Special thanks to Lisa Pollak and our partners on this episode: Bloomberg Markets, The Center for Public Integrity and NBC Bay Area.
Support for Reveal is provided by the Reva and David Logan Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation and Mary and Steven Swig.
Al Letson: From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson.On our show, how do you know if your child's daycare is safe?
Mason Bayun: It literally looked like someone had gotten a hold of my daughter and punched her in the face.
Al Letson: Why millions of parents can't get the information they need to protect their kids.
Mason Bayun: It's almost like you're hiring a known offender to take care of your child.
Al Letson: Plus, the victims are real.
Ted Liming: It was like somebody had drained the blood out of my body.
Al Letson: But everything else was fake.
David Evans: I've investigated a lot of frauds before I'd never seen anything that was so pervasive.
Al Letson: Also, President Obama promised to keep politics out of science.
Pres. Obama: By letting scientists do their jobs and listening to what they tell us, even when it's inconvenient, especially when it's inconvenient.
Al Letson: Why his administration failed to keep that vow. Those stories and a lot more coming up on Reveal.
From The Center for Investigative Reporting and PRX, I'm Al Letson and this is Reveal. Reporter Katharine Mieszkowski needed to find a new pre-school for her daughter Iris.
Iris: There was this yard and I think they ... one area had tricycles and balls and stuff like that, and then the other area, there was a playground.
Al Letson: Katharine, that school closed unexpectedly and you didn't have much time to find a new one.
Katharine: The parents were scrambling. We were frantically emailing each other. There were a few places nearby that had openings but we didn't know if they were any good.
Al Letson: That sounds stressful. You don't want to send your kid to some place that you don't know anything about.
Katharine: I was also nine months pregnant with our second daughter. I was like, "I do not need this."
Al Letson: Oh, God.
Katharine: At a minimum I wanted to know that this new school was safe, had there been any complaints or violations, but it was shockingly difficult to find that information.
Al Letson: Aren't there inspections, reports, that kind of thing?
Katharine: Every licensed daycare and preschool in California gets inspected the problem is none of those reports were online.
Al Letson: Wait, this is the home of Silicon Valley, you're in California, in the middle of the tech industry and the reports are not online.
Katharine: Yup, and there's more than a million kids attending these programs just in California. This is a problem in other states too.
Al Letson: What are your options? What do you do next?
Katharine: If I wanted to find out what's in the reports I could have asked the school which is kind of dicey, say a school does have serious problems, can we really trust the administrators to share them with a prospective parent?
Al Letson: Right, like they're going to roll out the carpet and say, "Welcome to our preschool. We have a long history of violating state law."
Katharine: Exactly. My other option was to call an obscure government office. In my case that's the Bay Area Regional Office of California Community Care Licensing and leave a message.
Speaker 8: Please have a pen and paper handy for important instructions. First, leave your name and the age of the child for whom your care will be provided. Second, leave your telephone number including the Area Code. Third, the facility number. Fourth, the name of the child [crosstalk 00:03:10], the street address and city where the provider is located.
Al Letson: You have got to be kidding me.
Katharine: I got all of that together, left this long detailed message and no one called me back. It was really frustrating but also embarrassing.
Al Letson: Why embarrassing?
Katharine: Look, I'm a reporter who unearths government documents for a living and I can't even get these records for my own family. I wanted to find out if other parents were having the same problem. I started looking into this at work. My colleagues and I found that some daycare centers in California had received dozens of serious violations but were still open.
One of the most troubled schools is in Santa Clarita in Los Angeles County, it's called Sierra School. It’s had so many serious violations the state tried to shut it down, instead a judge put the school on probation for three years. We wanted to talk to some parents from the school to see if they knew what was going on. I found a parent on Yelp actually, he had written a pretty scathing review.
Mason Bayun: There is my review right here.
Katharine: That's Mason Bayun. He and his wife Holly moved to the area last March, and they needed to find a new school for their two year old daughter. They asked us not to name her in the story because she's so young. She started at Sierra School last April.
Mason Bayun: Right off the bat I say, "Avoid this place." Then it says, "If you do not care about how your child gets treated then by all means do sign-up with this school."
