The dream of becoming parents is turning into a nightmare for hundreds of people caught up in a surrogacy money scandal. They deposited tens of thousands of dollars with an escrow company in Texas to pay the costs of a surrogate carrying their child — but now, that money may be gone, and the FBI has launched an inquiry seeking potential victims. NBC New York’s Gilma Avalos reports.
The dream of becoming parents is turning into a nightmare for hundreds of people caught up in a surrogacy money scandal.
Some of the individuals are facing infertility or medical challenges, seeing surrogacy as their hope to have, or grow, a family.
Each deposited tens of thousands of dollars with an escrow company in Texas to pay the costs of a surrogate carrying their child. But now that money may be gone, and the FBI has launched an inquiry seeking potential victims.
Six couples — from New Jersey, New York and as far away as the West Coast — shared a similar story of trusting a company accused of mishandling more than $10 million.
In their apartment on Roosevelt Island, Laura Daniels and Christopher Cheng are overjoyed to be new parents. For medical reasons, they relied on a surrogate to carry their son Koda. It’s a journey that cost a fortune.
"We’re talking about their compensation, plus 50 percent, plus 100 percent depending on the agreement. So we’re talking about $100,000 sitting in this account," said Daniels.
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The couple trusted their money was safe – until a few weeks ago when their surrogate called. That's when they were informed she hadn't received her first two payments, Cheng said. They now fear more than $10,000 in their account is gone.
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On Long Island, another woman can’t get answers about $28,000 dollars intended for her surrogate.
"Out of the blue, everyone – from agencies to lawyers to intended parents to gestational carriers – were blindsided and did not see this coming," said Jennifer, who did not wish her last name be used.
Both families say they deposited their money with a company called Surrogacy Escrow Account Management LLC, or SEAM for short. Based in Houston, Texas, it’s been in business for ten years, providing a service experts said is standard in surrogacy.
Jarret Zafran, who runs a surrogacy agency in New York, said it was a "best practice" when doing surrogacy.
"It's a protection for both sides, transparency for intended parents to make sure money is really there to cover obligations to the surrogate," said Zafran, the founder and executive director of Brownstone Surrogacy.
On SEAM's website, owner Dominique Side talked of being a former surrogate and wanting to help people through the process. The video assures those interested that their funds would be "absolutely" secure.
However, a lawsuit filed in Texas alleges something’s gone criminally wrong at SEAM with as much as $10 million dollars looted from 600 escrow accounts, from clients around the globe.
The attorney who filed the lawsuit on behalf of a mom-to-be said her client lost more than $60,000.
"You have parents that are obligated under the contract to pay for the expenses for the surrogates. And so these parents are having to come up with alternate means to pay for this contract and these funds, and a lot of them just don't have it," said attorney Lori Hood.
The suit claims SEAM "may have been misappropriating the escrow funds for years in order to bankroll Side's other business ventures and lavish lifestyle” and pledged escrow funds for six-figure cash loans.
"She wasn't shy of blasting out her lifestyles of the rich and famous," said Hood.
Many of Side's social media accounts and websites for other businesses connected to her, including a clothing line and music studio, have vanished — and now she’s under even more scrutiny.
In an email to NBC New York, Side declined to comment, saying she and her company are the subject of an “active investigation by federal authorities.”
The statement from Side continued: "Under advice of counsel, I am not permitted to respond to any inquiries regarding the investigation. Please be kindly advised that the investigation involves only me, as an individual, and SEAM, as a single-member entity."
The FBI's Houston office told News 4 it is seeking other potential victims, asking people across the country to fill out an online form to help with their investigation.
"I obviously want all of us to get our money back. I also really want answers...and some sort of justice through the criminal system," said Jennifer.
On Roosevelt Island, Daniels and Cheng want answers from Side — for themselves and for all the parents-to-be left in limbo as a result.
"We’re fortunate that we have our baby in hand. That’s the most disturbing thing, is that she’s impacting families and generations of people," said Daniels.
A Harris County judge froze the bank accounts of SEAM, Side and her business partner.
In addition to the FBI investigation, intended parents have filed complaints with the Texas and New York attorneys general. Three financial lenders in New York have also filed lawsuits against Side and SEAM.
