Former Agency of Orson Mozes, Adoption Services Associates, Abruptly Closes; Civil Case Against Orson: Judgment in favor of plaintiffs UPDATED

Two interesting developments have occurred in the past month with regards to Orson Mozes. We have blogged a few times about him

here.

The first development was on March 5, 2012 in the FULLANA-JORNET et al v. ADOPTION INTERNATIONAL PROGRAM, INC. et al case. No media stories have been published about this case, but the decision was in favor of the plaintiffs.

 

The second development involves his former agency ASA.Adoption agency closing stuns prospective parents [My San Antonio 4/10/12 by Melissa Fletcher Stoeltje]

 

“A San Antonio adoption agency has closed  abruptly, sending more than 30 prospective parents in Texas and around the world into a panic as they assume the  worst about whether they’ll receive a baby or get their  money back.

 

The closure also might have left an untold number of  birth mothers who depend on money from Adoption Services Associates to live and receive prenatal  care out in the cold.

 

The ASA office on Prue Road was closed Friday with no   sign alerting visitors of the news. The Police Department  has opened an investigation while other adoption agencies  in San Antonio and other places in the state have stepped up to try to help the parents rescue what’s left of their adoption plans.

 

ASA, which arranged mostly out-of-state or overseas  adoptions, has placed more than 5,000 newborns, infants  and toddlers in Texas and around the world since 1985.

 

The owners sent a brief email Thursday to clients,  stating that “economic conditions” made it impossible for  the agency to continue.

 

“With deep sadness and regret, we are forced to cease  operations immediately. Our options and funds are  exhausted,” said an email from Jim McMahon and his  wife, Linda Zuflacht.

 

The news has devastated Rick Perez and his wife,   who adopted an infant son from the agency two years ago.  The agency had contacted the Harlingen couple three months  ago, saying a birth mother wanted to place another child  with them, Perez said.

 

He said he sent ASA a check for $34,300 in February. A  few weeks later, he learned that his counselor had been  laid off because of what she told him was “financial hard   times.”

 

“Then I get this email on Friday saying the agency has  closed,” he said. “Then the birth mother called me, saying  she was getting evicted from her hotel and didn’t have any  food. I almost cried. I want to know what they’ve done  with my money.”

 

On Saturday, McMahon sent an email to adoptive parents  who have already been matched with birth mothers through  the agency, referring them to Methodist Mission Home, a  117-year-old nonprofit agency in San Antonio.

 

He blamed the abrupt closure on his wife’s illness, which  included her admission last week to a hospital emergency  room in “near-death condition.”

 

“I’m praying that there will be no permanent brain damage,” he wrote. “She appears better today, but is a long way from her previous self.”

 

An official with Methodist Home said it planned to work  with the six sets of “matched” adoptive parents to see  about transferring their cases to Methodist. It is unclear what will happen to the 25 couples who were not matched   with a birth mother, she said.

 

Adoption Covenant in Lubbock said in an email that it will reduce its typical $27,500 fee to $6,500.

 

“That will help finish out the adoptions that are already  in place, do the parental terminations,” executive  director Merinda Condra said.

 

Perez said he was told that Methodist Home would handle  the adoption, but for $11,000.

 

“I don’t know where I’m going to come up with the money,”   he said, adding that the birth mother is due in July.

 

A client in Frankfurt, Germany, was frantic at the  thought of losing thousands of dollars she and her spouse  had given to the agency to find a baby to adopt.

 

“I am just in a state of shock,” said the woman, who’d   heard about the agency from friends in Paris and who  didn’t want to give her name. The couple paid $30,000 to  ASA, she said, only to have the birth mother back out in  September. Before the agency closed, a social worker had  recently told the couple they had more than $14,000 “on  credit” and had referred them to an adoption attorney in   Ohio.

 

None of the emails sent by ASA addressed how clients  might get refunds. McMahon sent another email to the Texas Department of Family and Protective Services, in  which he voluntarily relinquished the agency’s license.

 

Mary Walker, spokeswoman for the Texas Department of Families  and Protective Services, said it was “uncommon” for  an adoption agency to give up its permit for financial  reasons.

 

Agencies have 30 days to transfer their adoption records  to the Department of State Health Services, Bureau of Vital Statistics or to another child-placing  agency.

