East Bay adoption agency's bankruptcy stalls would-be parents' plans

OAKLAND (KTVU) -- When The Independent Adoption Center, a national adoption agency headquartered in the East Bay, suddenly filed for bankruptcy in January, it dealt a devastating blow, both financially and emotionally, to many potential parents hoping to adopt a child.

KTVU Investigates obtained the tax returns for Independent Adoption Center, or IAC, and spoke with stunned clients and state regulators about the turmoil the agency's bankruptcy has created.

One couple who feels cheated is Roxane and Dave Ambrose of Kensington. They've been trying to have a child for the past five years.

"We tried to have children," Dave said. "Due to medical reasons we are unable to (and) we tried surrogacy."

They decided on adoption. The couple signed with an adoption agency on Clayton Road in Concord in September.

"It felt like a guarantee. Everything else we had done nothing was guaranteed. This felt guaranteed," Roxane said.

Only four months later, the couple experienced disappointment when they heard on Jan. 31 that the adoption wouldn't happen.

"I was just stunned," Roxanne said. "It's not something you ever expect."

With virtually no warning to clients, IAC executives filed for bankruptcy, sending an email to clients to notify them before the agency abruptly shut down.

The money paid by the agency's clients was now in limbo. For the Ambrose couple, that amounted to $14,000.

But they say that's nothing compared to the emotional toll.

"You place a lot of hope in this," Roxane said. "And to take that away so abruptly was pretty awful."

When IAC, a non-profit group, filed for Chapter 7 bankruptcy, it meant that the agency was shuttered. The move also halted the adoption plans of its 412 Bay Area clients, who were in the process of adopting, and stalled the plans of the adoption's clients of over 1,800 nationwide.

Some of the firm's clients had been waiting to adopt for over two years.

After numerous requests for comment, Greg Kuhl, who is president of IAC's board of directors, expressed regret about the move.

"We are heartbroken over it, of course," he said.

But 2 Investigates learned that just three days before declaring bankruptcy, IAC was still making presentations to would-be clients and still signing up new ones, including Jess and Chris Taylor of Berkeley.

"They're very good at getting people hopeful and excited," said Jess Taylor. "So it was a really big let down."

"And a waste of a lot of people's time," said her husband, Chris. "Getting up people's hopes (and) then letting them down. That would include us."

Although IAC did not process the couple's $1,500 deposit, the two feel the agency took advantage of them.

The California Department of Social Services oversees adoption agencies in the state.

"Do I think it is ethical? No," said Department of Social Services spokesman Michael Weston. "But we don't have the ability to stop an agency from conducting business."

When Kuhl was asked if he knew IAC was going bankrupt, why was it still having people coming in?

"We didn't know we were going bankrupt," he said. "If we had a good January we could continue.

"We couldn't sustain three bad months," Kuhl said.

State regulators say there's nothing they can do because they do not have authority over an agency's finances.

But the the state has stepped in to try to help clients.

The Department of Social Services retrieved the agency's documents that date back more than 30 years.

"We had three truckloads (or) 800 boxes," Weston said. "We're talking about a lot of history."

The department is working on returning sensitive documents back to the bankrupt agency's clients. Regulators say they don't remember a bankruptcy involving an adoption agency that was as big and sudden as the IAC filing.

"Now we are in the process of triaging, going through the files trying to determine at what point in each case they are," Weston said.

"We're all adoptive parents ourselves," Kuhl said. "We were just in this to help other people get adopted."

2 Investigates reviewed tax records that show IAC had been struggling financially for the past few years, losing money in 2013.

Adoption placements were also on the decline.

The final steps to settle the bankruptcy will happen in bankruptcy court in Oakland to divide the agency's remaining, which is about $57,000, records show.

An initial court hearing is scheduled for March 14.

Some families say they aren't hopeful of getting any of their money back and some of them have spent upwards of $25,000.

They say their dreams of raising a child are delayed along with time wasted and their trust in the process is damaged.

"All of our eggs were in one basket," Roxane Ambrose said. "Yeah, it was devastating."

By KTVU reporter Rob Roth.