European Adoption Consultants Sued For Money Damages by Ohio Attorney General June 1st, 2017 18-Pagesy Damages Only
European Adoption Consultants Sued For Money Damages by Ohio Attorney General June 1st, 2017 18-Pagesy Damages Only
BYRD
CUYAHOGA COUNTY CUERK OF COURTS
1200 Ontario Street
Cleveland, Ohio 44113
vs.
Judge: JOAN SYNENBERG
EUROPEAN ADOPTION CONSULTANTS, INC. ETAL.
Pages Filed: 18
1. Plaintiff, State of Ohio, by and through the Attorney General of Ohio, Michael DeWine,
having reasonable cause to believe that violations of Ohio’s consumer laws and charitable
laws have occurred, brings this action in the public interest and on behalf of the State of Ohio
under the authority vested in him by R.C. 1345.01 et seq. (“Consumer Sales Practices Act”),
R.C. 109.23 et seq. (“Ohio Charitable Trust Act”), R.C. 1716 (“Ohio Charitable
Cuyahoga County, and in other counties, involve residents of the State of Ohio, and, as set
forth below, are in violation of the Consumer Sales Practices Act, R.C. 1345.01 et seq. and
its Substantive Rules, Ohio Admin. Code 109:4-3-01 et seq., the Ohio Charitable Trust Act,
R.C. 109.23 et seq., the Ohio Charitable Organizations Act, R.C. 1716, and the Attorney
3. Jurisdiction over the subject matter of this action lies with this Court pursuant to R.C.
4. This Court may exercise personal jurisdiction over the Defendants in this case pursuant to
R.C. 2307.382 because the acts and omissions alleged in this complaint occurred in Ohio
and/or because they involve or relate to the activities of an Ohio nonprofit corporation.
5. This Court has venue to hear this case pursuant to Ohio Civ. R. 3(B)(3) in that the
Defendants conducted activity which gave rise to the claims for relief in Cuyahoga County in
DEFENDANTS
corporation with the Ohio Secretary of State on July 10, 1992. Defendant EACI does
business in Cuyahoga County and other counties, in the State of Ohio. Defendant EACI has
tax-exempt status under section 501(c)(3) of the Internal Revenue Service Code.
7. The principle place of business for Defendant EACI is 12608 Alameda Drive, Strongsville,
Ohio 44149.
8. Defendant Margaret Cole (“Cole”) is a natural person whose last known address is 6731
hereto controlled and directed the business activities and conduct of Defendant EACI,
causing, personally participating in, or ratifying the acts and practices of Defendant EACI,
10. Defendant EACI is a “charitable trust” as that term is defined in R.C. 109.23 and a
11. Defendant Cole and all board members of Defendant EACI are fiduciaries of the
12. Defendants are “suppliers” as that terms is defined in R.C. 1345.01(C), since Defendants, at
all relevant times hereto, were engaging in the business of effecting consumer transactions by
soliciting and selling intercountry adoption services to consumers in Ohio and nationwide for
purposes that were primarily personal, family, or household, within the meaning specific in
R.C. 1345.01(A).
STATEMENT OF FACTS
13. Defendants operate a business which solicits and sells intercountry adoption services
throughout the United States, including in the State of Ohio and in Cuyahoga County.
14. Defendants contracted with consumers to provide intercountry adoption services, including
but not limited to processing applications and other paperwork, translation services, home
15. Consumers each paid Defendants substantial amounts of money for intercountry adoption
services.
16. Defendants represented to consumers that the consumers met the requirements for certain
programs for countries that, in fact, did not have intercountry adoption programs.
18. Defendants misrepresented the amount of time for an adoption in a particular country. For
example, Defendants stated that the wait time to complete an adoption in one country was 6
9 months when, in fact, the average wait time to complete the process in that same country
19. Defendants represented to consumers that the consumers had been enrolled in intercountry
adoption programs to adopt an infant when, in fact, infant adoptions were rare or impossible
in such countries.
20. Defendants represented that fees paid by consumers were forwarded to the country in which
the consumer was enrolled, when such was not the case.
21. Defendants solicited donations to support Defendants’ mission trip to Guatemala and
represented that money donated to Defendants’ Guatemalan mission trip could lead to the re
opening of the country for intercountry adoption when Defendants had no ability to produce
such a result.
