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Luxury for Adopters
July 29, 2009 permalink
Here is another story on the squandering of assets by Imagine Adoption, this one based on interviews with director Alan Brown. While the agency was failing financially, the husband and wife management team drew $320,000 in annual salary, ran up $300,000 in expenses and drove luxury vehicles at the agency's expense. This is just like children's aid, according to the report of Ontario's Auditor General. What is different is that when children's aid runs out of money, the province covers the deficit with a supplemental appropriation.
Imagine Adoption board member speaks out on bankrupt Cambridge agency expenses
July 28, 2009, By Brian Caldwell, Record staff
CAMBRIDGE — The husband and wife who headed a non-profit Cambridge adoption agency that went bankrupt two weeks ago earned a combined total of $320,000 a year.
Susan Hayhow, executive director of Kids Link International Adoption Agency and two related organizations, had an annual salary of $180,000.
Her now-estranged husband, Rick Hayhow, made $140,000 a year as chief financial officer of Kids Link — which operated as Imagine Adoption — and the Saint Anne Adoption Centre until he resigned in April after it came to light that his wife was in a relationship with another employee.
Their six-figure salaries were the first indications of trouble for two members of the agency’s board of directors who later went to police with allegations of hundreds of thousands of dollars in improper expenses.
“Everybody has to live,” said Alan Brown, one of the volunteer directors who raised concerns. “There’s a reasonableness to everything. But when I heard those numbers, I was like, ‘You’ve got to be kidding me.’ ”
On top of their salaries, the couple both drove vehicles leased to the agency — Susan a $72,000 Lexus and Rick a Nissan Pathfinder worth $42,000.
Brown said the two directors did a check of the agency’s finances and turned up more than $300,000 in suspect expenses starting in early 2007.
Included were the purchase of a $3,000 horse and a $2,700 saddle, a one-week, $13,000 hotel stay in New York last Christmas, two trips to Disney World in Florida, clothing purchases from Holt Renfrew and extensive work at the couple’s Cambridge house, such as the installation of a $13,500 wrought- iron fence.
“It’s absolutely insane,” said Brown, who spoke publicly Monday for the first time since the agency collapsed. “There are tons of ridiculous purchases.”
Bankruptcy trustees have been working with government officials to complete about 40 adoptions, mostly from Ethiopia, that had reached the stage where Canadian families were matched with children.
Clients who hadn’t reached that step have been lobbying the province — which licenses international adoption agencies — to help see their cases through as well.
Representatives of about 400 families are scheduled to meet Tuesday with Deb Matthews, the minister of children and youth services.
Many of them have invested months of time and $20,000 or more in the hopes of adopting needy children from overseas.
“There were all manner of expenses (to the agency),” Brown said. “When the families see the list of what was bought … it’ll make them sick.”
Part owner of a software development company in Cambridge, Brown said he had known the Hayhows for about eight years when he became an Imagine board member in 2008.
About a year later, in May of this year, Brown said an emotional Rick Hayhow invited him to breakfast to discuss the breakup of his marriage.
Susan Hayhow had begun a common-law relationship with Andrew Morrow, the third director of Imagine and an employee of Global Reach Children’s Fund, the other related organization.
Brown said Rick Hayhow told him he had resigned because of the affair and that he been given a year of continued salary, plus the use of the Pathfinder, as severance.
Alarmed by the amounts involved, Brown said he contacted fellow board member Chris Hughes and they began going through financial records.
“The salary was a number that floored me when I first heard it,” Brown said. “I had no idea they were drawing those types of wages.”
Brown said they found numerous questionable expenses and determined Imagine was so strapped for money that bankruptcy was the only option.
Although the agency had about $500,000 in bank accounts, he said, the money was supposed to be held in trust for clients and couldn’t be used to pay the staff of 15 or meet other operating expenses, including $50,000 to $70,000 a month to run a transition home in Ethiopia for children matched with Canadian families.
