Summer Camp Received Millions In Federal Loans Before Refusing To Refund Parents, Filing For Bankruptcy

LOS ANGELES (CBSLA) — A popular summer camp that has filed for bankruptcy while refusing to refund parents who paid ahead of time is said to have received millions in federal loans weeks before filing.

In an email to parents last week, the owner of Camp Galileo wrote that its summer camps across California are canceled due to the coronavirus pandemic.

The owner also announced that "offering full refunds or even half refunds" was "not an option given our financial situation."

Parent Alina Malkin, who paid a $600 deposit to send her son to camp this summer referred to the camp's Chapter 11 bankruptcy filing.

"I think it's a bunch of baloney," Malkin said. "Apparently we all have a different perceptive of what bankruptcy means."

When the pandemic hit, the camp's owner sent an email to parents. "Camp is cancelled and we are not giving any refunds. Sorry, we don't have any money," Malkin summarized.

The email went on to say that the camp had already spent a majority of its funds on supplies, hiring summer staff, insurance, and marketing.

According to the bankruptcy declaration, by the end of April, more than 10,000 families paid a combined $11 million in tuition ahead of the 2020 summer sessions.

"Camp hadn't even begun yet, how could he have spent all that money?" asked Malkin.

Also in the filing, Camp Galileo has more than $6 million in its bank accounts, including a $2.5 million PPP loan and a $500,000 SBA loan, secured just two weeks before filing for bankruptcy.

"It's not OK...you got a PPP loan, you got a small business loan and you left us all hanging," said Malkin. (In the video version of this story, Malkin incorrectly stated that the camp has $11 million in the bank. The camp has said that it received $11 million in tuition, but because of its annual spending cycle, it had already spent a majority of those funds.)

In the filing, Camp Galileo's owner cited a $20 million class-action lawsuit from parents looking for refunds as the reason for the Chapter 11.

Bankruptcy attorney Dean Rallis has been retained by the potential lead plaintiff in the lawsuit.

"So rather than spend the money to defend the lawsuit, the debtor chose to file Chapter 11 case instead," said Rallis.

Regarding the PPP and SBA money, Rallis said because they were applied for, approved, and funded before the bankruptcy, Camp Galileo will likely be able to keep the money.

"Is that permissible? The answer is yes, so long as the debtor continues to use the funds as intended by way of the application, and by way of the statute," said Rallis.

Malkin plans to join the class-action lawsuit.

"We are all struggling right now. We don't all have a million dollars in the bank," said Malkin. "He has everything and we are left with nothing."

Rallis said he believes he will be able to help parents get their money back.

A Galileo spokesperson provided CBS2 with the following statement Wednesday:

"Galileo Learning plans to use its PPP loan for payroll and other related costs, in accordance with the specified uses under the law. The company is working diligently to prepare for the launch of its virtual Camp Galileo Anywhere and is grateful that the loan will sustain the company's remaining workforce as it strives to survive the pandemic economic crisis, continue serving its camper families, and manage the Chapter 11 restructuring process."