 

A copy of ASA’s most recent financial report sent to the  state showed its annual expenses were $25,000 greater than income. In a separate filing to the Internal Revenue  Service, ASA reported that for the year ending April 30, 2011, it took in $1.2 million but spent $20,000 more  than that.

 

In 1989, ASA was placed under intensive regulatory  monitoring by the state because of numerous violations of  standards, though many were minor. Some substantiated violations included the failure to obtain complete information about biological parents or to use qualified  staff.

 

State inspections in 2010 and 2011 found that some ASA staff had not been properly trained, some background  checks were not done in time and random drug tests had not  been conducted since 2008.

 

Last year, the agency was sued by a local birth father  for failing to notify him that his baby was being placed  for adoption. The baby was removed from the adoptive  family on the East Coast and returned to the father before the lawsuit went to trial, said the attorney who  represented the father.

 

The state has not received complaints about the agency  and there have been no investigations of it in the past several years, according to a state official responding to  a public information request by the San Antonio Express-News.

 

A client in Connecticut who didn’t want to be named said he and his wife received an infant in December but that  the custody of the child was signed over to ASA because of   the birth mother’s drug use. Technically, he and his wife  are “just caregivers right now,” he said.

 

“We anticipate returning to San Antonio in June to go  before a judge and finalize the adoption,” he said. “We  hope it’s not going to be a problem.”

 

1991 article on San Antonio’s “Baby Market”

 

“The Alamo City’s telephone book lists Alamo Adoptions, Adoption Alliance, Adoption Advocates, Adoption Services Associates, and ABC Adoptions.

 

Lawyers run them all as bottom-line businesses. Entrepreneurial adoption agencies — particularly those set up by attorneys — are cropping up all over the state, but the San Antonio baby market is the most fiercely competitive.

 

Here birth mothers often shop around for the agency that offers them the best financial support during their pregnancy. Couples jet in from New York, Connecticut and Canada and leave with their precious — and expensive — bundles of joy.

 

It is here that the state’s changing baby market is most apparent. Since 1985, the number of Texas adoption agencies has jumped from 86 to 138, while the number of babies available for adoption has fluctuated only slightly.

 

“Why is there such a boom in adoption agencies when the numbers of available babies are declining?” wonders Mike Ross, professional services director for the Christian Child Help Foundation in Houston.

 

The Christian Child Help Foundation, a church-supported agency founded 23 years ago, is placing 20-30 children yearly, compared to some San Antonio proprietary agencies that are placing several hundred babies each year.

 

Linda Zuflacht, a San Antonio attorney who started Adoption Services Associates seven years ago, said her success has spawned “a lot of copycat-type deals.” She placed about 250 babies for adoption in both 1988 and 1989, but last year heated competition reduced her number to 206.

 

That’s still about ten times the business that CCHF and many other charity and church-supported agencies are handling. Zuflacht specializes in identified adoptions, which she said are still not widely practiced in Texas.

 

In an identified adoption, a couple will advertise in a state like Texas that has no restrictions on “baby wanted” advertising, find a birth mother and bring her to an agency such as ASA. The agency takes care of the medical, housing, food, clothing and transportation needs of the mother-to-be and is reimbursed for those costs by the prospective adoptive couple.

 

When the child is born, the agency files the legal papers for adoption and the designated couple receives the baby. That’s how it works when it goes according to plan.

 

But when it snags, it can be heartbreaking. The couple may have paid thousands of dollars to support the birth mother during the pregnancy, but the birth mother is not legally obligated to relinquish the baby. Or the birth mother may give the baby up out of perceived obligation to the adoptive couple or agency, even if she wants to keep it.

 

Zuflacht said she counsels adoptive couples to purchase newly available adoption insurance. By purchasing $1,200 in insurance offered nationally by two brokers, the couple can safeguard an investment of up to $10,000. Then if the woman decides to keep her baby, it may be a terrible psychological blow to the hopeful adoptive couple but won’t be a financial disaster.

 

“Adoption is so expensive now that for some people, if they lose out on the first girl they’re matched up with, they may never be able to adopt again. They just blew their entire savings on one case. So this insurance is a wonderful thing,” said Zuflacht.