Katharine: Their daughter didn't seem to like the school very much. They said she usually is a social butterfly, but she had not made any friends. Holly and Mason figured it was just a rough transition, the terrible [inaudible 00:04:44], until one day last May when they came to pick up their daughter a little early.
Mason Bayun: I looked at her face and her right eye, right under it is black and it literally looked like someone had gotten a hold of my daughter and punched her in the face.
Holly Bayun: There's a discoloration of her skin where the blood collected, it's still there, it hasn't dissipated.
Katharine: That's Mason's wife Holly. Months later their daughter's skin is still discolored. Sierra School staff say the girl just got hurt on the playground, but Holly got a different story from her daughter.
Holly Bayun: After we picked her up from school we asked her, "What happened to your face?"
Katharine: Over and over again she told her parents that a teacher hit her.
Holly Bayun: That's all she could say. That's all that would come out of her mouth, no matter how you put the question.
Katharine: The local sheriff's office investigated but no charges were filed. The Bayun’s pulled their daughter out of Sierra School soon after the injury.
After they told us what happened to their daughter we presented them with a stack of state records about the school, records they hadn't even known existed, much less how to get them. They were shocked. They had no idea that the school had had so many problems. The children had been left alone. At one point the school had illegal wiring, wires that were within a child's reach, and here's what the Bayun’s said when they saw the records for the first time.
Mason Bayun: Essentially I enrolled my daughter in a death trap. It's almost like you're hiring a known offender to take care of your child.
Katharine: The thing is the judge in the Sierra School case had tried to prevent this very thing from happening. As part of its probation Sierra School had to show parents the judge’s ruling.
Mason Bayun: Did you see this order when we filled out?
Holly Bayun: I didn't see any of this, none of it.
Katharine: The Bayun’s said they'd never have sent their daughter to Sierra if they'd known the school's record. But what about other parents, did they know Sierra was on probation? We stood outside the preschool early in the morning to talk to parents after they'd dropped off their kids.
We're reporters and we are talking to parents whose kids go to this school. I just want to give you my card. We wondered do you know that the school's license is on probation?
Speaker 10: No.
Katharine: No, they didn't tell you that?
We spoke with five different parents and none of them said they had any idea that Sierra School was on probation.
I'm Katharine Mieszkowski.
Lalanie Herath: Hi, I'm Lalanie.
Lalanie Herath: Hi, how are you?
Lalanie Herath: [Inaudible 00:07:20] okay?
Katharine: Lalanie Herath is the Director of Sierra School, and even though Sierra's racked up violation after violation Herath has been recognized as a local business leader. In 2013 she was commended by the City of Santa Clarita, as well as members of the state assembly and senate. We spoke with her at her office.
I wanted to ask you if you think that parents here know about the history of the violations at the school?
Lalanie Herath: Yes, of course they do know, because the state requires that form for them to sign and keep it in their files.
Katharine: Herath didn't want to answer any more questions. She interrupted our conversation to call her consultant Bob O'Connor, she made the call right in front of us. He runs a preschool of his own and Herath hired him to help her resolve the problems at the school, apparently, we'd become one of them.
Bob O’ Connor: Lalanie.
Lalanie Herath: Bob, Bob.
Bob O'Connor: Yes.
Lalanie Herath: Let me tell you, we've got reporters, why are they looking for all these garbage?
Katharine: Herath said that all Sierra parents signed forms acknowledging the problems at the school. Bob sent us copies of those forms. There is even one from the Bayun’s dated nearly two months after they pulled their daughter from the school. I sent Mason a copy of the document. He was surprised, to say the least. He told us that he and Holly had no contact with the school in July when this document was supposedly signed.
Mason Bayun: There was a [inaudible 00:08:46] investigation going that the Los Angeles Sheriff Department was doing and one of the things they told us not to do is contact the school.
Katharine: After we talked Mason contacted the California Department of Social Services. He said that the signature on the bottom of the form wasn't his, and that he and Holly believed the form to be fabricated and false. But by then the state was already trying to shut down the school. Again, one of the state reasons, the school didn't keep parents informed. We wanted to give Herath a chance to respond.