22. In some cases, Defendants failed to communicate with consumers regarding the status of
documents expired, Defendants failed to inform consumers that their documents had expired,
23. Defendants required consumers to prepay for services that had not yet been rendered, or
would not be rendered in the near future. For example, families prepaid for post-placement
24. Upon information and belief, Defendants did not escrow or set aside prepaid funds.
26. As a result of Defendants’ misrepresentations, consumers have spent significant time and
expense and have not been provided the contracted for adoption services.
27. Defendant Cole misrepresented the amount and type of assets possessed by Defendant EACI
28. On December 16, 2016, the US Department of State temporarily debarred Defendant EACI
for a period of three years. Defendant EACI was required to cease all adoption services
29. At the time of debarment, Defendant EACI had approximately 300 consumers that had
contracted with Defendant EACI, paid for intercountry adoption services, and were in
30. Defendant EACI was required by federal regulations and the U.S. Department of State to
transfer intercountry adoption cases and adoption records to other accredited agencies or
persons for adoption services that were in process at the time of debarment.
31. Defendant EACI was required by federal regulations and the U.S. Department of State to
provide refunds for intercountry adoption services that were paid for by consumers, but not
32. Under 22 U.S.C. § 96.33(e), “in the case of cancellation or debarment, it [an adoption
agency] must execute the plans required by §§ 96.33(e) and 96.42(d) under the oversight of
the accrediting entity, and transfer its Convention adoption cases and adoption records to
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33. Under 22 U.S.C. § 96.33(e), Defendant EACI was required to have a “plan to transfer its
services in Convention cases. The plan includes provisions for an organized closure and
34. Under 22 U.S.C. § 96.42(d), Defendant EACI was required to have a “plan that is consistent
with the provisions of this section, the plan required under § 96.33, and applicable State law
for transferring custody of adoption records that are subject to retention or archival
records, in the event that the agency or person ceases to provide or is no longer permitted to
35. On December 19, 2016, Defendants represented to consumers on Defendants’ website and
via email that their cases are “more important than whether or not we [EACI] contest the
action by the State Department and our efforts are focused on taking care of you and our
international programs. We are trying to maintain some consistency in our cases with
minimum difficulty and expense. As a part of that, we are making arrangements to facilitate
the transfer of our families to another accredited agency. Decisions on your case must be
made quickly in order to keep your adoption process moving, so hopefully, within the next
few days, we will be able to give you our agency’s recommended transfer plan.”
36. On December 23, 2016, Defendants represented to consumers on Defendants’ website and
via email that they were “dedicated to help all families to complete their adoption process.
We are still asking for your continuous patience. We will notify all families of the proposed
service plan including estimated cost and procedures for each case that accurately reflects the
and via email that “the transfer plan will be complete during the last week of December. We
will be arranging conference calls in January to explain the transfer plan. After the
conference call, your country consultant will be contacting each one of you individually
accordingly to the stage of your adoption process to notify you of the transferee agency and
38. The Council on Accreditation required Defendant EACI to transfer the consumers’ adoption
cases and records to the new accredited adoption agencies or persons within 10 days from the
date of finalization of the transfer plans. The last of the transfer plans were finalized on
January 20, 2017 and thus, files should have been transferred by January 30, 2017.
39. Under 22 U.S.C. § 96.42(d), Defendant EACI must return any funds to which the
“prospective adoptive parent(s) may be entitled within sixty days of the completion of the
delivery of services.” The last date of Defendants’ ability to perform any services was
December 16, 2016, and refunds to consumers should have been provided by February 14,
2017.
40. At the time of debarment, hundreds of consumers had paid Defendants between several
41. To date, Defendants have failed to transfer intercountry adoption cases, adoption records, and
consumers’ paid adoption funds to other accredited agencies or persons for adoption services
that were in process at the time of the debarment, in accordance with the approved transfer
plans.
42. To date, Defendants have failed to provide refunds to the consumers for adoption services
that the consumers have paid for, but have not been provided by Defendants.
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43. As a result of Defendants’ actions, consumers’ pending adoptions cannot move forward
without significant time and extra expenses to the consumers, including but not limited to,
payment of administrative fees to the new adoption agency, payment of fees for certain
adoption services to be redone by the new agency, additional travel expenses, etc.
44. Despite the promises made to consumers by Defendants, many consumers who have reached
out to Defendants via phone regarding the failure to provide services, transfer files or funds,
or provide refunds are unable to get through to Defendants or have their calls answered by an
answering service that has no knowledge of the situation and do not receive calls back from
Defendants.
