NYHOMESTUDY BLOG

By DAN FROSCH

Faced with a tightening of federal regulations governing foreign adoptions, and suffering from a downturn in business, international adoption agencies in the United States are finding themselves in financial straits and closing their doors in unprecedented numbers, experts say.

At least 15 percent of agencies that specialize in international adoptions have recently shut down, are expected to do so this year or will probably merge with other agencies to survive, according to the National Council for Adoption, an advocacy and education group in Virginia.

In some cases, the closings have come without warning, leaving people without the thousands of dollars in fees they paid to an agency or the child they had thought would finally be theirs.

They have also led to lawsuits and criminal investigations, as some struggling agencies have apparently turned to more desperate business practices to stay afloat.

“I don’t think anyone thought we’d see the number of closings that we have,” the adoption council’s vice president of training and agency services, Chuck Johnson, said. “We’ve heard of agencies still collecting fees from families and then announcing they’re going out of business the next week.”

For couples like Susan and Jim Paulson of Lafayette, Colo., what began as an aching desire to have another child turned quickly into a nightmare.

In 2006, with their son Quinn, 2, dying from a degenerative neurological disorder, the Paulsons decided to adopt a third child. Their first-born, a boy, now 6, would be lonely without his brother, they reasoned. And so would they.

After contacting Lisa Novak, the director, along with her husband, of the Claar Foundation, a Boulder adoption agency, the Paulsons paid roughly $11,000 in processing fees and waited for the arrival of a baby girl from Nepal.

But after the adoption collapsed amid political turmoil in Nepal last May, the Paulsons said they asked for some of their money back but never received a response from Ms. Novak. She was arrested on March 26 on charges of defrauding families of tens of thousands of dollars by promising adoptions but never completing them.

“It was devastating,” Ms. Paulson said. “We really trusted them.”

Ms. Novak’s lawyer, Lance Goff, said that there was no merit to the charges, and that the Paulsons knew the risks of adopting in Nepal and could have continued working with Claar to adopt a child in another country. Under their contract, he said, the Paulsons were not entitled to their money back.

“No adoption agency can guarantee a couple a child,” Mr. Goff said, adding that what agencies did was help couples “put together the paperwork so they can adopt, and there’s no evidence that the Claar Foundation breached that obligation to its clients.”

Mr. Goff added that prospective parents “need to have the fortitude and the flexibility to roll with the punches if they are committed to getting a child.”

The story of the Paulsons, and that of other people the Claar agency is accused of swindling, exemplifies a trend in a field that until recently operated largely free of federal regulation.

International adoptions in the United States fell to 19,613 children in the last fiscal year, from 22,884 in 2004, with one factor being red tape in countries like Russia and China making it more difficult for people to adopt there.

On April 25, the Vietnamese government announced it would stop processing new adoption applications from Americans after July 1, following a report by the United States Embassy in Hanoi that accused the adoption system there of widespread corruption. The Vietnamese government has denied the charges.

And in Guatemala, the government has placed a temporary one-month hold on pending adoptions as each case is reviewed because the system there has been plagued with corruption.

The Hague Convention on Intercountry Adoption, which went into effect in the United States on April 1, is also having an impact.

The convention requires that to become accredited, international adoption agencies must comply with uniform standards that include training for prospective parents, establishing staff qualifications and transparent bookkeeping. But the standards apply only to agencies that bring children to the United States from countries that agreed to abide by the convention, more than 70 in all.

“From what I’ve seen, it looks like some of those agencies have looked at the Hague standards and simply can’t meet them,” Kemy Monahan, who coordinates adoption compliance with the Hague Convention for the State Department, said of many of the agencies that have gone out of business recently.

Ms. Monahan and Mr. Johnson said they thought that the Hague regulations, intended to safeguard adoptions better, would eventually weed out agencies that operated on the fringes of the law.

That seems to be happening already in some places.

In Michigan, a district court judge recently barred the operators of Waiting Angels Adoption Services from participating in adoptions for nearly three years. The state attorney general’s office has also asked the judge to order the operators to refund $327,000 to prospective parents who paid the agency to facilitate adoptions of children from Guatemala that never took place, said a spokesman for the office, Matt Frendewey.

In Santa Barbara, Calif., the director of the Adoption International Program, Orson Mozes, was charged on April 1 with 62 felony counts of theft by false pretenses. Mr. Mozes, who has since disappeared, is
accused of taking more than $1 million from families who paid to adopt
children from Eastern Europe, adoptions that rarely happened, according
to an arrest affidavit.

Reece and Amanda Heinrich of Holt, Mich., said they were out more than $14,000 after an adoption arranged through Waiting Angels fell apart.The Heinrichs, who are unable to have children of their own, fell in love with a baby boy from Guatemala after the agency showed them pictures and a video of him.

They named the baby Jamyson, but after waiting more than a year, the Heinrichs said, Waiting Angels told them there were complications with the birth mother and that Jamyson was no longer available for adoption. They were refused a refund, they said.

The couple have since adopted twins through a domestic agency, but the experience has left scars.

“I’d honestly rather get stabbed in the stomach than have to go through that again,” Mr. Heinrich said. “We were relying on somebody to help us create a family, and then to have our hearts ripped out. I considered Jamyson my son.”

In Colorado, on the heels of the police investigation into the Claar Foundation, the state Department of Human Services found, in a report released May 1, that 10 of 22 local international adoption agencies whose financial records they examined were losing money. As a result, Colorado will tighten its licensing standards to require that agencies maintain two months’ worth of operating costs in reserves and prohibit them from charging an entire adoption fee up front, said Liz McDonough, a department spokeswoman.

The Paulsons and others have filed lawsuits against Claar and its directors. This year, the Paulsons won a $5,000 judgment in small claims court from Ms. Novak, but Ms. Paulson said she had not received any money.

Mr. Goff, Ms. Novak’s lawyer, said Claar had no revenue because it was no longer operating. Ms. Novak is scheduled to appear in Boulder County Court on May 19.

The Paulsons said their experience had left them too traumatized and without enough money to try adopting again. The quilt they bought for a new daughter has been stashed away in a closet, a list of potential names discarded.

Worst of all, Quinn Paulson died on Feb. 5.

His older brother “kept asking when his new sister was coming home, that she would be able to play with him all the time,” Ms. Paulson said. “It feels really unfair.”

Copyright 2008 The New York Times Company.