Federal authorities Friday arrested a woman on suspicion of defrauding more than $2 million from prospective parents, surrogates and banks in connection with a scheme carried out through her Modesto-based company.
A federal grand jury on Thursday indicted Tonya Collins, 36, formerly of Modesto, on seven counts of wire fraud, four counts of mail fraud, nine counts of bank fraud and 10 counts of money laundering, according to the U.S. attorney's office in Sacramento. Collins was arrested at her home in Antelope, in Sacramento County.
The indictment alleges the crimes occurred from November 2006 through March 2009.
Collins' companies, SurroGenesis and the Michael Charles Independent Financial Holdings Group, are the focus of the federal investigation. SurroGenesis was a Modesto-based surrogate and egg donation agency designed to help people having children through third-party assisted reproduction.
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Collins lived in Modesto until 2008, when she moved to Colleyville, Texas. SurroGenesis continued to operate in Modesto; concerns were raised in 2009 by would-be parents when payments to the surrogates stopped.
The couples and surrogates they represented came from across California and the nation, as well as Europe and China.
In April of that year, a class-action lawsuit was filed in California on behalf of about 100 intended parents. Named as defendants were Collins, SurroGenesis, Michael Charles Independent Financial Holdings Group and Jack Kiserow, Collins' business partner.
The Michael Charles Independent Financial company purported to be an independent personal property escrow company. It would hold clients' funds in trust and pay out — with the client's permission — surrogacy fees, medical fees and costs associated with the surrogacy process.
Federal prosecutors Friday said Collins allegedly steered SurroGenesis clients to Michael Charles Independent Financial, but concealed her ownership and operation of it.
The prosecutors said Collins created fictitious employee identities to make it appear that Michael Charles was an independent company with its own staff.
In September 2010, the plaintiffs asked to have the case dismissed while authorities continued their investigation. Attorney Wayne Beaudoin of Sherman Oaks wrote that with the FBI and U.S. attorney's office investigating the matter and potentially seeking restitution, "there is also an issue of more than one proceeding seeking the same amounts lost."
In that court filing, Beaudoin wrote that Kiserow, who earlier had said he was not involved in the alleged fraud and was cooperating with authorities, did not take any of the $2.5 million the plaintiffs claim was missing.
Beaudoin, who could not be reached for comment Friday, also wrote that his investigation determined "the funds allegedly stolen by Tanya Collins have either been expended in their entirety or well hidden such that we have been unable to ascertain the existence of any viable assets."
A relative of Collins' told the Fort Worth (Texas) Star-Telegram in 2009 that Collins' lifestyle changed as SurroGenesis grew. When the relative started working for the company in October 2006, she said Collins wasn't flashy and lived "comfortably." Within a year and a half, Collins was flaunting diamonds, buying cars and wearing expensive clothes.
The indictment handed down Thursday alleges that Collins used the SurroGenesis and Michael Charles accounts for unauthorized personal purchases, including vehicles, homes, jewelry, clothing, and vacations for herself and others.
As a result of Collins' conduct, prosecutors said SurroGenesis and Michael Charles Independent Financial suffered substantial cash flow problems. Various surrogate mother fees and related surrogacy expenses were not paid by the companies.
If convicted, Collins faces a maximum sentence of 20 years in federal 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.
At the time of the class- action lawsuit, Kiserow and Collins' husband, James, said they had no idea that Collins might have been up to wrongdoing. James Collins left the couple's Colleyville home and returned to California.
Reached through a Modesto phone number Friday, James Collins said he had no comment on his estranged wife's arrest.
Bee staff writer Patty Guerra and assistant librarian Katie Sizemore contributed to this report.
Bee staff writer Rosalio Ahumada can be reached at email@example.com or (209) 578-2394.