45. Defendants’ violations of law and their misrepresentations are a breach of fiduciary duty.
46. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
47. Defendants have committed unfair or deceptive acts or practices in violation of the CSPA,
48. Defendants have committed unfair or deceptive acts or practices in violation of the CSPA,
R.C. 1345.02(A), by misrepresenting the status of consumers’ adoption services, the transfer
49. Defendants have committed unfair or deceptive acts or practices in violation of the CSPA,
R.C. 1345.02(A) and R.C. 1345.02(B)(1), by representing that Defendants’ adoption services
R.C. 1345.02(A) and R.C. 1345.02(B)(2), by representing that Defendants’ adoption services
are of a particular standard, quality, grade, style, prescription, or model, when they are not.
51. Defendants have committed unfair or deceptive acts or practices in violation of the CSPA,
R.C. 1345.02(A) and R.C. 1345.02(B)(9), by representing that Defendants have sponsorship,
52. Such acts and practices have been previously determined by Ohio courts to violate the CSPA,
R.C. 1345.01 et seq. Defendants committed said violations after such decisions were
53. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
54. Defendants have committed unconscionable acts or practices in violation of the CSPA, R.C.
55. Such acts and practices have been previously determined by Ohio courts to violate the CSPA,
R.C. 1345.01 et seq. Defendants committed said violations after such decisions were
56. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
57. Defendants have committed unfair or deceptive acts or practices in violation of the CSPA,
R.C. 1345.02(A) and the Ohio Admin. Code 109:4-3-09(A), by accepting payments from
adoption services contracted and paid for; and (2) refund the payments to consumers within
sixty days of ceasing the ability to deliver the intercountry adoption services.
58. Defendants have committed unfair or deceptive acts or practices in violation of the CSPA,
R.C. 1345.02(A) and the Ohio Admin. Code 109:4-3-09(A), by failing to transfer consumers’
files for intercountry adoption services to other accredited agencies or persons in the required
59. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
60. R.C. 1716.17 states, in pertinent part, “[e]very person who solicits, collects, or expends
officer, director, trustee, or employee of that person who is concerned with the solicitation,
in a fiduciary capacity.”
61. R.C. 109.23(A) states, in pertinent part, “’charitable trust’ means any fiduciary relationship
with respect to property arising under the law of this state or of another jurisdiction as a
result of a manifestation of intention to create it, and subjecting the person by whom the
property is held to fiduciary duties to deal with the property within this state for any
62. Through the acts and omissions identified above, Defendants violated their fiduciary duties
Ohio Attorney General is entitled to restitution and injunctive relief, and for which she is
liable to pay a civil penalty of up to $10,000 for each violation pursuant to R.C. 1716.16(B).
64. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
65. R.C. 1716.14(A)(1) prohibits committing any deceptive act or practice in the planning,
charitable purpose.
66. R.C. 1716.01(F) defines “deceptive act or practice” as “knowingly misrepresenting any
67. R.C. 1716.14(A)(2) prohibits misleading any person as to any material fact concerning the
68. Defendants’ acts and omissions identified above violate R.C. 1716.14(A)(1) and (A)(2) for
which the Ohio Attorney General’s Office is entitled to an injunction prohibiting further
litigation, and civil penalties of up to $10,000 for each violation pursuant to R.C. 1716.16(B).
69. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
70. At the January 5, 2015 meeting of the board of Defendant EACI, Defendant Cole expressed
her “concern” about Defendant EACI’s “ability to show that the Corporation had sufficient
Colombia. She indicated that in order to assist the Corporation with its financial
requirements, prior to the end of 2014, she had donated to the Corporation certain property in
Ashtabula County owned by her that had a probable sales value of approximately
$300,000.00 and that she also had loaned $300,000.00 to the Corporation. She advised that
there was a good likelihood that the property she donated could be sold in short order and
that she expected the loan to be repaid from the proceeds of the sale of that property,
hopefully, by the end of February.” In reliance upon this information, the board executed a
promissory note for the sum of $300,000.00 with Defendant Cole that was payable on
71. At the time this promissory note was entered into, Defendant Cole had not transferred any
72. The property in Ashtabula County was eventually transferred to Defendant EACI via Quit
73. Defendant Cole made the above false or misleading statements and representations to board
members regarding the amount and type of assets that Defendant EACI possessed. At the
time of the debarment several families had been the process with Defendant EACI to adopt in
Columbia.
reckless and intended to mislead board members regarding the amount and type of assets that
75. Board members relied on these false or misleading statements and representations regarding
the amount and type of assets that Defendant EACI possessed and have suffered damages.
