Surrogacy makes for a perilous path to parenthood

Some agencies have earned the trust of doctors and provide valuable services to couples and surrogates, but the industry's lack of regulation allows unscrupulous brokers to swindle aspiring parents.
By Alan Zarembo and Kimi Yoshino

Not even jail could keep Nanette Delp out of the surrogacy business.

In 2006, she was arrested on allegations that she stole tens of thousands of dollars from couples who had paid her to find women to carry their babies, according to court records.

While she was behind bars awaiting trial in Sacramento, she continued to sign up more couples, using a new business name and a new website, state records show. Ultimately, she was sentenced to six years in prison after pleading no contest to seven counts of grand theft.

In the surrogacy industry, there are no consumer guarantees. A website is not a professional license -- in fact, there is no such thing. Even in California, widely considered the friendliest place in the world for people seeking surrogates, contracts tend to favor the broker agencies, not the clients.

Signing with an agency is frequently an act of faith, sometimes with bitter results. Often, aspiring parents must pay the entire bill -- $50,000 or more -- in advance. The money is nonrefundable, placing them at the mercy of the agency.

In recent days, Modesto-based SurroGenesis and Beverly Hills-based B Coming have been accused by attorneys or through lawsuits of misusing more than $2.5 million in clients' funds -- in some cases without ever helping couples choose a surrogate or conceive a child.

Although several agencies throughout the country have been around long enough to earn the trust of doctors, others come and go. Their owners, many of whom are former surrogates themselves, often have little experience managing the hundreds of thousands of dollars that even the tiniest agencies attract.

"It's so easy to start up and be anonymous on the Internet," said Dr. Craig Kraffert, a Redding dermatologist who hired Delp because he and his wife wanted a surrogate to deliver their biological child.

"I was just sucked in -- hook, line and sinker," he said. "There's a huge component of faith that goes into this and people aren't as rigorous as they would be in any other business transaction."

Kraffert sued Delp and got back $12,000, but he said he still lost $50,000.

The process of paying surrogates has been controversial since its inception -- but the initial fears focused more on surrogates themselves, not on the prospect of unreliable or unscrupulous brokers.

In the mid-1980s, the high-profile case of Baby M crystallized worries that surrogates might change their minds about giving up the child, leading to rancorous custody battles.

In the national furor generated by that case -- which the surrogate lost -- dozens of state legislatures debated the legality of surrogacy. Michigan, New York and several other states outlawed compensation for surrogates. Many other countries followed suit.

California, however, embraced surrogacy, minimizing legal hassles to make the state a magnet for aspiring parents from around the world.

More than a third of the 1,042 in vitro fertilization procedures nationwide using gestational surrogates -- women who are unrelated to the babies they deliver -- took place in California in 2006, according to the most recent data available from the U.S. Centers for Disease Control and Prevention.

A perilous path to parenthood

"We're not wealthy people. We saved for years to do this," said 37-year-old Beth Mardones, a former client of SurroGenesis, which recently was accused of being unable to account for more than $2 million of clients' funds. Many couples have filed police reports alleging fraud, and dozens have hired attorneys in preparation for possible lawsuits.

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