NEW YORK TIMES, A Surrogacy Agency That Delivered Heartache
By Tamar Lewin
July 27, 2014
CANCÚN, Mexico — Rudy Rupak, the founder of Planet Hospital, a medical tourism company based in California, was never shy about self-promotion. Over the last decade he has held forth about how his company has helped Americans head overseas for affordable tummy tucks and hip replacements. And after he expanded his business to include surrogacy in India for Western couples grappling with infertility — and then in Thailand, and last year, Mexico — he increasingly took credit for the global spread of surrogacy.
But now Mr. Rupak is in involuntary bankruptcy proceedings, under investigation by the F.B.I. and being pursued by dozens of furious clients from around the world who accuse him of taking their money and dashing their dreams of starting a family.
The practice of paying a woman to have an embryo transferred to her womb and bear the child for someone else, known as gestational surrogacy, has been growing steadily over the last decade although it remains illegal in most countries.
Where it is permitted, as in parts of Mexico, businesses like Mr. Rupak’s — many reputable, some not — have flourished by serving as intermediaries connecting clients with egg donors, in vitro fertilization clinics and surrogates. Those able to pay more than $100,000 for services often turn to an American agency in a state where surrogacy is legal and fairly widely practiced. Those with less money often go to India or to Mexico through agencies like Planet Hospital that advertise heavily and charge less than half the American price.
Jonathan C. Dailey, a lawyer in Washington, wired Planet Hospital $37,000 in December 2013, the first installment on a contract for a single mother in Mexico to carry his child. He and his fiancée flew to Cancún to leave a sperm deposit at the clinic that would create the embryo and to visit the downtown house where their surrogate would live while pregnant. They picked a “premium” egg donor from the agency Planet Hospital sent them to. But nothing happened.
“It was just outright fraud,” said Mr. Dailey. “It’s like we paid money to buy a condo, they took the money, and there was no condo. But it’s worse, because it’s about having a baby.”
The emerging Planet Hospital story, which Mr. Rupak characterized as one of mismanagement rather than fraud, stands as a cautionary tale about the proliferation of unregulated surrogacy agencies, their lack of accountability and their ability to prey on vulnerable clients who want a baby so badly that they do not notice all the red flags.
Catherine Moscarello, who worked with Mr. Rupak and handled communications with clients, said the company was engaged in unsavory practices “from the moment I stepped aboard.”
“The object was to get money,” she added. “He would keep changing clinics, and whenever his relationship with a clinic in India or Thailand or Cancún broke off, he would disparage the clinic and the doctors there. But what was really happening was that he wasn’t paying his bills.”
She said Planet Hospital also engaged in unauthorized egg-splitting. In at least one case, Mr. Rupak admitted taking eggs harvested for one intended parent, and giving some to another to keep his costs down. Then, too, Ms. Moscarello said, Planet Hospital did not use proper care in choosing women to be surrogates. Ms. Moscarello, who was herself trying to have a baby through surrogacy, said she was paired with a woman who was only 18, had a 9-month-old child of her own and who had had uterine cysts removed the day before the embryo transfer. The surrogacy did not work.
Mr. Rupak had about 150 domain names on the Internet for his surrogacy business, with web advertisements for Christian surrogacy, gay and lesbian surrogacy, Mexican surrogacy, Indian surrogacy and more.
Earlier this year, he closed Planet Hospital. But this month, he popped back up, once again starting up the company website, offering kidney transplants, gastric bypass, tummy tucks, and other surgery — but not surrogacy.
“My interest is to stay in business and keep this thing going, even though I’m not making any income at the moment,” Mr. Rupak said.
Mr. Rupak said his lawyer had advised him to ignore the bankruptcy, but now he might fight it.
Even with Mr. Rupak out of the Cancún surrogacy business, the demand for affordable surrogacy and the potential profits are such that all the former main players in Planet Hospital — its vice president, the head of the egg-donor agency it worked with, the woman in charge of the Cancún surrogate housing, and Ms. Moscarello, the client representative — are starting their own surrogacy businesses in Mexico.
In fact, hundreds of new surrogacy businesses advertise their services on the Internet because anyone can establish an agency, regardless of background or expertise. Agencies are started and disappear, sometimes reappearing under a new name.
Some agencies have faced legal action, though.
In one case, Tonya A. Collins, the owner of SurroGenesis in California, was sentenced to five years in prison for fraud after taking millions of dollars of client money, supposedly placed in escrow for surrogacy costs.
In another, Theresa M. Erickson, a California surrogacy lawyer and owner of Conceptual Options, was convicted in a baby-selling ring. She was sentenced to five months in jail, nine months of home confinement and fined $70,000. The ring solicited women online to bear children for others and sent them to Ukraine to have embryos implanted — but there were no would-be parents. When the surrogates were more than four months pregnant, Ms. Erickson told them the fictitious parents had backed out, and sold the babies for more than $100,000 each.
“There are more scams and scandals in surrogacy now than I can ever recall seeing,” said Andrew W. Vorzimer, a surrogacy lawyer in Los Angeles. “But I think Planet Hospital is the biggest mess yet.”
‘Some Horrendous Mistakes’
Mr. Rupak, 45, who is Canadian and is also known as Rupak Acharya, started out as a software developer designing video games, then served as chief technology officer for American Apparel, before founding Planet Hospital in 2002.
He said Planet Hospital had a good track record at the start, when the company focused on orthopedics, plastic surgery, dental work and other relatively quick and predictable procedures. But he contended that he became overextended, and fell behind on his payments when he expanded into surrogacy.
Unlike basic surgical procedures, surrogacy is a complicated process with no guarantees that the surrogate will get pregnant, and not miscarry, or that the fetus will not have serious defects. And unlike most medical procedures, surrogacy is a lengthy process, with weeks when the egg donor and the woman who will carry the baby take hormones to synchronize their cycles, all followed by nine months of pregnancy.
In an interview, Mr. Rupak said he had good intentions, but “made some horrendous mistakes.”
“What happened is entirely 100 percent my fault, but it’s mismanagement rather than outright fraud,” Mr. Rupak said. “I am an entrepreneur, but I am notoriously, notoriously bad at contracts.”
Many of his clients take a darker view of what they say was a trail of lies, excuses and broken promises that left them heartbroken and out thousands of dollars — in some cases, their life savings.