76. Plaintiff incorporates by reference, as if completely rewritten herein, all the allegations set
77. R.C. 1716.14(B) provides, “[t]he act of soliciting contributions for any charitable
complying with the requirements of this chapter or any rule adopted pursuant to this chapter
is a nuisance.”
78. Defendants violated R.C. 1716.14 with respect to Defendant EACI as stated above.
79. Defendants’ conduct as described above violates R.C. 1716 and constitutes a nuisance
Defendant EACI, and prohibiting Defendants from distributing or accessing any assets of
Defendant EACI.
80. Plaintiff incorporates by reference, as if completely rewritten herein, the allegations set forth
when: (A) there is a viable charitable trust; (B) the donor evidenced a general charitable
intent on promoting the trust; and (C) it has become impossible or impractical to carry out the
82. Ohio case law also recognizes the equitable doctrine of deviation. Courts may apply the
doctrine when it deems necessary or highly desirable in order to enable the trustee to perform
the purposes of the trust. Courts may deviate from the terms of the trust if the provisions
83. Defendant EACI was formed as a charitable trust and is required to operate for the benefit of
its charitable beneficiaries. As such, the funds of Defendant EACI may be used only for the
charitable purposes set forth in the terms of the trust. Additionally, all charitable proceeds
unjustly or illegally retained by Defendant EACI or Defendant Cole are subject to the same
charitable trust.
84. The specific purposes and/or specific terms of the charitable trust have become impossible or
85. The Ohio Attorney General is entitled to an order reforming the terms of the charitable trust,
in order to most nearly fulfill the purposes of the charitable trust in accordance with the
86. Because Defendants Cole and Defendant EACI have proven incapable of appropriately
managing and distributing charitable trust assets and solicitation proceeds collected on behalf
of charitable purposes, the Ohio Attorney General requests an order reforming the charitable
trust, dissolving Defendant EACI, and distributing all assets and proceeds to the Ohio
WHEREFORE, Plaintiff respectfully requests that this Court grant the following relief:
violates the CSPA, R.C. 1345.01 et seq. and its Substantive Rules, Ohio Admin. Code 109:4
B. ISSUE AN ORDER, pursuant to R.C. 1345.07, permanently enjoining Defendants EACI and
Cole, doing business under these names, or any other name(s), their agents, partners,
representatives, salespersons, employees, successors and assigns and all persons acting in
concert and participation with them, directly or indirectly, through any corporate device,
(1) Engaging in business as a supplier in any consumer transaction in the State of Ohio
until all sums due under all judgments are paid in full, whether those judgments are
issued by this Court or any other court against Defendants in favor of consumers who
(2) Engaging in the acts or practices of which Plaintiff complains and from further
violating the CSPA, R.C. 1345.01 et seq. and its Substantive Rules, Ohio Admin.
Code 109:4-3-01 et seq., including, but not limited to, violating the specific statutes
C. ISSUE AN ORDER permanently and perpetually enjoining Defendant Cole from holding
as an Ohio nonprofit corporation and dissolving the organization pursuant to R.C. 109.24;
E. ISSUE AN ORDER permanently and perpetually enjoining Defendant Cole from soliciting
in Ohio for charitable purposes or on behalf of any charitable organization, including, but not
G. ASSESS, FINE and IMPOSE upon Defendants EACI and Cole, a civil penalty of Twenty-
Five Thousand Dollars ($25,000.00) for each separate and appropriate Consumer Practices
H. ORDER Defendants EACI and Cole liable, pursuant to R.C. 1345.07(B), for reimbursement
unconscionable acts or practices, including, but not limited to, making restitution to
consumers who paid money to Defendants but never received the services for which they
paid;
I. ORDER Defendants, pursuant to R.C. 1716.16(B) of the Ohio Charitable Organizations Act,
to pay to Plaintiff Ohio Attorney General a civil penalty of up to $10,000 for each violation,
J. REFORM the charitable trust in accordance with the doctrine of cy pres or deviation,
laws of Ohio, ORDER Defendants EACI and Cole, their successors or assigns, under these
or any other names, to maintain in their possession and control for a period of five years all
to permit the Ohio Attorney General or his representative, upon reasonable twenty-four hour
notice, to inspect and/or copy any and all of said records, however stored, and further
ORDER that copies of such records be provided at Defendants’ expense to the Ohio Attorney
M. ORDER Defendants to pay all court costs associated with this matter;
N. GRANT such other relief as the court deems to be just, equitable and appropriate.
Respectfully submitted,
MICHAEL DEWINE
Ohio Attorney General
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