Last week, Allison Layton, owner of Miracles Egg Donation entered into a plea arrangement with the U.S Attorneys Office whereby she was sentenced to 8 months in federal prison and three years probation for cheating more than 40 of her clients out of more than $270,000. Allison Layton was holding those funds “in trust” for egg donors and for surrogates matched with hopeful intended parents through her agency.
Sadly, this is an all-too-familiar story. There have been other agency owners whom, too, have either pled guilty or been convicted of similar charges. An abuse of trust, absconding with funds, these despicable agency owners leave in their wake not only heartache but more practically, financial despair. Donors and surrogates caught up in these bad acts often go unpaid. This is devastating and tragic but also avoidable. Surrogates, donors, prospective parents do not need to be exposed to this risk of loss. Funds for assisted family building can and should be securely held and the financial management of the fees and expenses for which those funds are intended should be managed by licensed professionals.
When intended parents sign-off on agreements with an agency, with their donor or with their surrogate, they become financially bound to certain obligations. Assisted family building is a costly endeavor, in these agreements promises are made to compensate donors and gestational carriers for their role in the building of a family. These agreements are often lengthy and complex with detailed discussion of how and when and at what amount the donor or the carrier will be compensated and how related expenses will be met. These agreements are often the result of extensive negotiations; careful planning and thought go into how the financial aspects of these arrangements are intended to be managed. But often not enough planning, if these agency, donor or surrogacy agreements do not require that funds for the arrangements be placed with an independent escrow account, managed either by an attorney or a licensed escrow agent then the funds are exposed and the parties for whom the funds are intended are vulnerable.
So, how does this typically play out at agencies? Intended parents are given cost estimates calculated by the agency. The intended parents are required, in most cases, to provide the agency full funding to meet these cost estimates (before the donation or the surrogacy cycle will commence) and, as is often the case, the agency deposits those funds into the agency bank account. Some agencies, it seems, deposit client funds into their operating account, others into accounts they name “escrow” or “trust” but neither such designation offers the parents, the donor or the surrogate any protection if, in fact, those so-called trust accounts are not managed by a licensed professional.
Those professionals who are licensed to hold funds for third-parties are held to a heightened standard of practice, either imposed by state law or by a licensing body and often both. Licensed professionals carry malpractice insurance protection, licensed professionals are governed by regulatory entities overseeing their compliance with ethics and other practice standards. Violation of these practice standards can result in sanctions and, if egregious enough, the stripping of the license. Plainly put, a licensed professional holding funds on behalf of another person does so with restrictions and regulation. Allison Layton held no such credential, nor was her professional status governed by any regulating body. According to reports she did not hold any sort of business insurance whereby in the instance of her malfeasance, parties harmed by her bad behavior could recover. Allison Layton took advantage of vulnerable and trusting people and she operated in a way that offered no safeguards to protect the very people relying on her.
There are so many “what-ifs” in assisted family building, so many contingencies and so many ways things can veer off-track. But there are also ways of mitigating risks, one of the way parents, donors and surrogates can protect themselves is by demanding that all funds for a family building arrangement be placed in the trust of an attorney or a licensed escrow agent.