Hi Lalanie, this is Katharine Mieszkowski from the Center for Investigative Reporting, since I'm doing a radio story I'm recording our phone conversation. I just had a few follow-up questions for you since we last spoke.
That, was the end of our conversation. Her consultant Bob O'Connor referred us to her lawyer, but he didn't return our calls.
Sierra is just one school but it represents a bigger issue. We can't stand outside every preschool that has problems waving stacks of documents around, only the state can make sure parents have the information they need. We went to Sacramento.
Pat Leary: My name is Pat Leary, I'm the Chief Deputy Director at the California Department of Social Services.
Katharine: She blames the agency's antiquated technology for its lack of transparency and told us it would take years for the state to get all these information online. What advice does she have for parents?
Pat Leary: What we are trying to do is provide steps to get parents access to better information, more timely information but the best advice for all parents and all facilities is always be a [inaudible 00:10:23] and always asking a lot of questions.
Katharine: The Bayun’s did just that but it wasn't enough.
We figured if California wasn't going to put these records online for parents soon we'd just do it ourselves. We requested all the records but the department wanted to charge us more than $20,000 just to give us the electronic files. Officials said it would take more than two years to give us all those files, and keep in mind these are public records.
We weren't ready to give up yet, we decided to scan these records ourselves at state offices, tens of thousands of pages. It took hundreds of hours and that was only for 4 counties out of 58.
JenniferLaFleur: This is Day 4 in Alameda County. I don't know how many days left we have in Alameda County. We've been through a lot of counties scanning.
Katharine: That's my colleague, Jennifer LaFleur. "This process was absurd, scanning paper copies of electronic documents to make them electronic." But there was some hope, in response to our initial reporting California lawmakers took action. There's now a law that requires the state to put at least some information about inspections and complaints online. Progress, but it's limited. Parents still can't see online exactly what violations their child's school got.
California isn't the only straggler, more than a dozen other states have yet to put this information online. But under a new law all of them will have to be more transparent if they want to keep receiving federal subsidies for childcare. But by the time that happens in California both of my daughters will likely have left there preschool days behind.
As for those records I was looking for in the first place, back when my older daughter's preschool closed, she's now in second grade. I found out when reporting this story that there was nothing to worry about, we were lucky, but parents shouldn't have to wonder. For Reveal I'm Katharine Mieszkowski.
Al Letson: Thanks Katharine. That's Reveal reporter Katharine Mieszkowski.
Now you're probably wondering if your state puts its daycare inspection records online. We put together a list and it's on our website, revealnews.org.
NBC Bay Area contributed to this story along with Jennifer LaFleur, Emmanuel Martinez, and Jim Getz.
Later in this show a story about making babies, no, not that kind of story. This one involves the FBI and a couple who thought they were about to become parents.
Shawn: We were totally misled. We were totally lied to. We had spent all our money.
Al Letson: But next stop.
Ted Liming: I felt very, very sick. It was like the flu and the hangover had a baby together.
Al Letson: His life savings vanished without a trace and he wasn't alone.
Ted Liming: It seemed to me like some had invented a new way to commit a crime that authorities really weren't equipped to deal with yet.
Al Letson: The clues to solving a 21st century scam. This is Reveal.
You want to talk to us about stories you're hearing? You can find us on Facebook and Twitter that's @reveal.
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A title I personally recommend, easy, The Dog Stars by Peter Heller. It's an apocalyptic tale about a survivor of a pandemic, as he struggles to hold on to his humanity in a world that is determined to take it away. Heller's writing is just simply poetic and the narrator Mark Deakins is spot-on. Try Audible today. For a free audio book of your choice go to audible.com/reveal.
From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Letson.
Ted Liming is a can-do type of guy. After losing not one but two homes in the housing crash of '08 he realized he needed to change the trajectory of his life, specifically his financial outlook. He went back to school, got his commercial driver's license and started driving a big rig. By late 2013 he was back earning good money but also feeling a little frustrated.
Ted Liming: Being a truck driver I couldn't have any real relationships. I never knew where I was going to be or when I was going to get back there.
