How NYC brothers’ $400M summer camp empire fell apart — rocking the Israel bond market and leaving parents in a panic

Brothers Michael and David Shabsels amassed a $400 million fortune, becoming known as the summer camp kings of New York.

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Their empire included 30 kids’ camps in their home state, New Jersey and Pennsylvania, as well as offices, a retail center and water parks.

Now, they find themselves on the brink of losing it all.

Rounds of heavy borrowing and rapid expansion led to a complicated financial situation, with Israeli bond holders claiming to have been burned to the tune of $214 million after the brothers defaulted on payments, they admitted in court papers.

As a result, since May 30, they have filed for Chapter 11 bankruptcy protection and been forced to auction off their summer camp empire — currently an ongoing process — leaving many parents with kids currently enrolled on edge.

Sources told The Post Michael, 56, has traditionally been the money man, while David, 49, is more hands-on, and the situation has driven a wedge between them.

A camp partner described David as being “fair” and honest.”

However, they added: “He claims he has no idea what was going on with his brother. But I don’t believe him, frankly. How could I? He was a trusted business partner with his brother for 27 years.”

The source said they got the sense David felt violated by his brother “because, he explained, it was more like a sickness than anything else. His brother was  just trying to right the ship, so to speak, and taking bigger-and-bigger risks.”

Making things worse, the pair are now under investigation by the DOJ, according to The Real Deal, citing a filing on the Israeli stock exchange.

The source said they had never met Michael and only dealt with him via email about financing for the camp where they worked. He said he’d heard from others Michael is eccentric, only using a flip phone and memorizing all the phone numbers he needs, but also noted he is always polite and professional.

The source said David told him the financial problems were partly due to COVID, as businesses in office buildings they owned stopped paying rent, leaving them short on capital elsewhere.

That set the stage for heavy borrowing, allegedly totaling between $500 million and one billion in liabilities on their non-summer camp assets, according to the Jerusalem Post.

The brothers also had a very risky pattern of borrowing, taking numerous Merchant Cash Advance loans, of $1 million and under. Such loans are usually taken by businesses working outside the traditional banking system and carry high interest. When payments were missed, those debts accounted for $200 million, according to business publication Globes.

Then, at one point, Michael transferred $32 million from the company’s coffers to a personal account, leaving the holding company without cash to cover payments to bondholders, per the Jerusalem Post.

“My sense is that they were building a massive enterprise of camps and real estate,” an insider told The Post, explaining a missed interest payment for their bonds alone, due on May 31, totaled nearly $7 million.

The insider noted that once people get involved in large-sum transactions and moving around debt, the practice can become both empowering and addictive.

A source told the Israeli newspaper: “You could make a movie of this event. So many questions arise. How did the Shabsels brothers manage to operate in such a problematic way for so long and how do you get to liabilities like these without anyone stopping for a moment?”

Various lawyers for the Shabsels did not return requests for comment from The Post.

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The closed-door auction of the camps — estimated to be worth $400 million — took place Tuesday and Wednesday.

Among the larger camps run by the Shabsels were: Camp Lokanda in Glen Spey, NY; Camp Achim in the Catskills, NY; Camp Chen-A-Wanda in Thompson, Penn.; Camp Malka in Greenville, NY; Camp Lavi, in Lakewood, Penn. and Camp Mesorah in Guilford, NY.

Considering the sell-off is transpiring in the heart of the summer-camp season, a source told The Post: “They could not have picked a worse time to do this.”

A New York mom with children in one of the camps agreed. “My kids are enjoying their summer and are unaffected right now,” she told The Post, acknowledging that uncertainty has resulted in reduced attendance this year. “I just don’t know how long it will continue.”

However, one unlikely figure who stands to benefit is Warner Bros. Discovery CEO David Zaslav. He has stepped in with an offer to buy Mohawk Day Camp, located in Westchester County, which is the camp his kids attended.

According to The Hollywood Reporter, Zaslav, via his holding company Grandview Ventures, put in a $68 million bid for the camp and its associated pre-school, which he apparently sees as an investment.

But moms of campers are not sweating auction outcomes or interest rates facing the brothers. They’re worried about busted-up camps wrecking their summers.

After insolvency on the brothers’ company was declared in June — just as kids prepared to go to camp — more than 120 letters from concerned parents were sent to the bankruptcy judge, pleading to help keep the camps going.

“I’m dealing with two little broken hearts if this doesn’t happen the way the way I hope it ends up,” one mother was quoted as saying by Law 360.

The situation has shocked the tony Park Slope, Brooklyn, community where the Shabsels grew up. They are the sons of Charles Shabsels, a well-established estate planning lawyer, and his wife Susan.

They developed their entrepreneurial chops in the ‘90s with University Sports Publications, a group of magazines devoted to college sports which landed on 800 campuses. It was so successful in 2009 they sold their share for $37.5 million.

That windfall was parlayed into the summer camps, under the corporate handle of Simad Holdings. Their Real estate investments are under the portfolio name of Damis Holdings (the same word backward).

Simad is the company now under investigation by the DOJ, according to the Israeli stock exchange filing.

David previously attended camp fairs, run by the American Camp Association, where he was well liked.

But now, “You can hear it in his voice. The guy’s just bummed out… People wanted time with him, because he was very successful… and he just went from being the Prince of Camps to being investigated by the DOJ,” the camp partner said. 

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