The media continues to investigate the SurroGenesis scandal with three new articles being published in the past 24 hours. Melody McDonald of the Star Telegram continues her fine reporting on this scandal with an article about how the lack of regulations in Texas and around the country allowed a predator like Tonya Collins to defraud victims of millions of dollars. Among the highlights:
The issue of whether surrogacy should be regulated has gained momentum in recent weeks after a class-action lawsuit was filed against a Colleyville woman, Tonya Collins, and her California-based surrogate agency, Surrogenesis.
The suit alleges that $2.5 million paid by prospective parents is missing from an escrow account. Collins, 33, and Surrogenesis, along with the Michael Charles Independent Financial Holdings Group and Jack Kiserow, are the subjects of the lawsuit, which was filed in April in California on behalf of 100 people.
The FBI and Postal Inspection Service are also investigating.
In response to the scandal and others, the American Bar Association’s family law committee met recently and is drafting model legislation to provide the legal framework to regulate surrogacy agencies.
The Reno Gazette-Journal has two articles out today regarding SurroGenesis, Jack Kiserow and Michael Charles Holdings. In the first article, reporter Martha Bellisle reports on the lack of regulation of the field. In her companion piece, Ms. Bellisle focuses upon the class action lawsuit brought against, among others, Nevada resident Jack Kiserow:
Kiserow said he was shocked by what happened with the company, said he knew nothing of its financial problems and said he believes Collins embezzled the money. He said he, too, was a victim and said he is cooperating fully with federal authorities.
“The whole concept of the company was to help people who wanted to have children,” Kiserow said during an interview in his east Sparks home. “It’s amazing how many families she has hurt.”
But Ted Penny, a Los Angeles-area lawyer whose firm filed the class-action lawsuit said he expects everyone named in the case to claim they are victims. Penny said he holds Kiserow responsible for his part in the business.
“We know that Mr. Kiserow and Ms. Collins established a business whose sole legitimate purpose was to safeguard money placed with them to be available for childbearing,” Penny said. “We believe that Mr. Kiserow, Ms. Collins and others neglected their responsibility to be the guardians of those funds.
“When the purpose is so important and the financial risk is so great, a standard of care is required that cannot be rebutted by simply stating, ‘I didn’t know.’”
Kevin Clancy, a Dallas lawyer representing Collins, who lives near Fort Worth, Texas, declined to comment.
Kiserow admitting that the funds were embezzled and demonstrating just how tone-deaf and insensitive he is:
When Kiserow and his partner, Michael Kiserow, decided to become parents, they spent years to save the $100,000 they expected the process to cost, and signed on with SurroGenesis, which advertised its services on a Web site.
They couple shared their journey through a series of stories that ran in the Reno Gazette-Journal in 2006.
The company found a woman named Sarah Jones to be their surrogate, and she gave birth to two boys and a girl in Stockton, Calif., on Sept. 25, 2006. Although tiny, the triplets were healthy, and the boys came home to Sparks two weeks later. Their daughter required a longer stay.
Jack Kiserow declined to talk about the details of how he and Collins launched the holding company, but he said he was motivated to find a job that would support his new role as a stay-at-home dad.
He and Collins came into the company at 50 percent each, he said. The company was registered with the Nevada Secretary of State’s office on June 2, 2006. It is now listed as being in default.
His job was to help find new clients; he was not involved in handling the holding company’s accounts, he said.
He had plans to fly to Texas to meet with Collins to discuss the business in early March, but on March 9, Kiserow said he received a call from Collins’ lawyer saying she was canceling a meeting.
“It appears there has been a misappropriation of funds,” Kiserow said he was told by Collins’ lawyer. Kiserow asked how much, and the lawyer told him about $2 million.
Kiserow reported this to federal authorities, he said. He filed for Chapter 7 bankruptcy April 21.
Although stressed and concerned, he said he’s grateful that he has a good family and good health.
“If it had happened to us, we would be hard-pressed to start over and have kids,” he said.
On the class action lawsuit:
The actual amount missing remains unclear, said Penny, a lawyer with the firm that filed the lawsuit in Superior Court in Alameda County on behalf of the intended parents. Some say they put in $60,000, others more than $95,000.
About 100 parents are involved so far, but that number might grow, he said.
While this suit pertains to the intended parents, none have yet been filed on behalf of the surrogates or egg donors, he said. That is largely because the contracts make the parents, not SurroGenesis, responsible for all financial support.
“They look directly to them for payments,” Penny said of the surrogate mothers and egg donors. “The money in Michael Charles was security that the money was present.”
Now some surrogate mothers are pregnant for parents who have lost tens of thousands of dollars, he said.
“They’re having to find a way to pay for nine months of assistance the mothers will require,” he said.
The media continues to do their job in exposing this criminal enterprise. I have to believe the FBI cannot be too far behind now.
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