Hundreds of families planning on adopting children through a nationwide agency were left stunned — and out thousands of dollars — after the organization announced last week that it was closing and declaring bankruptcy, despite reporting millions of dollars in revenue in recent years, records show.
The Independent Adoption Center [IAC], a 34-year-old non-profit enterprise based in California with operations across the country, made the abrupt announcement in an email to its clients last Tuesday, writing that “immediate closure is our only option.”
“As you may be aware, the climate of adoption has changed in recent years,” IAC interim executive director Marcia Hodges and board president Greg Kuhl said in a January 31 statement. “Societal changes have created an environment in the United States where there are fewer potential birth parents than at any other point in our 34-year history of helping to create families.
“Simultaneously, due to changing demographics and the closure of international adoption programs, there are more hopeful adoptive parents seeking to adopt domestically than in any other time in recent history,” Hodges and Kuhl continued. “The IAC has worked tirelessly to adapt to this changing environment, but the many efforts we implemented were ultimately unsuccessful. We therefore cannot sustain the agency any longer.”
Tax filings between 2011 and 2014 show the agency reported revenue between $4.6 million and $6.5 million each year, but in IAC’s Chapter 7 bankruptcy filed on February 3, it noted it was left with just $57,012.45.
Expectant parents and birth mothers who received the email were at a loss, and left asking themselves what to do next or who to turn to for answers, as the agency’s offices, as well as its online message boards and social media pages, were shuttered by the time the announcement was made.
“I was just in shock, and complete and utter despair,” Angela Stevens, 34, told InsideEdition.com. “I thought, ‘I am never going to have a family; I am never going to have a child.'"
Stevens and her husband Shane, also 34, tried having children when they married five years ago, deciding to adopt after unsuccessful attempts to conceive both naturally and through in vitro fertilization, she said.
“We met with Independent Adoption Center and we thought they were great,” she said. “They were known as being one of the top agencies. They’ve been in business for 34 years. We thought we were going with a reputable company.”
The California couple became members in August and by the time Stevens had received the heartbreaking email, they had spent about $15,000 in fees, she said.
“Now that the money’s gone, it makes our options difficult,” Stevens said. “IAC has really crushed a lot of people’s dreams of becoming parents. People spend their life savings on this.”
Like the Stevens, many hopeful parents had turned to IAC over the years because of their long history of operation, inclusive approval policies for adoptive parents and its counseling resources available to all those involved in the adoption until the child turns 18.
Those resources — and, of course, the promise of becoming parents — made the extensive preparation work and the time spent waiting for a child worth it, according to Brandi DaVeiga, 37, who said she and her husband, Thomas, had spent at least $15,000 in the two years they had been trying to adopt through IAC.
“We chose adoption because... it may take a while but at least it’s a guaranteed way to have a child,” DaVeiga, of California, said. “I never would have thought this was a possibility — over 30 years in business and you look at the information they present to you, you think, ‘Okay, this is the way we want to go.’ Never in a million years did I think we’d be in this position. How do we go forward from here?”
The email left DaVeiga stunned, she said, but what was even more shocking was the agency’s apparent mistake in not notifying 800 clients of the bankruptcy.
In a second announcement posted on its former website, IAC said that “an internal mistake,” led to the error.
“This is our mistake and we are working hard to correct it,” IAC wrote.
“The lack of any compassion or anything toward those who are going to be affected — it’s crazy. There was a much better way to go about this," she said. "And how do you miss 800 families? This is huge."
Included in that group was the California-based Galvez family, Monique Galvez said, noting that she learned she and her husband, Julio, were not going to be becoming second-time parents through IAC when she tried calling the office.
"On Monday I had called the office and my rep talked to me just like normal about turning in certain things," Galvez, 41, said. "On Wednesday I called back with another question, and I heard on the voicemail they had closed, effective immediately. I couldn’t believe it. I was like, 'Is this for real?' I actually tried calling again."
