Directors charged with defrauding adoption agency of $420,000

by: ANNA MEHLER PAPERNY

The founder and general manager of an international adoption agency are accused of defrauding the agency of hundreds of thousands of dollars almost two years after trustees first found “questionable” spending in its records.

Cambridge, Ont.-based Imagine Adoption, which matched up Canadians with orphans from Ghana and Ethiopia, declared bankruptcy in July, 2009, leaving hundreds of families in adoption limbo.

Now, the agency’s founder, Susan Hayhow, and its general manager, Rick Hayhow, are charged with breach of trust and multiple counts of fraud, totalling more than $420,000.

Police allege the frauds took place between January, 2007 and the agency’s bankruptcy declaration. During that time, police say, money paid for adoption services was spent on international vacations, renovations to the couple’s shared home in Cambridge, food and clothing.

The charges are cold comfort to the families, many of whom have moved on or tried to adopt through other avenues.

But it raises questions about how an agency involved in the increasingly lucrative business of international adoptions, whose license was renewed multiple times by the Ontario government, could have operated for so long with its financial irregularities unnoticed.

International adoption has become a multi-billion-dollar global industry; children’s advocates argue it’s under-regulated and ripe for abuse.

Ontario has “some of the most comprehensive international adoption licensing requirements in Canada,” said Anne Machowski, a spokeswoman with the Ministry of Children and Youth Services. Imagine Adoption, which was first licensed in 2005, had its license renewed annually.

“Why hasn’t the Ontario government yet taken responsibility for their failure to properly monitor an international adoption agency?” said Ingrid Phaneuf, who had been waiting for adoptions from the agency. Ms. Phaneuf has since adopted two boys, eight and 10, from Ontario.

Children and Youth Services Minister Laurel Broten wasn’t available for comment Friday, Ms. Machowski said.

Since the Imagine Adoption case, the province has strengthened its licensing process: It now requires an audited financial statement, an annual report available to the public and a report from the board of directors that outlines agency operations and activities.

“When the Ministry became aware of the difficulties concerning Imagine Adoption we acted quickly and immediately,” Ms. Machowski said in an e-mail, adding that the province worked with BDO Dunwoody to help families affected and ensure the agency’s orphans in Ethiopia were safe. (The orphanage Imagine Adoption was working with in Ghana, which the Canadian agency did not operate, was shut down by the Ghanaian government over allegations of child-trafficking right around the time of Imagine Adoption’s bankruptcy declaration.)

Susan Taves, the BDO Dunwoody trustee charged with handling Imagine Adoption’s bankruptcy and restructuring in 2009, says spending irregularities at the agency were apparent when she began going through its financial records.

“It was clear from our banking review there was some really questionable stuff,” she said. This included travel to the United States and renovations that clearly hadn’t been done on Imagine Adoption’s Cambridge office. But Ms. Taves said she wouldn’t expect the province to have noticed that.

“Licensing is like issuing a license for someone to be a car salesman: They’re not going to be in there every day to see if the price of cars is going up or down,” she said. “This is an operating issue I think it would have been difficult for a licensing body to see.”

Mr. and Ms. Hayhow are on record as having declared personal bankruptcy in 1996, with $165,712 in declared liabilities. The couple bought a house on Roseview Avenue in Cambridge in 2004. It was sold for $417,000 in 2010.

When Imagine Adoption declared bankruptcy, the couple owed money to a swimming pool business, a home-renovation contractor and a landscaper who confirmed the work was done at Ms. Hayhow's private residence.

Imagine Adoption has since restructured and is technically operational, although its adoptions are being run by Mission of Tears in Toronto.

For board member Christine Starr, things turned out all right: Her 19-month-old daughter Soleila arrived from Ethiopia in December.

“I would do it all again in a heartbeat.”