Imagine That!

April 9, 2011 permalink

Two years after entering bankruptcy, the operators of Imagine Adoption, Susan and Rick Hayhow, have been charged with fraud and breach of trust. They used $420,000 in agency funds for vacations, clothing and home renovations. Earlier stories: [1] [2] [3].

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Brian Caldwell, Sat Apr 09 2011 09:01:00

Adoption agency founders charged

Susan and Rick Hayhow, who operated Cambridge-based Imagine Adoption, are charged with fraud and breach of trust.

Charged Susan and Rick Hayhow, who operated Cambridge-based Imagine Adoption, are charged with fraud and breach of trust.

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CAMBRIDGE — Holly Guistini finally has the family she always wanted after adopting a baby boy from Ontario last year.

But as she makes plans to celebrate her son’s first birthday next week, the Kitchener woman still isn’t over the heartache of what might have been.

Guistini and her husband, David, were among more than 400 families across Canada whose hopes were dashed when an overseas adoption agency based in Cambridge went bankrupt almost two years ago.

Memories of that blow flooded back Friday when police announced they have charged the husband and wife behind Imagine Adoption with numerous counts of fraud and breach of trust.

Rick and Susan Hayhow are accused of blowing more than $420,000 in agency funds on personal purchases — including vacations, clothing and home renovations — in the 2 ½ years before it collapsed in July 2009.

“I’m happy it’s coming to an end, but it won’t be enough for those people who have lost all their dreams,” Guistini said.

Police began investigating the agency after allegations surfaced of six-figure salaries, leased luxury vehicles and suspect expenses charged by its two senior executives.

Included in the expenses were a horse and saddle, cosmetic dental surgery, trips to Disney World and New York City, and extensive renovations at the couple’s old stone home on Roseview Avenue in Cambridge.

A wrought-iron fence installed at the house cost $13,500. The tab for a five-day family trip to New York came to $13,000.

Guistini and her husband turned to Imagine — the umbrella organization for three related agencies — after having four miscarriages and trying expensive in-vitro fertility treatments.

A year into the lengthy international adoption process, they had spent about $20,000 in hopes of bringing home an infant daughter from Ethiopia.

The couple bought clothes and dolls and painted the nursery pink. Guistini got a mannequin to practise braiding African hair.

Then came word the agency had collapsed, leaving them wondering if they would ever have the money or emotional energy to try again.

“It was absolutely devastating,” Guistini said. “It was just like losing another child.”

Ingrid Phaneuf and her husband, Edward Barth, were also waiting to be matched with a child in Ethiopia after spending about $15,000 through the agency.

She had taken a second job to pay the fees after having a stillborn son a few years earlier.

Like the Guistini’s, the Etobicoke couple has since successfully adopted in Ontario. They now have two children, ages eight and 10.

Phaneuf is still furious, however, at the suspect expenses and the fact the Ontario government — which had licensed Imagine just a few months before it failed — didn’t step in to compensate clients.

“It would be nice to have that $15,000 to help pay for college for my kids,” she said.

Promoted as a Christian agency, Imagine fell apart after it came to light that Susan Hayhow, the executive director, was having an affair with Andrew Morrow, an employee and board member whose wife also worked there.

Rick Hayhow, the chief financial officer, was given a year’s pay as severance when he left the four-year-old agency in the wake of the scandal.

Alan Brown, a new member of the volunteer board of directors, subsequently learned the couple had been paying themselves a combined salary of $320,000 a year, in addition to the use of leased luxury vehicles.

Brown and another new board member, Chris Hughes, then looked into the agency’s finances and flagged suspicious expenses estimated at more than $300,000 that had been racked up since early 2007.

Financial records before that time couldn’t be found.

Following the bankruptcy, Brown came forward with his concerns and an investigation was launched by Waterloo Regional Police and the RCMP.

Brown has said records suggest agency credit cards were routinely used for personal expenses including shopping at high-end clothing stores, restaurants, vacations and spa visits.

Susan and Rick Hayhow are jointly charged with breach of trust, six counts of fraud over $5,000 and three counts of fraud under $5,000. They are also individually charged with one count of fraud under $5,000.

Staff Sgt. Dale Roe of regional police said the investigation involved the examination of “volumes and volumes” of documents.

Rick Hayhow, 46, was arrested in Cambridge, while Susan Hayhow, 45, was arrested in Whitby. They were released by police on a promise to appear in Cambridge court May 26.

“It’s been a long haul,” Brown said Friday. “I just hope to see some resolution for the families who have been affected by this.

“In the end, it’s incredibly unfortunate for the kids that money should have been supporting and, of course, the families who sacrificed to save children out of Third World poverty.”

The agency had just $500,000 in bank accounts when it went bust. Clients left in the lurch initially filed about $3 million in claims as part of the bankruptcy process.

After months of turmoil, a majority of affected families voted to salvage the agency by paying an extra $4,000 each. Overseas adoptions have since slowly resumed.

Guistini considers herself incredibly fortunate to have been able to adopt a local child after it seemed like the couple was out of options.

But there are still plenty of reminders in her home — including a large map of Africa — of the daughter who never came because of the collapse.

“You just feel bad for the other people who weren’t so lucky,” Guistini said. “It disgusts me. I don’t even think I have the words for it.”

Mercury news services

Source: Guelph Mercury