Independent Adoption Center Collapse was Abrupt, But Not Without Warning Signs

Normally, when it comes to adoption services, Youth Services Insider and The Chronicle are focused on the “public” side of the coin, meaning the effort to find adoptive homes for children who are in the foster care system.

The private side of adoption placement – connecting birth parents who don’t wish to parent children in foster care – isn’t exactly a shadow world; private adoptions and the firms that facilitate them are monitored by state child welfare agencies.

But, as the nation was reminded last week, the private adoption market is vulnerable to changes in supply and demand that are not present when trying to find foster youth forever families.

Independent Adoption Center, IAC, served birth parents and adoptive parents in eight states, so families around the country are reeling from the closure of a nonprofit that held their private records and thousands of now-wasted dollars.

It appears that IAC’s business model had failed. Like other firms, it recruited birth parents who wished to make their child available, and paired those parents with parents hoping to adopt them.

The central problem: Its adoptive clientele far exceeded the supply of adoptable children IAC was able to identify and place. This is attributable to several factors, including a general decrease in the number of recruited birth parents, and greater restrictions placed on international adoptions.

As more families gave up on IAC, the organization’s refunds to those families skyrocketed. And on January 30, the organization filed for Chapter 7 bankruptcy protection, meaning its assets would be liquidated. All of the adoptive parents who poured tens of thousands of dollars into the process are now creditors.

News of IAC’s closure was cold and impersonal; it alerted its clients with an e-mail:

As you may be aware, the climate of adoption has changed in recent years. Societal changes have created an environment in the United States where there are fewer potential birth parents than at any other point in our 34-year history of helping to create families. Simultaneously, due to changing demographics and the closure of international adoption programs, there are more hopeful adoptive parents seeking to adopt domestically than in any other time in recent history.

Several clients told YSI of attempts to contact IAC officials after the e-mail. The outstanding debts to clients were locked into bankruptcy of course; but what about records of the home studies conducted by IAC? What about the adoptions that had been agreed upon and were in the final stages of completion?

Those requests for information on these issues were not answered by IAC. Calls to IAC’s media contacts by YSI were also not returned.

“My husband and I had paid $16,000 to IAC and have received basically nothing and now need to start over,” said Christopher Koontz, an IAC client, in an e-mail to YSI.

Koontz said he and his husband were attracted to IAC because the organization marketed itself to adoptive parents other organization did not, including single parents and same-sex couples. He and his husband were scheduled for a final home study visit last week; it never happened, and they are now unclear on how to proceed.

If the story ended there, it would just be a story about the personal face of unfortunate economic reality; well, along with a case study in how NOT to treat clients on the way out the door. But other details, in YSI‘s humble opinion, raise questions about the oversight and tracking of organizations in IAC’s sector.

California’s Department of Social Services (CDSS) was notified of IAC’s closure in the same way the clients were; with an e-mail. But the state agency was well aware of the organization’s troubles before that.

CDSS confirmed to YSI that an investigation into IAC is ongoing and was active before last week’s closure.

“The Department does not discuss active investigations regarding any licensed entities,” CDSS Public Affairs Director Michael Weston told YSI in an e-mail sent late last week. “Information regarding any investigation would be available once the investigation is complete.”

Weston did not comment on when the investigation began, or why. But a former IAC client, who wished to remain anonymous pursuant to a settlement in a court case against IAC, said the California investigation was prompted more than a year ago by information provided to CDSS by a group of former clients. They made a presentation to the state that focused on two things:

  • A small-sample client survey showing overwhelmingly negative opinions of IAC’s services.
  • Audited financial documents for IAC that showed a growing inability to match birth parents and adoptive parents. In 2011, the organization refunded $277,713, about 6 percent of revenue. By 2013, that had reached $530,140, nearly 10 percent of revenue.

Click here to read the presentation.

“If IAC was to stop accepting adoptive families today, it would take over three years to work through the backlog,” the client presentation given to CDSS said. But instead of holding three years of operating reserves, the presentation states, IAC held just three months.

This presentation was first made to IAC leadership, the anonymous client told YSI. Clients reached out to CDSS only after IAC made it clear they would not be acting on any of the recommendations, including a shift in marketing strategy and resources toward recruiting more birth parents and focusing less on recruiting new adoptive parents.