 

Placing the financial risk on the adoptive couples has been a successful strategy for ASA. Zuflacht said her agency is non-profit, but acknowledged that she earns $90,000 yearly in salary and fees for her agency’s legal work.

 

Zuflacht estimates that three-fourths of her agency’s placements are with out-of-state couples referred by adoption attorneys in the Northeast. Adoptions can run $18,000 to $25,000, based on the birth mother’s expenses.

 

“We’re licensed in New York and New Jersey and approved in Connecticut, and we do seminars up there from time to time.”

 

Stanley Michaelman, a prominent New York attorney who has written books on identified adoption, often refers clients to ASA. Michaelman could not be reached.

 

Winnell Byrd, who operates Blessed Trinity Adoptions in Houston, said she recently asked eight pregnant women to leave her maternity home after finding that they were corresponding with Michaelman about placing their babies with ASA.

 

Byrd said Michaelman was sending packets of information about his prospective adoptive couples to several women staying at Blessed Trinity’s maternity home. Byrd said she could not support the women after finding that “the bond of trust was gone.”

 

Byrd said ASA and some other high-volume agencies do not place black babies, because “it does not bring in the bucks.”

 

Zuflacht said her agency just placed a biracial infant, but will often refer pregnant black women to another agency because “it’s very hard to find black adoptive parents.”

 

Margaret Stewart, who heads a San Antonio-based agency called Adoption Affiliates, said some birth mothers shop around to find an agency willing to offer more than it should under state laws prohibiting baby-selling.

 

“Birth mothers call, and sometimes they’re very frank. One girl said, “I don’t want very much, just a used car,’ ” said Stewart. “I think the word is out that they can get help and might as well take advantage of it.”

 

Stewart said one pregnant woman was getting financial support simultaneously from three different agencies and did not place her baby with any of them.

 

Stewart said Adoption Affiliates, which has several offices across the state, places most of its babies at its other locations because the agency does not want to get into “a bidding war” for San Antonio birth mothers.

 

Dale Johnson, another San Antonio attorney who specializes in identified adoptions, opened Adoption Alliance two years ago. He said his agency expects to place 180 babies this year, many of them out of state.

 

“We place a lot in the Northeast, Canada, Israel, Australia and California,” he said. He said Lucille Rosenstock, another well-known New York adoption attorney, often refers clients to his agency, but he also gets referrals from other out-of-state lawyers.

 

“If you do a good job, good things will come to you,” he said.

 

Johnson said his agency does not support a birth mother until the sixth month of her pregnancy and tries to keep tabs on her expenses to hold down bills for the adoptive couple.

 

Elizabeth Vanderwerf, a veteran adoption social worker who recently opened Adoption Advocates with attorney Jane Hall, said Hall is adopted and brings an extra dimension of interest to the agency.

Vanderwerf said she believes the state should more closely monitor financial support of birth parents because it is too often abused.

 

She said some agencies pay expenses after the parents relinquish the baby, a practice that can be misconstrued as baby-selling. Maternity supports also entice some couples to have more babies to give up, because “it’s a means to support themselves, and for them it’s very lucrative.”

 

“A lot of birth parents get implicated in dirty adoptions without knowing that they shouldn’t. By the time they become implicated, they have no recourse.”

 

Texas Assistant Attorney General Ann Hartley said she is concerned about potential conflicts of interest when a lawyer runs an adoption agency. Attorneys should make it clear that neither the adoptive couples nor birth parents are their clients.

 

“Adoption agencies have their own business and financial interests, and the lawyer’s interests are inextricably tied to the adoption agency,” she said.   ”

The Baby Market/San Antonio offers most fertile of baby markets

[Houston Chronicle 10/7/91 by Nancy Stancill]

 

ASA, !

 

REFORM Puzzle Piece

 

 

Update: “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.

 

The couples are from San Antonio, Belgium, Germany, Spain, Dubai and Hong  Kong, among other places.

 

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.”

