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Beverly Hills surrogacy firm accused of fraud and theft

March 26, 2009|Kimi Yoshino and Alan Zarembo

For Francisco Egea Cerezuela and his wife, the answer to their dream of having a child was found on the Internet: a Beverly Hills surrogacy and egg-donor agency called B Coming.

Surrogacy is illegal in their country, Spain, as it is throughout much of the world. In 2007, they got a baby in the United States -- but at a high cost.

B Coming was supposed to use a $90,000 deposit to compensate the surrogate and the doctor, the couple claimed in a lawsuit filed in December. They allege the agency kept most of the money, forcing them to pay tens of thousands more out of pocket.

Other B Coming customers have similar stories. A man from Taiwan, who claimed the agency pocketed more than $100,000, won a judgment last year after the firm's owner, Rosa Balcazar, failed to appear in court. And a Woodland Hills lawyer said he has been hired by six couples from Spain and another from North Carolina who claim they paid more than $500,000 collectively for services they never received. None wound up with children.

Two of the Spanish clients complained to Beverly Hills police late last year, alleging fraud and theft. The department is trying to determine whether it has jurisdiction, a police spokesman said.

Reached by phone Wednesday, Balcazar, 41, denied any wrongdoing. She said she has not committed fraud or theft, but instead is the target of couples who became frustrated after their surrogates failed to become pregnant.

"Every case is different -- and I feel bad -- but services were provided." As a result, she said, she can't offer full refunds.

The complaints about B Coming follow recent allegations that a Modesto surrogacy agency, SurroGenesis, had failed to account for more than $2 million in customers' money. The claims are the latest flare-up in a scandal-prone business fueled by the cash -- and sometimes desperation -- of childless couples.

Surrogacy agencies are perhaps the least regulated aspect of a loosely overseen multibillion-dollar industry.

"If you're going to sell hot dogs, you need a permit," said Steve Litz, director of Surrogate Mothers Inc. in Monrovia, Ind., an agency responsible for more than 400 births. "If you're going to run a surrogacy agency out of your garage, you don't."

Although no one keeps a precise count, Southern California is thought to be the center of the surrogacy and egg-donor industries because the state's laws are favorable to parents who want to use surrogates.

There are few barriers to start-up. And little information is available to the public besides word of mouth and Internet message boards to guide aspiring parents.

Jessica and Jeffrey Kuk, the North Carolina couple, both have master's degrees. They thought they'd done enough research before signing a contract with B Coming and wiring $22,000 to Balcazar, they said.

"We didn't just ride into town and fall off the turnip truck," Jessica Kuk said. "But there is no instruction book out there that says 'this is what you should do, this is what you shouldn't do.' "

When the Kuks rejected the first proposed surrogate and Balcazar demanded another $85,000, the couple said, they asked for a refund.

The Kuks said they made these allegations in a report with local police in North Carolina. They then traveled to Beverly Hills in search of Balcazar -- but never found her, they said.

"We were crushed," Jessica Kuk said. "We were just baffled by the whole process. You're totally stripped of the initial joy you had, the hope you had, the feeling of possibility."

B Coming was not a well-known player in the industry, fertility industry experts said. Balcazar said she started her business 14 years ago and that 75% of her customers come from Spain.

Dean Masserman, the lawyer representing the six Spanish couples, said many were initially won over when Balcazar visited their homes and shared meals with them. He said he is trying to determine whether it is worth filing suit against B Coming since it is unclear whether the company has any assets.

Balcazar, whose address is listed in court records as a Beverly Hills penthouse, filed for bankruptcy in 2007 but was denied for unspecified reasons. In filings with the court, the customer from Taiwan claimed at the time that Balcazar was simply trying to escape debts arising from "fraud."

Last October, the California Secretary of State revoked B Coming's business license for failure to pay taxes. Balcazar said she is still in business and continues to seek new customers.

In November, the insurance company Health Net of California sued B Coming for fraud, misrepresentation and breach of contract, alleging that Balcazar had passed off a customer and a surrogate as employees in order to get them health insurance. Health Net said in the suit that it is trying to reclaim more than $500,000 it paid in claims.

Balcazar said she could not comment on the case because she had not seen the lawsuit.

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