Surrogacy makes for a perilous path to parenthood

Not even jail could keep Nanette Delp out of the surrogacy business.

In 2006, she was arrested on allegations that she stole tens of thousands of dollars from couples who had paid her to find women to carry their babies, according to court records.

While she was behind bars awaiting trial in Sacramento, she continued to sign up more couples, using a new business name and a new website, state records show. Ultimately, she was sentenced to six years in prison after pleading no contest to seven counts of grand theft.

In the surrogacy industry, there are no consumer guarantees. A website is not a professional license -- in fact, there is no such thing. Even in California, widely considered the friendliest place in the world for people seeking surrogates, contracts tend to favor the broker agencies, not the clients.

Signing with an agency is frequently an act of faith, sometimes with bitter results. Often, aspiring parents must pay the entire bill -- $50,000 or more -- in advance. The money is nonrefundable, placing them at the mercy of the agency.

In recent days, Modesto-based SurroGenesis and Beverly Hills-based B Coming have been accused by attorneys or through lawsuits of misusing more than $2.5 million in clients’ funds -- in some cases without ever helping couples choose a surrogate or conceive a child.

Although several agencies throughout the country have been around long enough to earn the trust of doctors, others come and go. Their owners, many of whom are former surrogates themselves, often have little experience managing the hundreds of thousands of dollars that even the tiniest agencies attract.

“It’s so easy to start up and be anonymous on the Internet,” said Dr. Craig Kraffert, a Redding dermatologist who hired Delp because he and his wife wanted a surrogate to deliver their biological child.

“I was just sucked in -- hook, line and sinker,” he said. “There’s a huge component of faith that goes into this and people aren’t as rigorous as they would be in any other business transaction.”

Kraffert sued Delp and got back $12,000, but he said he still lost $50,000.

The process of paying surrogates has been controversial since its inception -- but the initial fears focused more on surrogates themselves, not on the prospect of unreliable or unscrupulous brokers.

In the mid-1980s, the high-profile case of Baby M crystallized worries that surrogates might change their minds about giving up the child, leading to rancorous custody battles.

In the national furor generated by that case -- which the surrogate lost -- dozens of state legislatures debated the legality of surrogacy. Michigan, New York and several other states outlawed compensation for surrogates. Many other countries followed suit.

California, however, embraced surrogacy, minimizing legal hassles to make the state a magnet for aspiring parents from around the world.

More than a third of the 1,042 in vitro fertilization procedures nationwide using gestational surrogates -- women who are unrelated to the babies they deliver -- took place in California in 2006, according to the most recent data available from the U.S. Centers for Disease Control and Prevention.

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A perilous path to parenthood

“We’re not wealthy people. We saved for years to do this,” said 37-year-old Beth Mardones, a former client of SurroGenesis, which recently was accused of being unable to account for more than $2 million of clients’ funds. Many couples have filed police reports alleging fraud, and dozens have hired attorneys in preparation for possible lawsuits.

Mardones and her husband, Marcio, who live in a suburb northwest of Chicago, estimated they had $22,000 left in their SurroGenesis account after three unsuccessful attempts at in vitro fertilization with a surrogate.

“It’s just incredibly disheartening that someone can be so dishonest and manipulative,” said Beth Mardones, who had her uterus removed as a result of cancer.

An attorney for SurroGenesis’ owners declined to comment.

Kathryn Kaycoff Manos, president of the Agency for Surrogacy Solutions in Encino, defended her field, saying that “many agencies are run by reputable people seeking to service both the surrogates and intended parents with compassion and integrity.”

“There are thieves committing fraud and stealing money from innocent people in every human endeavor where money is exchanged,” she wrote in an e-mail. “But does one Bernie [Madoff] reflect a totally corrupt industry? I think not.”

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‘A buyer-beware situation’

At the very least, the inexperience of the people who often get into the business and the lack of oversight can be frustrating and costly.

Customers ultimately must approve the surrogate, after a medical screening by their fertility doctor. But it can take several tries -- and several months -- to find a suitable candidate.

Dr. Jeffrey Steinberg, a fertility specialist in Encino, said agencies often send candidates who are obese or have a history of difficult pregnancies that make them unsuitable candidates. He rules them out, but the customer still gets the bill.

Steinberg became so frustrated with agencies sending unsuitable women that he began recruiting surrogates directly through online ads.

Dr. Mike Feinman, a fertility specialist at the Huntington Reproductive Center in Pasadena, said he recommends just a few well-known agencies to his patients.

“It’s a buyer-beware situation,” he said. “It is incredible how people are willing to place their trust in mom-and-pop operations.”

Surrogates sometimes get stiffed by brokers as well.

On surromomsonline.com, a website for surrogates, one message board is called “Surrogacy community beware” and features passionate discussions of how to guard against dishonest brokers.

“These are often young women, nonaffluent, who don’t have a lot of education or financial resources,” said Kraffert, the dermatologist who sued Delp. The agencies “are leaving a trail of blood on both sides.”

Even when suspect surrogacy brokers are exposed, they don’t always disappear easily.

One broker facing a litany of fraud complaints closed his New Jersey agency, moved to Florida and reopened under a new name.

As Delp’s case in Sacramento shows, even incarceration is no bar to business.

“Nothing would stop these people after criminal prosecution from being able to resurrect their company under a new name without anyone knowing,” said Andrew Vorzimer, a Woodland Hills attorney who handles surrogacy deals.

Rosa Balcazar, owner of B Coming in Beverly Hills, has continued to operate even as former customers have filed two lawsuits against her; a health insurance company has sued her, alleging fraud; and the state has revoked her business license for failure to pay taxes. Balcazar has denied any wrongdoing.

Even as allegations hang over SurroGenesis, one employee told The Times she is planning to start new businesses and has registered a new website.

Patrick Johnson of Houston said he wired SurroGenesis $93,000. He had not yet selected a surrogate when he discovered that his money had disappeared.

A few days later, Johnson said, he received a phone call from a case manager offering her continued help.

All he had to do was send more money.

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Times staff writers Rong-Gong Lin II and Jessica Garrison contributed to this report.