 

Closed adoption agency under investigation

[My San Antonio 4/30/12 by Melissa Fletcher Stoeltje and Patrick Danner]

Update 2: “Texas Attorney General Greg Abbott is suing a San Antonio adoption agency.  The state says the company took people’s money, but never found those families a child.
After months of investigating the Texas Attorney General filed two lawsuits yesterday.  One was against Adoption Services Associates, Inc. (ASA) and the other is against ASA’s owners.  Both suits claim the adoption agency and its owners engaged in “…false, deceptive and misleading acts”.  They also state ASA took thousands of dollars from families across the country even though they knew they were shutting their doors in April.
The lawsuit against the company is set for bankruptcy court and is expected to be worked out in the next 30 days.
But the suit filed against owners, James McMahon, Jr. And Linda Zuflacht, could go to court.  Until the case gets set, the AG has asked a judge to grant a temporary injunction which would stop the owners from destroying documents, transferring funds, or continuing to advertise as an adoption agency.
We did reach out to the company’s owners but no one got back to us. ”

Texas AG sues local adoption agency

[WOAI 7/25/12 by Mireya Villareal]

See the lawsuit against the agency here: ASA_Company_Lawsuit

See the lawsuit against the owners here: ASA_Owner_Lawsuit

Update 3: “A plea for donations

On July 10, Zuflacht apparently posted comments on a Facebook page for former ASA clients. In it, she blamed the agency’s closure on a host of issues, including “morning after pills” and “the acceptance of unwed mothers.”

It included a plea for group members to send money.

“We had to file bankruptcy and, of course, people are furious with us,” the post read. “We are asking those adoptive parents whom we helped to build their families to help us repay these people who were so harmed by our closing. We are setting up an account at Frost National Bank in San Antonio that will be administered by an impartial third party. The sole purpose of this account will be to try to repay those individuals who suffered financial loss due to our closing.

“You are all aware of the high cost of adoption so you can imagine that we need to raise a huge sum of money. Any amount you can give to help us will be so appreciated. Please help us make our waiting adoptive parents whole. We need your help.”

Pam Thomas, a Frost spokeswoman, said the bank couldn’t confirm anything about the account because of confidentiality rules.

Help for couples

News of the litigation brought a measure of relief to some former clients.

“I don’t want to say I’m happy, but I’m so glad the authorities are taking this seriously,” said Elaine DeLisi, a secretary in Long Island City, N.Y, who with her husband paid ASA more than $13,000 last August for an adoption that never materialized.

“We don’t want (the owners) to walk away from this without suffering any consequences for their actions,” said DeLisi, who contacted the Texas AG’s office soon after the email from McMahon.

Three months after accepting DeLisi’s check, ASA’s owners were notified by the New York State Office of Children & Family Services that the agency was no longer authorized to operate in New York state, according to a letter included in the lawsuits.

DeLisi said ASA never informed her of the licensure revocation.

Together, the two petitions name four former clients, none in Texas, not the dozens who may be owed money.

“Should we prevail in the civil suit in state court, we will ask the court for restitution for all known victims,” Kelley said.

Narratives of the four clients are similar.

According to one affidavit, a Virginia couple paid ASA more than $26,000 in May 2011. An adoption scheduled for January failed when the birth mother changed her mind.

Two weeks before receiving the April 5 email, the husband spoke with an ASA social worker, who agreed to find a new birth mother. She made no mention of their impending closure, according to his affidavit.

One couple interviewed in April by the Express-News said that a few weeks after they sent at $34,300 check to ASA in February they were shocked to learn their social worker had been laid off because of “financial hard times” and that their birth mother hadn’t been paid.

Both suits by the state ask for civil penalties of not more than $20,000 per violation of the Deceptive Trade Practices Acts.

The state also wants the court to prevent the couple from concealing, transferring or spending assets, which include the agency’s location on Prue Road, property in Converse, a 36-foot yacht and a 10-foot power boat.

ASA filed for Chapter7 liquidation April 24, listing no assets and about $31,550 in debts. In its tax return for the year ended April 30, 2011, the agency reported almost $554,000 in assets and $573,600 in liabilities.

The next step will be a hearing about a temporary injunction.”
Lawsuits claim adoption agency did not intend to deliver

[My San Antonio.com 7/27/12 by Melissa Fletcher Stoeltje]

Update 4: There is a Facebook group where former clients are gathering https://www.facebook.com/AffectedbyClosingofASA

From the postings, one can observe that Linda Zuflacht is still licensed to practice law in Texas. Another search shows that she resigned her membership in Quad A attorneys on 4/25/12 (just one day after filing for Chapter 7 bankruptcy.) See here and scroll down to Changes in Membership Status.