Founder of surrogacy company sentenced to 2 years for defrauding - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Founder of surrogacy company sentenced to 2 years for defrauding would-be parents

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SAN DIEGO (CNS) - The founder and operator of a California-based international surrogacy company was sentenced in San Diego Monday to serve two  years in prison for defrauding clients by exploiting their longing to become parents.

In addition to handing down the 24-month custody term for 49-year-old Acharyya "Rudy" Rupak, U.S. District Court Judge Cynthia Bashant ordered him to pay a $10,000 fine and scheduled a Sept. 13 restitution hearing to determine how much he must pay back to his victims.

Rupak committed the crimes while running Planet Hospital, a medical-tourism firm with business addresses in San Diego, Calabasas and Calexico. About 10 years ago, the company began offering international surrogacy services.

Over a period of at least 16 months ending around January 2014, Rupak made interstate wire transfers with the intent to facilitate commercial bribery, according to prosecutors.

In furtherance of the scheme, he solicited, and instructed PH employees to solicit, medical tourism and international surrogacy clients by falsely claiming that their funds would be set aside in escrow accounts and used only to pay for medical services.

In some instances, Rupak arranged for funds obtained from new PH clients to be used to pay for services provided to existing PH clients, court documents state.

In December 2013, PH clients wire-transferred $24,000 to a bank account controlled by Rupak. Instead of placing the funds into escrow, he mingled some of them with money received from another PH client.

Rupak then wire transferred the combined funds to My Donor Cycle, a San Diego-based business for surrogacy egg donation, to pay for services already provided to prior PH clients.

Rupak also initially undercharged PH clients for the cost of medical tourism and international surrogacy services in order to induce them to begin services through PH without knowing that additional payments would be required.

The service providers included the Fertility Clinic Cancun and the IREGA Clinic, facilities that provided surrogacy services in Cancun, Mexico.

Rupak's failure to forward client funds to the clinics in Cancun caused the service providers to demand additional funds from the PH clients in order to initiate or continue international surrogacy services.

Rupak made several excuses to PH clients for its failure to provide successful surrogacy services. He created a fraudulent website and email address through which he sent unauthorized emails in the name of a clinic and its physician to PH clients in order give false rationales for why PH had not provided promised services.

Rupak also instructed PH employees to make misrepresentations to clients regarding prior medical tourism and international surrogacy successes, and that unsuccessful surrogacy procedures were the fault of foreign service providers, restriction from foreign laws or failed bank transactions.

Apart from his work on behalf of PH, in order to obtain employment unrelated to medical tourism or international surrogacy, Rupak identified himself with an alias to potential employers in order to conceal his true identity and pending fraud allegations.

Rupak acknowledged that he caused total losses of at least $247,600, although the total damages will be determined at the restitution hearing.

Acting U.S. Attorney Alana Robinson stated that the defendant "betrayed the trust placed in him by people desperate to have a child."
"By preying on their vulnerable emotions, he was able to extract more money on the false promise that he was doing everything possible to help them obtain a baby," Robinson said.

"To use the dream of parenthood as leverage for obtaining fraudulent proceeds is intolerable and heartbreaking."
 

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