2026, and the government subsequently filed its notice of intervention and its complaint-in-intervention.
Kirby McInerney Partners Randall Fox and David Kovel, along with Associate Rohan Kulkarni represent the whistleblowers. The firm has a vibrant whistleblower practice. Mr. Fox is a nationally recognized whistleblower attorney and the former founding Bureau Chief of the New York Attorney General’s Taxpayer Protection Bureau.
The U.S. Attorney’s Office for the Southern District of New York announced the intervention and filing of the government’s complaint in a press release available here.
The PPP loan program was rolled out rapidly during the COVID-19 pandemic to provide a life-line to small businesses. Kirby McInerney is actively examining potential False Claims Act liability of persons alleged to have falsely represented their eligibility for the loans and their forgiveness by the government.
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