“The reason we put it into bankruptcy was to protect the families,” Brown said. “If we hadn’t, they would have lost everything.
“We had to protect the remaining money that should have been in trust. The way the business was running, the monthly expenses would have consumed all of those funds in less than 90 days.”
Brown said the two directors consulted a lawyer and froze the agency’s bank accounts.
They also stopped paying Rick Hayhow his severance and took Susan Hayhow off the payroll.
Brown said he spoke out so affected families understand the nature and seriousness of concerns about the agency.
Hughes, a long-time trustee for the agency, could not be reached by The Record.
Brown said he also wants it known that he found no evidence of wrongdoing by other employees of the agency — including Valerie Goodyear, wife of Cambridge MP Gary Goodyear.
Brown said the agency never received any government money or preferential treatment.
“The Goodyears don’t have anything to do with it,” he said.
“None of the staff knew anything about the finances in the organization. That was all very closely held.”
Since the bankruptcy, the accounts of Saint Anne and Global Reach have also been frozen because money was flowing between all three organizations. Some directors and senior staff members also held multiple positions, raising conflict-of-interest concerns.
“The finances and the books are a disaster for all three of them,” Brown said.
Waterloo Regional Police are conducting a fraud investigation into Imagine after meeting with Brown and Hughes last week. The first meeting of the agency’s creditors is scheduled for Thursday.
Morrow has not returned repeated calls from The Record. Rick Hayhow and Susan Hayhow couldn’t be reached for comment.
Source: The Record (Waterloo Ontario)
Addendum: The clients have pitched in $4000 each to recapitalize Imagine Adoption.
Families agree to lift adoption agency out of bankruptcy
Natalie Alcoba, National Post Published: Monday, September 21, 2009
An international adoption agency that went bankrupt this summer is almost back in business after prospective adoptive families voted to each pay another $4,000 to get it operating again.
The proposal for Imagine Adoption was overwhelmingly endorsed on Monday by its creditors, including landlords that agreed to receive less than what they are legally owed, but still needs court and ministry approval for it to become official.
"I'm elated. It's really the best plan for all of us," said Christine Starr, whose adoption was in the final stages in Ethiopia when the Ontario-based agency suddenly went bankrupt in July. BDO Dunwoody was named trustee, and families banded together to try to salvage the outstanding adoptions.
There were 350 Canadian families adopting through Imagine Adoption when it went bankrupt.
About 250 voted in favour of a plan that would see them pay two installments of $2,000, and 20 voted against. Some who were unhappy with the proposal expressed their opposition by not voting, saying the plan offers no guarantee that people at the bottom of the list could complete their adoptions.
"There's enough money for two years but there's three years of operations," said Ingrid Phaneuf, who had her adoption file with Imagine Adoption. "I'm in the bottom third, which means I would put this money in and it would guarantee the adoption of these other families but not my own." New board members say the plan is designed to see all families through their adoptions, with the last year of a three year proposal drawing on money from new clients. Ms. Phaneuf, however, was skeptical that the agency would be able to attract more business, given all the negative publicity it has received. She will lose the $16,000 she has spent on adopting from Ethiopia and will try to adopt through the Children's Aid Society.
Ms. Starr, chair of Families of Imagine Adoption, a group that has been working to achieve completion of all the adoptions registered with the company, said the revived adoption agency would operate with much more oversight. There are eight people on the board of directors now, herself included, compared to three before. A trustee would be overseeing the process as well.
She said the approved proposal does not guarantee adoptions for anyone, but that has less to do with the process and more to do with international adoption as a endeavor. The goal is to make Imagine Adoption a viable agency that can continue to operate beyond these outstanding adoptions, she said.
"It's a victory. It allows us to take the next step in the journey," said Rob Eagleson, who also sits on the new board of directors. He and his wife adopted a little girl from Ethiopia last year. Mr. Eagleson said he did not expect any difficulty in obtaining court and ministry approval.
He said people have inquired about getting on a waiting list for Imagine Adoption.
Source: National Post