Al Letson: Life on the road was taking its toll, and just like in 2008 when Ted had to rethink everything. It was time to create an exit plan, but this time he had more options, namely money. Financially, trucking had been pretty good to him and he thought the nest egg he'd saved should start working for him.
Ted Liming: I had a lot planned on this money because it was going to allow me to change my life for the better, to get off the road, to have a normal life, or sleep in a normal bed, and seeing old friends.
Al Letson: Like a lot of people, Ted was looking for a secure investment and when he entered those two exact words in the search engine it turned out a company with that name, Secure Investment, just sitting there, waiting for him.
Speaker 16: It's true our company is quite conservative. We're not trying to receive over profit and too fast in implementing new approaches but our results are stable and predictable.
Al Letson: When he came across the website secureinvestment.com it seemed to offer guidance in an area where Ted was not an expert, currency trading. Currency trading as it turns out, is the largest financial market in the world, a hundred times the volume in dollars of the New York Stock Exchange on any given day.
Ted Liming: I had found some investing services that were actually too good to be true and I passed them by because I thought they were trends or just totally made up, totally unrealistic. I checked their background, I checked the articles in corporations ... what I could find. I could get them any time of day. Their emails were promptly returned. They were very professional.
Al Letson: With the first half of 2014 Liming invested $19,000 of his own money with Secure Investment and he watched his money grow online, checking his account several times a week.
Ted Liming: It was exciting to see something where I was finally getting ahead of the game for a change, finally making identifiable, consistent, progress towards my goal.
Al Letson: Now, around that same time, David Evans noticed the same website. Evans is a financial sleuth at Bloomberg News, he works on the team of investigative reporters at the magazine Bloomberg Markets. Evans is a former trial attorney at the Commodity Futures Trading Commission, the very agency that oversees retail foreign currency trading in the US. When David looked at that website for the first time, it was like looking at the entrance of a rabbit hole, you never know where you'll end up.
David, Secure Investments, they have this website and they've got animations on it?
David Evans: They've got some really interesting animations, one of them has got two guys on the freeway, one guy is driving a fancy sports car convertible, another guy is driving a junker. The guy pulls up next to his old friend.
Speaker 18: Nick, how are you doing buddy? I almost didn't recognized you.
David Evans: Suntanned, just back from his vacation he says, he just got a house on the lake. "Well, how'd you do that?"
Speaker 18: "You have done well my friend. How can you afford all these?"
Nick: "I invest online in Forex, uh, it's short for Foreign Exchange."
Speaker 18: "Oh, so, you're a Forex Trader, huh, like that guy Paul from the gym. I heard he lost a lot of money though."
Nick: "No, no, I'm not a Forex expert at all. You see, Forex requires a lot of knowledge and expertise, if you are not a Forex professional chances are you could lose your money. My money is managed by professionals from Secure Investment."
David Evans: The guy in the junker asks whether currency trading with Secure Investment is very risky.
Nick: "There is no risk to the initial investment. In the past five years they have had only a few days with negative results. In fact I'm earning about 1% of profit daily."
David Evans: They're openly acknowledging that trading in currency is very risky, they're not playing down the risk, what they're marketing is the idea that you need expert help.
Then there's this other animation, you see this househusband, there're kids running all over the place, there's a cat that needs to be fed, it's total chaos, and the wife is just giving this guy a hell of a hard time complaining and he's trying to figure out a solution to his dilemma, and we see him in bed at night with his computer. He discovers the Secure Investment website, he sends money and the next thing we knew we see him on an island with a yacht and his dreams have come true. There's riches everywhere and they give you the contact information for Secure Investment.
Al Letson: That sounds like a beer commercial.
David Evans: Besides those videos they had dozens, dozens of testimonial videos that you could click on.
Al Eddy: I check my account every day, and just [inaudible 00:19:51] watching it continue to grow.
David Evans: But I tracked down this guy who made the testimonial and several others, and it turns out they were just testimonials for hire. This one guy who we just heard is Al Eddy from Chattanooga, Tennessee, and in another website he says he can say just about anything and he’ll make it sound heartfelt for just $5 bucks.
