I had the pleasure of speaking with Sterling Johnson of San Rafael, California on Friday. This humble family law attorney has been foisted into a central role in the SurroGenesis debacle. Before I go further, he is not an ART attorney. He is not representing anyone claiming to be damaged. Rather, because of his unique experiences two years ago when ASAP closed its doors, Sterling has a certain expertise in agency roll ups and has a unique perspective of this matter.

We spoke about ESPA, the organization's goals and the protections we hope to provide through education, guidelines and alternate dispute resolution. Mr. Johnson was very kind to compliment the organization and our members for being pro-active.

Mr. Johnson was also kind to provide me with the following information. First, Tanya Collins, the owner of SurroGenesis and another person (Michael Charles) formed the escrow company, Michael Charles Group to service the funds deposited by intended parents for the benefit of surrogates and egg donors. Collins had check writing capability. Second. the FBI is looking at the financial transactions. Federal prosecutorial jurisdiction is invoked because there is a interstate component to SurroGenesis corporate business and because the threshold for damages, $500,000.00, has been exceeded. Third, there is an insurance policy and a bond covering these matters. While the Insurer has not disclosed the declaration sheet or any "reservation of rights" letter, if such has been issued, it is believed the policy limits are $2,000,000.00. The bond is believed to be $100,000.00. Fourth, the nature of the SurroGenesis organization, a spoke and wheel arrangement, apparently included directing client funds from the so-called franchises into the Charles accounts. Fifth, the money withdrawn from the Account in question for alleged non-client activities has not been fully accounted for. Thus, there is some hope that the remaining assets can be tracked and recovered.

Again, my thanks to Attorney Johnson for his time and this information. I also thank EDSPA member, Andrew Vorzimer, who made the meeting possible.

I offer some personal observations. It appears there will be civil suits of varied amounts, in multiple jurisdictions and perhaps even a class action suit. These suits will be complex because theft, an intentional act, is usually outside the scope of insurance coverage. Additionally, individual intentional acts are typically outside the scope of corporate activities, thus, the Corporate entity may successfully isolate itself from the individual. The civil attorney will have to draft his/her pleadings very artfully to survive a Motion to Dismiss and quite possibly a Motion for Summary Judgment.

Regardless of how these civil collection activities originate, there will likely be a contemporaneous criminal prosecution. State based criminal actions typically look for restitution before other punishment is invoked. Federal based criminal actions look to jail time first with restitution as a second thought. Either way, let us hope the victims are recompensed before anyone gets carted off to jail.

Thank you to the EDSPA members and the EDSPA Board of Directors for helping move our vision forward. With your help, we can minimize problems, create solutions and provide a safe, stable professional environment for our respective clients.

Robert