For those that would rather not wade through the entire Complaint, here are the key paragraphs:

26) Pursuant to the terms of the Contract, SURROGENESIS promised to set up an “independent” trust fund for the purpose of making fee payments to Plaintiffs’ intended surrogates and for the payment of other expenses related to the surrogacy process. Plaintiffs, and
each of them, understood that the term “independent” meant that the their funds would be delivered in trust to a company unrelated in any manner to SURROGENESIS, its officers and employees, and acting in accordance with the SurroGenesis Contract terms, which would then ensure the safety and availability of Plaintiffs’ funds for the purposes of satisfying their financial obligations with their intended surrogates.

27) SURROGENESIS, in addition to requiring that Plaintiffs agree to the SurroGenesis Contract, further required that Plaintiffs, and each of them, agree to and execute an “Agreement For Management Of Trust Account”, in substantively the identical form as that
attached hereto and incorporated herein as Exhibit “B”.

28) The Agreement For Management of Trust Account provided that SURROGENESIS was to administer Plaintiffs’ trust accounts, the funds of which were to be deposited with a company identified by SURROGENESIS to be held for safekeeping for the benefit of Plaintiffs. According to the terms of the Agreement For Management Of Trust Account, the funds deposited with the trust company were to be clearly segregated from any accounts holding funds to which SURROGENESIS, after withdrawing its fees, had any claim.

29) The company that SURRGENESIS identified and selected for handling Plaintiffs’ trust accounts, and each of them, was MICHAEL CHARLES.

30) Plaintiffs are informed and believe and thereon allege that SURROGENESIS breached the SurroGenesis Contract with Plaintiffs, and each of them, in that MICHAEL CHARLES was not an “independent” trust company. Rather, Plaintiffs are informed and believe and thereon allege that MICHAEL CHARLES was, for all intents and purposes, operated and controlled by COLLINS, the President and CEO of SURROGENESIS. Had Plaintiffs, and each of them, known that MICHAEL CHARLES was operated and controlled by COLLINS, they
would never have agreed to MICHAEL CHARLES holding their funds in trust.

31) Starting in or about November 2008, Plaintiffs were made aware that their intended surrogates were not receiving payments from MICHAEL CHARLES pursuant to their surrogacy agreements, or that the payments sent to the surrogates, in the form of checks drawn
from Plaintiffs’ trust accounts held by MICHAEL CHARLES, were being rejected as “NSF” for insufficient funds in those accounts.

32) In or about March 2009, SURROGENESIS advised Plaintiffs, and each of them, that the funds held in Plaintiffs’ trust accounts through MICHAEL CHARLES were “gone” and that SURROGENESIS did not know what had happened to their trust funds.

33) Plaintiffs are informed and believe and thereon allege that as a result of SURROGENESIS’ breach of the SurroGenesis Contract, whereby SURROGENESIS failed to arrange for an “independent” company to safeguard Plaintiffs’ trust funds, Plaintiffs have been
damaged in that SURROGENESIS, COLLINS and DOES 1-25 were provided unfettered access and control of Plaintiffs’ trust accounts and that sometime in the past year, SURROGENESIS, COLLINS and DOES 1-25 converted Plaintiffs’ trust funds for their own benefit, or otherwise denied Plaintiffs’ the use of or access to their trust funds.

34) Accordingly, as a direct result of SURROGENESIS’ breach of the SurroGenesis Contract, Plaintiffs and the class have either lost the approximate $2,500,000.00 in funds they deposited with MICHAEL CHARLES, or have otherwise been denied the use or access to those
funds.

SECOND CAUSE OF ACTION
(Fraud – Against SURROGENESIS and DOES 26-50)

36) Plaintiffs are informed and believe and thereon allege that SURROGENESIS and DOES 11-20 knew that the representations made in the SurroGenesis Contract entered into with Plaintiffs, and each of them, on various dates in the past three (3) years, that Plaintiffs’ funds would be deposited with an “independent” trust company, were false at the time the SurroGenesis Contracts were entered into. Plaintiffs are informed and believe and thereon allege that at all times relevant herein, SURROGENESIS knew that MICHAEL CHARLES was not an “independent” trust company, but rather MICHAEL CHARLES was operated and controlled by SURROGENESIS and/or COLLINS.

37) Plaintiffs are informed and believe that SURROGENESIS and DOES 26-50 intended for Plaintiffs to reasonably rely on the representation in the SurroGenesis Contract that their funds would be held in trust by an “independent” trust company.
38) Plaintiffs and the class were unaware of the falsity of the Defendants’ representation that their funds would be held by an “independent” trust company and reasonably relied upon the misrepresentations made by SURROGENESIS and DOES 26-50.

39) Had Plaintiffs and the class known that MICHAEL CHARLES was operated and controlled by SURROGENESIS and/or COLLINS, they would never have agreed to MICHAEL CHARLES holding their funds in trust.

40) Plaintiffs and the class have incurred damages as a result of SURROGENESIS and DOES 26-50’s intentional misrepresentations, as Plaintiffs and the class have either lost the approximate $2,500,000.00 in funds they deposited with MICHAEL CHARLES, or have otherwise been denied the use or access to those funds. In addition, Plaintiffs have suffered from emotional distress, financial distress, annoyance and anxiety, as a result of Defendants’ actions alleged herein, and seek damages in an amount to be determined at trial for the same.

80) Plaintiffs are informed and believe and thereon allege that sometime between January 2007 and the present, Defendants did knowingly and willfully conspire and agree among themselves to: (1) misrepresent to Plaintiffs and the class that their trust funds would be handled by an “independent” trust company; (2) entice Plaintiffs and the class into depositing their trust funds with MICHAEL CHARLES; and (3) convert Plaintiffs’ trust funds for their own use and benefit as set forth herein.

81) In furtherance of said conspiracy and agreement, the aforementioned Defendants engaged in fraudulent representations, omissions and concealment of facts, acts of cover-up and statements calculated to obtain Plaintiffs’ trust funds for the benefit of Defendants and as set forth in detail in the foregoing paragraphs, which are hereby incorporated herein as though set
forth in full.

82) All of the actions of Defendants set forth in the preceding paragraphs, incorporated herein, were in violation of the rights of Plaintiffs and the class and committed in furtherance of the aforementioned conspiracies and agreements. Moreover, each of the
aforementioned Defendants lent aid and encouragement and knowingly financed, ratified and adopted the acts of the other. As a proximate result of the wrongful acts herein alleged, Plaintiffs and the class have suffered significant damage, which is estimated to be $2,500,000.00, or otherwise determined at trial.

83) These acts constituted malicious conduct which was carried on by said Defendants with willful and conscious disregard for Plaintiffs’ rights with the intention of misappropriating Plaintiffs’ trust funds or otherwise causing injury, and was despicable conduct
that subjected Plaintiffs to a cruel and unjust hardship so as to justify an award of exemplary and punitive damages. Accordingly, punitive damages should be awarded against Defendants to punish them and deter them and other such persons from committing such wrongful and malicious acts in the future.

I am extremely impressed with the draftsmanship of this Complaint. The attorneys have done a masterful job of pleading the essential allegations without introducing unnecessary distractions which tend to cause wasteful procedural wrangling. While I am disappointed that the RICO cause of action did not ultimately make it into the Complaint, I do understand the considerations in removing it from the lawsuit. RICO claims are pleading behemoths and can complicate and delay civil suits. So the decision not to include the RICO count had nothing to do with the merit of the underlying claim, but rather was to allow this lawsuit to swiftly progress through the court system and thus expedite the resolution for the victims.