Al Eddy: This gig is a testimonial gig. It's for the believable fact, a heartfelt testimonial, I can wear different colored shirts, I have different kind of backgrounds, I'm from -
David Evans: Suddenly in the middle of my investigation on May 1st 2014, the site went dark. They said they were going down for maintenance and they never came up. I was actually in an online chat with their customer service people, which was still answering questions and the site was dead. Thousands of people went from checking their accounts daily to getting an error message. It was really devastating for people. This is how Ted Liming put it when I talked to him.
Ted Liming: When I felt a cold shiver go up and down my spine is when I couldn't get them on the phone and the email to customer service came back to my address undeliverable.
David Evans: What did it feel like?
Ted Liming: It was just like somebody had drained the blood out of my body, it was very ... I felt very, very cold. I felt very, very sick. It was like the flu and the hangover had a baby together.
Al Etson: Was all of his money gone? All $19,000?
David Evans: All of it, and if they're telling the truth about having a 100,000 investors then there are 100,000 Ted Liming's out there.
Al Letson: David, you've explained to me how it's working in the cloud but old school, how did they do this type of stuff before the internet came along?
David Evans: Old school, if you had a scam to sell you would have to create a boiler room. You'd have to hire guys to come in and make phone calls. You buy a mooch list, which was a list of people who'd invested in other frauds and it will be up to the individual salesmen to answer all their questions, sound convincing, used the right voice diction, everything to relate to them. You need to make a lot of calls. You need to have a lot of people working in that boiler room. The more people you have there, the more likely it is that one of them is going to become an informant, or if you're in the same place with this boiler room the boiler room is going to get raided.
Contrast that with creating a website where all of the fraudulent material is presented beautifully, professionally, in the cloud, you don't have to go searching for victims because the victims are using clicks, they're looking for words like "Secure Investment" and those searches lead the victims directly to your website.
Al Letson: It's like the internet has advanced to the point where we're not just skeptical but someone is actually preying on our skepticism. There's this faux transparency you think, "My doubts are being addressed," but in fact we're just 21st Century mooches.
David Evans: Exactly. There's now a cottage industry in reassuring people in giving testimonials although their false, but it's as if what their selling is real and people can trust it.
Al Letson: How did you find all these victims? You found what, 25?
David Evans: Yeah. It took months to find them. The problem is people are really reluctant to speak about this, obviously they are embarrassed. Nobody really wants to talk about it. Ted Liming addressed that when I talked to him.
Ted Liming: Just to be very clear, I'm not a publicity hound. I really don't want to be on the radio, or in television.
David Evans: Why are you going public now?
Ted Liming: Because you're the only person that's giving this any sort of publicity. You're the only one that's showing how big this problem is. It seemed to me like someone had invented a new way to commit a crime that authorities really weren't equipped to deal with yet.
Al Letson: David, what does he mean? Who's on the hunt for these bad guys?
David Evans: No law enforcement agency has taken actions against the company. There aren't any private lawsuits that I could find, because with this company no one even knows what jurisdiction to file a lawsuit in. However, after the story came out the Feds, the US Attorney's Office for the Eastern District of New York in Brooklyn started taking a look, trying to track these guys. It's going to be a difficult tasks because it's so difficult to trace people through the ether, but that's what they're trying to do.
Al Letson: Basically, we have no idea who's behind this whole thing.
David Evans: We don't even know if the images that we saw in the infomercials are the actual people running Secure Investment or more likely they were just more actors.
Al Letson: The perfect crime in the cloud. If you've invested in foreign currency trading with Secure Investment head over to our website, that's revealnews.org and learn what you can do about it.
David, thanks so much for coming in today.
David Evans: Thanks for having me.
Al Letson: David Evans is an investigative reporter for Bloomberg Markets.
When you think of hot button political issues scientific integrity probably doesn't make your list, but it was a priority for Barrack Obama. During his first presidential campaign Obama promised he wouldn't let politics interfere with science. He repeated that pledge when he became president.
Pres. Obama: Let's be clear, promoting science isn't just about providing resources it's also about protecting free and open inquiry, it's about letting scientists do their jobs free from manipulation or coercion and listening to what they tell us, even when it's inconvenient, especially when it's inconvenient.
