CANCÚN, Mexico — Rudy Rupak, the
founder of Planet Hospital, a medical tourism company
based in California, was never
shy about self-promotion. Over the last decade he has held forth about how his
company has helped Americans head overseas for affordable tummy tucks and hip
replacements. And after he expanded his business to include surrogacy in India
for Western couples grappling with infertility — and then in Thailand,
and last year, Mexico
— he increasingly took credit for the global spread of surrogacy.
But now Mr. Rupak is in involuntary
bankruptcy proceedings, under investigation by the F.B.I. and being pursued by
dozens of furious clients from around the world who accuse him of taking their
money and dashing their dreams of starting a family.
The practice of paying a woman to have an embryo
transferred to her womb and bear the child for someone else, known as
gestational surrogacy, has been growing steadily over the last decade although
it remains illegal in most countries.
Where it is
permitted, as in parts of Mexico,
businesses like Mr. Rupak’s — many reputable, some not — have flourished by
serving as intermediaries connecting clients with egg donors, in vitro
fertilization clinics and surrogates. Those able to pay more than $100,000 for
services often turn to an American agency in a state where surrogacy is legal
and fairly widely practiced. Those with less money often go to India
or to Mexico through agencies like PlanetHospital that advertise heavily and
charge less than half the American price.
Jonathan C. Dailey, a lawyer in Washington,
wired PlanetHospital
$37,000 in December 2013, the first installment on a contract for a single
mother in Mexico
to carry his child. He and his fiancée flew to Cancún to leave a sperm deposit
at the clinic that would create the embryo and to visit the downtown house
where their surrogate would live while pregnant. They picked a “premium” egg
donor from the agency PlanetHospital
sent them to. But nothing happened.
“It was just outright fraud,” said Mr.
Dailey. “It’s like we paid money to buy a condo, they took the money, and there
was no condo. But it’s worse, because it’s about having a baby.”
The emerging PlanetHospital story, which Mr. Rupak
characterized as one of mismanagement rather than fraud, stands as a cautionary
tale about the proliferation of unregulated surrogacy agencies, their lack of
accountability and their ability to prey on vulnerable clients who want a baby
so badly that they do not notice all the red flags.
Catherine Moscarello, who worked with Mr.
Rupak and handled communications with clients, said the company was engaged in
unsavory practices “from the moment I stepped aboard.”
“The object was to get money,” she added.
“He would keep changing clinics, and whenever his relationship with a clinic in
India or Thailand
or Cancún broke off, he would disparage the clinic and the doctors there. But
what was really happening was that he wasn’t paying his bills.”
She said PlanetHospital
also engaged in unauthorized egg-splitting. In at least one case, Mr. Rupak
admitted taking eggs harvested for one intended parent, and giving some to
another to keep his costs down. Then, too, Ms. Moscarello said, PlanetHospital did not use proper care in
choosing women to be surrogates. Ms. Moscarello, who was herself trying to have
a baby through surrogacy, said she was paired with a woman who was only 18, had
a 9-month-old child of her own and who had had uterine cysts removed the day
before the embryo transfer. The surrogacy did not work.
Mr. Rupak had about 150 domain names on
the Internet for his surrogacy business, with web advertisements for Christian
surrogacy, gay and lesbian surrogacy, Mexican surrogacy, Indian surrogacy and
more.
Earlier this year, he closed PlanetHospital. But this month, he popped
back up, once again starting up the company website, offering kidney
transplants, gastric bypass, tummy tucks, and other surgery — but not
surrogacy.
“My interest is to stay in business and
keep this thing going, even though I’m not making any income at the moment,”
Mr. Rupak said.
Mr. Rupak said his lawyer had advised him
to ignore the bankruptcy, but now he might fight it.
Even with Mr. Rupak out of the Cancún
surrogacy business, the demand for affordable surrogacy and the potential
profits are such that all the former main players in Planet Hospital — its vice
president, the head of the egg-donor agency it worked with, the woman in charge
of the Cancún surrogate housing, and Ms. Moscarello, the client representative
— are starting their own surrogacy businesses in Mexico.
Pregnancy
for Pay
In fact, hundreds of new surrogacy businesses
advertise their services on the Internet because anyone can establish an
agency, regardless of background or expertise. Agencies are started and
disappear, sometimes reappearing under a new name.
Some agencies have faced legal action,
though.
In one case, Tonya A. Collins, the owner
of SurroGenesis in California,
was sentenced to five years in prison for fraud after taking millions of
dollars of client money, supposedly placed in escrow for surrogacy costs.
In
another, Theresa M. Erickson, a California
surrogacy lawyer and owner of Conceptual Options, was convicted in a baby-selling ring.
She was sentenced to five months in jail, nine months of home confinement and
fined $70,000. The ring solicited women online to bear children for others and
sent them to Ukraine
to have embryos implanted — but there were no would-be parents. When the
surrogates were more than four months pregnant, Ms. Erickson told them the
fictitious parents had backed out, and sold the babies for more than $100,000
each.
“There are more scams and scandals in
surrogacy now than I can ever recall seeing,” said Andrew W. Vorzimer, a
surrogacy lawyer in Los Angeles.
“But I think PlanetHospital
is the biggest mess yet.”
‘Some Horrendous Mistakes’
Mr. Rupak, 45, who is Canadian and is also
known as Rupak Acharya, started out as a software developer designing video
games, then served as chief technology officer for American Apparel, before
founding Planet Hospital in 2002.
He said PlanetHospital
had a good track record at the start, when the company focused on orthopedics,
plastic surgery, dental work and other relatively quick and predictable
procedures. But he contended that he became overextended, and fell behind on
his payments when he expanded into surrogacy.