“This investigation has been ongoing for over a year and despite all of the evidence that a bankruptcy was inevitable, they did nothing to save hundreds of clients from this outcome,” the client told YSI. “It’s inexcusable that the state did not prevent this from happening.”
CDSS, and the California Association of Adoption Agencies (CAAA), both now appear to be moving quickly to clean up the IAC’s mess. CAAA has held a conference call to coordinate assistance from other agencies for parents involved with IAC; CDSS has set up a website with different agency contacts for IAC clients with closed and active cases.
Carol Biddle, co-founder of the National Center on Adoption and Permanency and who is in contact with CAAA, told YSI that the number of active cases breaks down to about 60 where the placement has occurred but has not been finalized, and about 250 cases somewhere earlier in the process. As for IAC’s closed cases: the organization promised lifetime post-adoption services to its clients, and that will certainly be a promise broken.
A report by the Indianapolis Star‘s Marisa Kwiatkowski put the total number of IAC pending adoptions at 1,886 around the country. The seven states outside of California where IAC was licensed to operate: Texas, Indiana, New York, Connecticut, North Carolina, Florida and Georgia.
YSI certainly hopes the adoption community comes together to help the birth and adoptive parents caught up in this. We also hope this prompts a conversation on how organizations like IAC are monitored, and how investigations into their practices are carried out.
“We were generally satisfied with the services provided [by IAC], but it appears there were a lot of problems the company did not share with us,” Koontz said. “If we had known that they had falling placements and growing wait-lists when we signed up … we obviously would not have entrusted our dreams and savings with them.”
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John Kelly
About John Kelly 1128 Articles
John Kelly is editor-in-chief of The Chronicle of Social Change.

6 Comments

  1. https://uploads.disquscdn.com/images/89f4078778076725860a33d6cfb4999e45746f1873509caef269e540be195529.png Thank you for this article John! I’m a former client of IAC. I sent the California Attorney General, Xavier Becerra, a consumer protection complaint and this is the extremely dismissive reply I received. I complained about this in an IAC Facebook group closed to those of us former agency clients and someone there told me that the state doesn’t care because there is no regulatory obligation within the states or federal government to be monitoring the adoption industry. While I understand that is presently the case, I honestly thought that the progressive state of California, especially since IAC was head-quartered in California with satellite offices in 16 other states, would actually be highly concerned to find out several hundred people who paid a MINIMUM of $13K each were collectively-swindled $6.5 million.

  2. How about the fate they also treat the women who place with them like junk? I know a few women who tried to back out of placement, but the agency wouldn’t let them. They brain washed women into thinking it was what was best for them.

    • Absolutely, I regret having ever worked with them and their closing proved my worst intuitions true.

  3. Thanks for this dive into IAC.

    In describing the current regulatory structure, I think the article goes too far is saying: “private adoptions and the firms that facilitate them are monitored by state child welfare agencies.” Further detail will help analyze the fallout, and most importantly guide future prospective adoptive families’ decisions.

    Certain aspects of adoption agencies clearly are monitored by state agencies in some fashion (home studies, interstate placements, relinquishments), and ultimately by courts (adoption finalizations and disputes). But other than some legal restrictions on advertising and payments to the birth/first parents, I believe the fairly amorphous field of “facilitation” and outreach by agencies are essentially unregulated by the state agencies.

    It’s an important distinction as we examine the fallout from this episode AND a crucial distinction for future prospective adoptive parents.

    Charlie Spiegel, Esq. S.F., Ca.

  4. Thank you for bringing attention to these issues. . The abrupt closing of all IAC offices and its programs has left many families in dire straits, both financially and emotionally. Those in the middle of an adoption are now hampered in their ability to complete the adoption, and others have lost substantial sums of money which will hinder if not eliminate their ability to adopt.

    This is a situation that should never happen. The legislature should mandate that adoption agencies segregate and hold adoptive parent funds in a separate trust account, and prohibit use of adoptive parent money until earned. Comingling hopeful adoptive parent funds with agency operating funds allows the premature expenditure of these monies at the agency’s discretion with little financial oversight. The end result can shatter the hopes and dreams of prospective parents, who seek to create or enlarge their families through adoption.

    The Fellows of the American Academy of Adoption Attorneys have pledged to assist those families that now find themselves in an untenable situation as a result of IAC’s bankruptcy. The Academy will assist these families in order for them to obtain their files from IAC, or to have them transferred to other reputable licensed adoption agencies. The Academy will also assist in advising those families as to be best way to proceed with regard to their prospective adoptions. There will be no charge for these services. A list of volunteer attorneys is posted to the Academy website at http://www.adoptionattorneys.org

    Jeanne Trudeau Tate, adoption attorney
    http://www.floridaadoptionattorney.com

  5. Well written John, this does a great job of explaining the situation with IAC and their failure. Not only did IAC fail, the State failed in it’s responsibility to protect citizen as well.

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