Modesto Surrogate Parenting Agency Owner Indicted for $2 Million Fraud Scheme

FRESNO, CA—United States Attorney Benjamin B. Wagner announced that Tonya Ann Collins, 36, formerly of Modesto, was arrested today by the FBI at her current home in Antelope. A federal grand jury returned an indictment on April 19, 2012 charging her with seven counts of wire fraud, four counts of mail fraud, nine counts of bank fraud, and 10 counts of money laundering in connection with a scheme to defraud. Collins carried out the scheme through her agency, Surrogenesis USA Inc., and a related company, Michael Charles Independent Financial Holding Group.

The indictment alleges that, from approximately November 2006 through March 2009, Collins, as owner of Surrogenesis and the Michael Charles company, carried out a scheme to defraud prospective parents, surrogates, and financial institutions. Surrogenesis was a surrogate and egg donation agency that marketed itself as assisting individuals in having children through third-party assisted reproduction. Michael Charles Independent Financial purported to be an independent personal property escrow company that would hold clients’ funds in trust and pay out those funds upon the clients’ authorization for legitimate expenses associated with the surrogacy process. Such expenses included authorized surrogacy fees and medical fees and costs associated with the surrogacy process. Collins allegedly steered Surrogenesis clients to Michael Charles Independent Financial but concealed her ownership and operation of the escrow company, including by creating fictitious employee identities to make it appear that Michael Charles was an independent company with its own staff. The Michael Charles company in certain cases also acted as the trustee for clients of other surrogacy agencies.

The indictment alleges that Collins used the Surrogenesis and Michael Charles accounts for unauthorized personal purchases, without the clients’ knowledge or authorization. Those personal expenditures included automobiles, homes, jewelry, clothing, and vacations for herself and others. Collins at times directly used client trust funds in the Michael Charles accounts to pay for her personal purchases and also at times transferred client funds from the Michael Charles accounts to other bank accounts that she controlled before spending the funds. As a result of Collins’ conduct, Surrogenesis and Michael Charles Independent Financial suffered substantial cash flow problems and various surrogate mother fees and related surrogacy expenses were not paid by the companies as required. Collins nonetheless allegedly continued to solicit new surrogate parent clients and funds. The indictment also alleges that, in an effort to conceal and forestall the collapse of the scheme, Collins kited checks and wire amounts between banks, which resulted in losses to financial institutions. Eventually the scheme collapsed in 2009. As a result of Collins’ conduct, Surrogenesis and Michael Charles clients, surrogates, and financial institutions suffered losses of more than $2 million.

This case is the product of an extensive investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Stanley A. Boone and Kirk E. Sherriff are prosecuting the case. Collins will make her first court appearance today before U.S. Magistrate Judge Gregory Hollows at 2:00 p.m. in the Sacramento federal courthouse.

If convicted, Collins faces maximum statutory penalties of 20 years in prison and a $250,000 fine on the mail fraud and wire fraud counts; 30 years in prison and a $1 million fine on the bank fraud counts; and 10 years in prison and a fine of up to $500,000 on the money laundering counts. The actual sentence, if convicted, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

The charges are only allegations, and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.