She received an email about the closure later that day, she said.
Though she and her husband lost $2,700 as a result of the closure, Galvez said she is more concerned about the state of the sensitive paperwork they have submitted to IAC since joining in December.
“They have all my documents — where does that leave me? Do I have to start over? They left numbers of other agencies to call. I’d get, 'We don’t have answers yet' or they’d take a message. While they tried to be helpful, there’s no spokesperson for IAC that we can call."
IAC requests copies of clients’ social security numbers, dates of birth, health records and marriage certificates, according to a statement of financial affairs form in its bankruptcy filing.
It also requires clients to undergo an FBI and State criminal history background information check, former clients told InsideEdition.com.
“Everything that identifies us as two human beings on this earth as we stand,” said Lisa Curra, 40, who had spent about $18,000 since she and her husband, Jason, 36, signed with IAC three years ago.
“They have so much information... they have where you were born, your mother’s maiden name — those are security questions,” the New York woman said. "And we can’t ask any questions. If they said, 'Your documents are being mailed to you, sit tight,' that would be one thing. But the trust is gone.”
Lisa Bevilacqua, who said she spent about $25,000 since she and her husband signed with IAC in April, was able to retrieve their file only after she called board president Greg Kuhl to demand the agency’s New York office be opened.
"I went down to the office less than 24 hours after receiving that email to see if I could speak with someone — nobody from IAC was there," she said. “I thought that was awful. This is our sensitive, personally identifiable information."
Bevilacqua believes that because she is an attorney specializing in data privacy law, the agency allowed her to retrieve her file and the file of another person trying to get their documents from the office, she said.
“That’s the only reason they allowed me to do it,” she said, noting that no one from IAC ever arrived at the office that day.
“The way that the agency handled this was just ... awful and it was unethical,” she said.
In addition to the myriad of questions clients have about their documents and the state of their adoptions, many said they are also left wondering how an agency that netted millions in revenue in recent years could be in dire straits financially.
“I think this is something the agency knew about for quite some time,” Bevilacqua said. "And yet they continued to advertise and take on more and more clients."
Elaine Farrugia, 37, of Indiana, had signed with IAC on January 27, she said. Four days later, she received an email informing her of the closure.
"I was able to put a stop on the checks I had written them,” the single English instructor said. “If I couldn’t, I would have been out about $18,000. I’m luckier than most; I was just at the beginning of the journey and I hadn’t invested in them so much, but part of me was really devastated. I kept thinking of people who were much further along in the process... how they’re completely without the resources. The monumental impact this has had on people really hits me."
In its statement, IAC said that clients will have an opportunity to file a proof of claim for any refunds they believe are due to them.
Attorney Marlene Weinstein has been appointed trustee to administer the bankruptcy estate, which was filed in the bankruptcy court jurisdiction is Northern District of California, Oakland Division.
“As everything will be under control of the trustee and the court, IAC will not be involved with determining how any remaining funds in the account are utilized,” IAC said.
But clients are skeptical that they will see any of their funds returned.
“Their only assets total $57,000 — that’s obviously not enough to spread over their clients nationwide,” Bevilacqua said.
Telling InsideEdition.com that she is considering filing a derivative action lawsuit directly against IAC’s board members, Bevilacqua said: “Their financial statements at one point showed $2.5 million in reserves... to go from that to $57,000 in a short time, somebody did something very, very wrong — and I plan to get to the bottom of it.”
A spokesman listed as a media contact on IAC’s statement detailing their closing declined InsideEdition.com’s request for comment, saying that no IAC principals will be doing interviews at this time.
As of February 2, IAC said it had a total of 1,886 adoptions in progress at varying levels within the process.
Families will be contacted regarding access to their files, IAC said, noting it has provided them with referral agencies.
The first meeting of creditors will be held on March 14 at the Oakland U.S. Trustee office, according to online records.