Closed adoption agency under investigation

Closed adoption agency under investigation

By Melissa Fletcher Stoeltje and Patrick Danner

Updated 11:53 p.m., Monday, April 30, 2012

Adoption Services Associates Inc., a San Antonio-based international adoption agency that filed for bankruptcy liquidation last week, is under investigation by the Texas attorney general for possible consumer fraud.

ASA abruptly closed its doors April 9, to the shock of dozens of prospective parents.

More than 900 couples from around the globe are listed as creditors in ASA's bankruptcy case, including some in despair over money and dreams of successful adoptions they've lost with the agency's disintegration.

The attorney general's office had directed James M. McMahon Jr., ASA's president, to appear Monday at the agency's San Antonio offices as part of its investigation into possible violations of the Texas Deceptive Trade Practices-Consumer Protection Act.

The state is investigating whether ASA advertised its adoption services with the intent of not delivering. A spokesman for the attorney general's office declined to comment.

The San Antonio Police Department has been conducting its own investigation and declined through a spokesman to provide details.

ASA had placed more than 5,000 newborns, infants and toddlers in Texas and around the world since 1985 before shutting down. McMahon's wife, attorney Linda Zuflacht, also is an ASA officer, state corporate records show.

In emails to clients when ASA closed, McMahon said “economic conditions” made it impossible for the agency to continue. He also blamed his wife's ill health.

ASA filed for Chapter 7 liquidation April 24 in U.S. Bankruptcy Court in San Antonio, listing no assets and about $31,550 in debts.

In its tax return for the year ended April 30, 2011, the nonprofit reported almost $554,000 in assets and $573,600 in liabilities.

The bankruptcy petition, which runs 359 pages, lists nearly 950 couples as unsecured creditors. Some of them were in the process of adopting before ASA shut down.

The bankruptcy filing didn't disclose how much each of the couples might be owed. Most of the creditor claims in the petition are disputed by ASA.

Martin Seidler, ASA's bankruptcy lawyer, had no comment, an assistant said.

Some ASA clients were angry about the bankruptcy filing.

Rick Perez and his wife, a Harlingen couple who adopted an infant from the agency two years ago, sent ASA a $34,300 check in February for a second adoption. That adoption didn't go through before the agency shut down. Perez didn't get his money back.

“A detective (with SAPD) told me that the date of my check put it within the time frame (of) when the owners knew they were going down,” Perez said. “Why did they take my money? ... We're talking about babies here.”

In New Jersey, Beth Kimmerling and her husband adopted successfully in 2009, so they signed up for a second adoption.

But the birth mother backed out, costing them $5,000 in expenses. But that still left $25,000 the couple had paid ASA.

“We asked for it, but (ASA's owners) said they'd put it in escrow” for another adoption attempt, Kimmerling said.

Then ASA closed and the money vanished, she said.

“We feel betrayed,” Kimmerling added. “The whole thing was just so poorly handled.” She has created a Facebook community of ASA adoptive parents.

A creditors meeting is set for 11 a.m. May 24 in room 333 of the Hipolito F. Garcia Federal Building at 615 E. Houston St.. The meeting is an opportunity for creditors to question representatives for the debtor.

Perez plans to attend.

“I will be there, no shadow of a doubt,” he said.

mstoeltje@express-news.net