Adoption agency investigated

Date: 2008-02-17

Daily Camera, The (Boulder, CO)

Boulder-based company closes amid lawsuits, angry prospective parents

Author: Heath Urie Camera Staff Writer

Boulder police are investigating the business practices of a Boulder-based international adoption agency that closed its doors last week in the face of mounting complaints and lawsuits, a Camera investigation revealed.

Police spokeswoman Sarah Huntley confirmed the investigation Friday, saying detectives have been assigned to look into "alleged felonious criminal wrongdoing in relation to adoption practices" at the Claar Foundation, 4141 Arapahoe Ave.

While details about the ongoing probe are not being released, business and court records -- along with several hopeful adoptive parents -- indicate the company that specialized in finding homes for orphans living in foreign countries has a troubled past.

In its various incarnations, the Claar Foundation -- started by former Erie Trustee Lisa Novak and her husband, Martin Claar -- has been sued several times over its financial dealings.

Grieving would-be parents say they were swindled, but Novak said the agency's closure has been handled properly.

Novak on Saturday said she was not aware of the ongoing police investigation, but that she has done nothing wrong.

"We stopped taking clients months before we closed, and then we offered all clients the ability to transfer to another agency so their adoptions wouldn't be stopped," Novak said. "I think the closing of a business as emotional as adoptions causes an extreme emotional reaction.

"It's a scary process, and when something big and scary happens in the middle of it like that, the worst in people comes out."

Questions of finance

The first public hint of problems within the company came in May 2005, when Novak's brother Joseph Novak sued the couple in Boulder County Court, saying they transferred assets among multiple companies "for the fraudulent purpose of escaping liability" for more than $216,000 of borrowed money.

The suit also alleged the couple put $8,400 in charges on credit cards taken out under his name without his knowledge.

The lawsuit was dismissed in November 2005, after a confidential out-of-court settlement, and Joseph Novak declined to be interviewed for this story.

Lisa Novak said the suit was settled in her favor, but could not discuss the terms of the agreement.

In the suit, though, Joseph Novak claimed the couple consistently founded companies and changed names to avoid paying their debts.

Records at the Colorado Secretary of State's Office show Novak's operation began as "New Dawn Adoptions," a nonprofit registered in 2003. The registration named Novak and her husband as the only two board members overseeing the company.

In January 2004, the couple changed the business's name to "Claar Foundation Inc.," but it wasn't the first time the company's identity shifted.

Joseph Novak wrote in the lawsuit that he helped Lisa Novak in early 2002 establish "One Light Adoptions," a nonprofit international adoption agency, as well as "One Light Services," a for-profit adoption services company.

Lisa Novak also is the registered agent of "Orphan Business Alliance," "Global Orphan Support and Education Foundation" and "New Family Services," state business records show.

New Family Services also had its name changed in September 2003 from "Rocky Mountain Bands," which operated under the names "Ez Dossier," "The Home Study Guide," "New Parent Training" and "Family Professionals Institute," according to the secretary of state.

All the registered businesses operated from the Arapahoe Avenue address.

Lisa Novak -- who in January 2005 resigned from her position on Erie's board of trustees after she decided to devote time to helping children orphaned by the Indian Ocean tsunami -- said she resents accusations that she used her companies to hide assets.

"No assets have ever transferred between any of the companies," Lisa Novak said, noting that some of the name changes were due to trade-name issues or "for marketing" reasons.

"Some of them we incorporated, but never used," she said. "We were just reserving the names."

A deeper toll

Other families who have since targeted the Claar Foundation in court say the toll has been much deeper than any financial statistics could indicate.

In November 2007, Denver resident Sheri Eisert -- an associate professor at the University of Colorado's Health Science Center -- won a $1,350 judgment against Lisa Novak and the Claar Foundation. A Boulder judge awarded Eisert the money after she sued for post-adoption home visits and reports that she said were never completed by the company.

"I was like a hostage," Eisert said, alleging that Claar officials held back paperwork while at the same time demanding more money. "These are the nastiest people, who take advantage of people who want to adopt."

She said she finished her adoption through a Maryland-based company, which delivered a 2-year-old daughter from the Asian nation of Kazakhstan.

Novak said she paid the settlement, but only because it would have taken additional assets to hire an attorney to defend against the claims.

More recently, Boulder resident Carol Kuzdek in December 2007 won an $18,700 judgment against Novak after she filed a lawsuit alleging the Claar Foundation failed to return fees paid to process an adoption in Guatemala that never happened.

"I think companies like that need to be accountable for what they do," Kuzdek said from her home. "We're not just talking about the financial aspect, we're talking about the emotional pull on people."

Kuzdek said she stuck with the adoption process with another company, though, and is expecting the arrival of her 6-month-old daughter from Guatemala later this month.

"I certainly don't regret doing an adoption," she said. "I just regret having gone through Claar Foundation."

Additionally, Lafayette residents Susan and Jim Paulson also won a civil judgment from Claar Foundation. A Boulder County Court judge on Feb. 1 awarded the couple $5,000 for adoption fees the company spent but refused to refund when Nepal closed its foreign adoption program.

The Paulsons said they decided to adopt a child when they realized their son, born with severe disabilities, would not live long.

"We thought we'd get a 2-year-old and it would round out our family," Susan Paulson said. "We were thrilled about the possibility."

On Feb. 5, the Paulson's 3-year-old son, Quinn, died.

Susan Paulson said she borrowed the money from a relative, and they can no longer afford to go through another adoption agency because they spent as much as $13,000 dealing with the Claar Foundation.

"We totally put all our trust in them," Susan Paulson said. "I want everyone to know -- I want to yell it from the mountaintops -- that these people did something ... really violating to our personal sensibilities."

Novak said the Paulson's claims against her company have "no validity."

"They're popping up now that they know we're closed," Novak said about the Paulsons.

Novak told the Camera that neither the Kuzdek judgment nor the Paulson judgment would be paid because the Claar Foundation has no assets. She said she is not personally liable for the court decisions.

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