Unlike basic surgical procedures, surrogacy is a complicated process with
no guarantees that the surrogate will get pregnant, and not miscarry, or that
the fetus will not have serious defects. And unlike most medical procedures,
surrogacy is a lengthy process, with weeks when the egg donor and the woman who
will carry the baby take hormones to synchronize their cycles, all followed by
nine months of pregnancy.
In an interview, Mr. Rupak said he had
good intentions, but “made some horrendous mistakes.”
“What happened is entirely 100 percent my
fault, but it’s mismanagement rather than outright fraud,” Mr. Rupak said. “I
am an entrepreneur, but I am notoriously, notoriously bad at contracts.”
Many
of his clients take a darker view of what they say was a trail of lies, excuses
and broken promises that left them heartbroken and out thousands of dollars —
in some cases, their life savings.
Former
PlanetHospital
clients seeking to have a baby through surrogacy in India
and Mexico share
similar stories of unpaid bills, switched clinics, reversed credit-card
charges, pleas for more time and promises to make it up with free services.
Mr. Rupak started his surrogacy program in
India, the country with the largest
surrogacy industry, but moved to Thailand,
and, last year, Mexico, after India
closed its doors to gay couples seeking babies through surrogates, as well as
singles and those married less than two years.
“By the time you realize how deep you’re
in, you’ve lost all your money and you’re stuck,” said Rhyannon Morrigan, who,
with her husband, signed an Indian surrogacy contract in October 2012. “They
liked to do everything by phone, and put as little in writing as possible.”
In retrospect, she said, there were warning
signs.
“Even at the start, when we sent the
contract in and asked for a signed copy back, we never got one,” she said. “We
got so tired of excuses and lies. By July 2013, I’d pretty much let go of the
idea of getting my money back, but I didn’t want it to happen to anyone else.”
So she began posting her problems with PlanetHospital online, and soon her
family began receiving online threats and slurs from Mr. Rupak.
Mr. Rupak has said that if people attacked
him, he felt free to retaliate.
Warning Signs Overlooked
In Thailand,
too, there were problems with PlanetHospital.
“We
contacted PlanetHospital
because we knew that India
was closing to gay couples. Thailand
is familiar to us, and we thought it would be good to have an American agency
with a lot of experience with surrogacy,” said Jim Carrington, an Australian
who paid $25,000 for a Thai surrogacy in March, 2013. “Looking back, I’m
annoyed with myself that I didn’t pick up how they made lots of assurance, but
they kept everything verbal, on the phone.”
And
all their questions, including a request last fall for a refund, got evasive
responses. “It was always, ‘I’m out of the country, I can’t get to a computer,
I’m in Europe, I’m not sure what happened, I’ll look
into it,’ ” Mr. Carrington said.
Mr. Carrington received a $5,000 refund
from the clinic, and Mr. Rupak agreed to wire another $5,000. But, Mr. Rupak
said, he decided that although they did not achieve a pregnancy, they received
enough services that no further refund was warranted — and he canceled the
wire.
Cancún’s
white-sand beaches and party reputation have helped make it a hot spot for
people, including many gay couples, looking to start a family through
surrogacy. In one blog post announcing the Mexico
program, Mr. Rupak wrote, “ ‘Cancún baby! Woohoo’ takes on a whole new
meaning now, doesn’t it?”
But Cancún is not in the state of Tabasco,
the only one in Mexico
where surrogacy is legal. So women here who agree to be impregnated and carry
babies to term have to fly about 450 miles to Tabasco
to deliver their babies.
Ms. Moscarello, the former PlanetHospital client representative, said her new
venture, IP Conceptions, would operate in Tabasco.
PlanetHospital worked with two clinics
here, Fertility Center of Cancún and Irega. Both said
their PlanetHospital
experience left scars.
Jaime Elorriaga, a spokesman for the
Fertility Center of Cancún, said that his clinic had ended its surrogacy
program altogether.
“We’ve had problems with other companies
that come to Mexico,
too, but not as bad as Rudy,” he said. “They like to cut corners to save a few
dollars, and that can turn into disaster.”
Tori Brown, the international patient
coordinator at Irega, said, “We have tried to put the whole PlanetHospital nightmare behind us. We
followed through with the clients we had, and we’re not going to discuss the
situation anymore.”
One Santa Fe couple,
Chris Pommier and Jonah Winn-Lenetsky, paid $22,500 for the first phase of
their PlanetHospital
contract, the largest chunk. The first-phase fees, typically $22,000 to
$37,000, covered the surrogate recruitment, semen deposit, egg donor, in vitro
fertilization and embryo transfer.
Phase Two, when a heartbeat was confirmed,
was $13,000 to $22,000 and went mostly to pay the woman carrying the fetus and
to pay for her housing. At Phase Three, the cost was $3,000 to $12,000 to cover
delivery if the client got that far. The money was paid to PlanetHospital, which coordinated the
process and served as a billing agent for the other clinics involved in the
process.
“We had flown down to do our semen deposit
and testing in July, and shortly after that we got an email that Planet
Hospital had not paid the clinic fees” at Fertility Clinic of Cancún, Mr.
Pommier said. “PlanetHospital
and the clinic blamed everything on each other. At first the clinic told us
they’d do whatever we wanted, but then they changed their tune when we wanted
to transfer the semen, because they hadn’t been paid.”
That same month, in an email complaining about the doctors he had worked
with, and turning down a bid by a client for a refund, Mr. Rupak wrote, “Here
is a little secret for all of you. There is a lot of treachery and deception in
I.V.F./fertility/surrogacy because there is gobs of money to be made.”