San Diego Surrogacy Broker Indicted in Alleged $2M Scam

San Diego, CA — The founder of San Diego-based company is facing federal charges for allegedly scamming more than $2 million from people who were trying to have babies through surrogate parents.

The U.S. Attorney’s Office in San Diego said Wednesday that 48-year-old Canadian citizen Acharayya Rupak — who has also gone by Rudy Rupak, Rudolph Matthews and Kevin Thomas Rudolph Matthews — has been indicted by a federal grand jury on allegations that he posed as a surrogacy broker through his medical tourism company Planet Hospital.

Medical tourism companies facilitate travel to foreign countries to undergo medical procedures such as gastric bypass, organ transplants, tummy tucks or hip replacements at a more affordable price. In this case, prosecutors say, Rupak acted as an intermediary, connecting U.S. clients with egg donors and in vitro fertilization clinics and surrogates in Mexico.

According to the indictment, Rupak pocketed money from clients that he was supposed to use to pay the clinics for various surrogacy services. The clinics didn’t get their money; the clients never received the services.

"People who seek the help of a surrogate are on an exhausting, expensive and emotional journey," said U.S. Attorney Laura Duffy. "They shouldn’t have their dream to have a child trampled by someone they trust to help them."

Rupak has been indicted for wire fraud and made his first appearance in federal court Tuesday in San Diego before U.S. Magistrate Judge Barbara Major. Bond was set at $50,000 and his next court hearing is scheduled for July 25.

He faces a maximum sentence of up to 20 years in federal prison.

The case investigated by the FBI revealed that Rupak’s medical tourism business had addresses in San Diego, Calabasas and Calexico. It is believed that in 2008, he began offering international surrogacy services, which is the practice of paying a woman to have an embryo transferred to her womb and bear the child for someone else.

Beginning in September 2009 and continuing until at least January 2014, Rupak is accused of soliciting international surrogacy clients, purportedly luring them in with promises of discounted prices and then hitting them with additional fees later. He is accused of convincing them to send him thousands of dollars by falsely representing that their funds would be put into escrow accounts and used only to pay for medical services.

But according to the indictment, Rupak failed to forward the clients’ funds to service providers such as egg donor companies, IVF clinics and surrogacy services. These companies would then demand additional funds from Rupak’s clients, who had already paid for the services.

To cover up the theft, Rupak allegedly created unauthorized websites and email addresses in the name of a clinic and its physician in order to send emails to Planet Hospital clients, giving excuses for why Planet Hospital had not provided promised services or falsely claiming that surrogacy procedures were unsuccessful.

"Frankly we no longer trust that Planet Hospital has done anything other than take $25,000 from us," one client wrote on a consumer alert website.

Rupak is also accused of lying to his clients about success rates and falsely claiming ownership interest in two IVF clinics in Cancun, Mexico, the indictment said.

Once his alleged deception started snowballing, Rupak is accused of operating his business like a Ponzi scheme, using funds from new clients to pay for services provided to existing Planet Hospital clients.

"Though the FBI investigates many types of fraud, it is concerning when victims have been taken advantage of because of their desire to start a family," said FBI Special Agent in Charge Eric S. Birnbaum. "The FBI will use our resources appropriately to root out fraudulent surrogacy schemes that violate the trust of the American public."