Surrogacy Scandal Raises Question About Regulation

Associated Press

August 11, 2011 / ABC News

She built a name for herself as a highly skilled reproductive law specialist in a state considered the nation's hub for surrogate pregnancies with its well-established network of sperm banks, fertility clinics and social workers.

But prosecutors say Theresa Erickson was actually working the system to become an international baby broker, running a birthing factory out of the Ukraine that duped at least a dozen American couples into paying $150,000 for children they thought were being adopted legally.

Details about the ring surfaced in federal court in San Diego in recent days after Erickson pleaded guilty to fraud charges in a case that prosecutors say highlights the need for more protection for adoptive parents, children and surrogate mothers.

Prosecutors described an elaborate scheme that stretched across two continents. Erickson and two others allegedly recruited women to go to the Ukraine and be implanted with embryos from anonymous donors.

They told their clients the babies had been part of a surrogacy contract and that the prospective parents had backed out at the last minute, Assistant U.S. Attorney Jason A. Forge said.

In fact, he said, there were never any such parents or contracts. The three were instead paying the surrogate mothers between $38,000 and $45,000 for each successful pregnancy and keeping the rest of the adoption money for themselves, Forge said.

They also misled the parents into believing they knew who the sperm and egg donors were when they were anonymous, he said.

Erickson also admitted to filing false applications for the surrogates to California's state insurance program to subsidize the medical costs of the deliveries of the babies.

The case highlights the need for more protection for the vulnerable adoptive parents, the babies involved and the surrogate mothers, Forge said.

He estimates Erickson raked in at least $70,000 alone from the scheme.

Erickson filed false declarations and pleadings in the San Diego Superior Court that the unborn babies were the result of a legitimate surrogacy arrangement to obtain pre-birth judgments that named the adoptive parents on the babies' birth certificates and guaranteed them full parental rights, according to court documents.

The parents will not lose their parental rights because they did not know any laws were being broken, Forge said.

The case, however, exemplifies how easily people involved in these arrangements can be taken advantage of, especially people desperate to have children, experts say.

"I would hope that the case enlightens legislators in terms of the vulnerability of the parents who want children and the need for additional protection for them and the carriers and the babies," Forge said.

He declined to elaborate on what those regulations would be exactly but experts say the case shows the challenge in trying to regulate the service, which has raised a host of questions by religious groups, bioethicists and others, particularly over whether it is ethical for surrogates to be paid.

Experts say California already leads the nation in trying to regulate the service and prevent such abuses

But at the same time, California "has become the capital of reproductive malpractice," said Glenn McGee, editor and chief of The American Journal of Bioethics, who has written a book about the topic called "The Perfect Baby."

That's partly because the state has a flourishing surrogacy market that attracts people from around the globe looking to adopt through surrogacy pregnancies.

"There's a kind of a web of service in California that makes it a special place, and the attorneys know the law best because some of the most challenging cases involving surrogacy have been in California," said McGee, who works at the Center for Practical Bioethics in Kansas City.

California courts have made landmark rulings on the subject, including a 1998 case involving a couple who adopted a baby through a surrogacy pregnancy and wanted to get a divorce. The father claimed the baby was not his since he had no biological connection to the child. But the court found that when a married couple intends to procreate using a non-genetically related embryo implanted into a surrogate, the legal contract between them makes the couple the child's lawful parents.

The ruling laid the foundation for California's elaborate system of protecting surrogates.

The three women tried to beat that system, but got caught when some of their surrogate mothers tipped off federal investigators, officials say.

The other defendants are a Maryland-based lawyer who also specializes in reproductive law and a Las Vegas surrogate mother. Forge said the three used their contacts to find customers. Erickson, 43, spoke frequently about the topic on TV and radio because of her expertise in the subject.

"Surrogacy is hard to regulate and hard to do responsibly if there are market pressures, and if there are exploitative and predatory legal practices," McGee said. "There is so much potential for abuse here."

There are also genetic risks for future generations if no one knows who the donors are who are producing the children, McGee said.

At the same time, he said surrogacy has enriched the lives of countless people yearning to raise a child of their own, and he worries cases like this could stymie efforts to properly regulate it.

"This case will set back attempts to create clear standards for surrogacy again, and it's a very bad time for that to happen because there are more desperate parents than ever, there are more problems than ever with international exploitation of adoptions, and the government is ill-prepared to regulate this right now," McGee said.

Erickson pleaded guilty to conspiracy to commit wire fraud. She has been ordered to pay each of the 12 couples $10,000 in restitution and up to $250,000 in fines to the government. She and the other two women face up to five years in prison when they are sentenced in October.

Erickson and her attorney, Ezekiel Cortez, declined to comment.

Hilary Neiman, the Maryland attorney, pleaded guilty to conspiracy to commit wire fraud on July 28. Carla Chambers, who is identified in court papers as the surrogate who helped recruit women to be gestational carriers, pleaded guilty last week to conspiracy to engage in monetary transactions derived from unlawful activity.