Al Letson: When Obama took office there was already a big problem at the Environmental Protection Agency. One of the EPA's jobs is to determine which chemicals can make us sick, then it has to decide what needs to be done to protect the public from those chemicals.
That can mean new regulations, but regulations can eat into the profits of chemical companies. Those companies have a financial interests in stopping them. That's where politics come into play. The Obama administration had big plans to get politics out of the process, but like a lot of good intentions, you know where they lead.
Here's David Heath with the Center for Public Integrity to tell us what happened.
David Heath: Hi Al.
Al Letson: Hey man, walk me through this.
David Heath: To understand what happened you have to understand how the EPA decides which chemicals can make us sick. To do that the EPA scientists start by reviewing the science, then comes the hard part, they actually have to calculate how much of a toxic chemical we can be exposed to before it gives us cancer.
Al Letson: How did they do that?
David Heath: It's actually not very easy because you can't just give somebody a toxic chemical and see if it makes them sick. The EPA scientists have to rely on things like animal studies or studies of people who are exposed to very high levels of a toxin, such as factory workers.
Al Letson: That sounds tricky if you can only use, test animals and people that have been exposed to high levels of this stuff.
David Heath: That's right, and the chemical industry uses that fact to create doubt, and that's a strategy that was actually pioneered by the tobacco industry, that is to argue that because there's uncertainty in the science the products are in fact safe. During the Bush administration the industry actually had support for this in the White House.
Congressional investigators found that the Bush White House put many of the EPA scientific findings on hold. In fact investigators said the delays were so endless that the scientific research being done at the EPA was virtually obsolete. Things would go over to the Bush administration and they'd ask a bunch of questions and they'd have to go back and start all over again.
Al Letson: Let me get this straight, during the Bush administration the EPA would send reports to the White House, the White House would then look at these reports and as a delay tactic ask questions that then made the EPA go back and restart the whole process over again.
David Heath: Right.
Al Letson: Obama comes into power and what changes?
David Heath: Obama knew of these and the Obama administration came in with a plan to fix it, and that called basically for doing many more chemicals assessments, and they do them a lot faster, but that plan has actually failed. In the last three years the EPA has actually done fewer chemical assessments than ever before.
Al Letson: Now why is that? If Obama comes in with the idea of moving this forward, how is it that we've done less?
David Heath: It all comes down to tactics by the chemical industry, before they can rely on the White House to block these assessments but then when Obama took office they really had to turn to Republicans in congress, of course until the last election Republicans didn't have control of congress so they couldn't pass legislation. But there were other ways that these Republicans could exert control of the EPA.
Let me give you an example of that. David Dieter, a senator from Louisiana delayed a Formaldehyde assessment by threatening to block a key EPA appointment. That assessment had been on the works since 1998 and it's still not out.
Al Letson: Since 1998 scientists have been working on assessing Formaldehyde, which is a chemical that is pretty common?
David Heath: Formaldehyde is in your kitchen cabinets, it's in some of your shirts, it's everywhere, and the EPA had found that it's linked to leukemia. It's a pretty serious finding. But these results have never been published.
The same thing happened with arsenic's. In 2011 the EPA had been working on an arsenic assessment, by then for eight years, but congressman Mike Simpson of Idaho put language in a report attached to a spending bill that actually delayed that assessment, and the EPA was just about to say that arsenic was far more deadly than they had previously thought, it cause cancer at a higher rate than anybody thought.
Al Letson: One of my questions here is I think that the vast majority of the American public believes that arsenic is a bad chemical and therefore not in a lot of the everyday stuff we use, that the EPA has already done its job and said that arsenic is deadly, and that's just common knowledge, like I figured that the EPA had already stated that. What do they find out about arsenic that made the chemical industry so worried?
David Heath: The EPA scientists were actually going to say that arsenic was 17 times more potent as a carcinogen than they previously thought. What that meant was that even people drinking the legal limit of arsenic in drinking water were likely to get cancer from it. In fact they came up with a calculation that was 730 out of 100,000 people will get cancer from it.
Here's what Congressman Simpson said when I asked him how he did it.
Cong. Simpson: We’ve asked for the National Academy of Sciences to review the EPA's science and how they come up with their decisions.
Al Letson: That seems like a perfectly reasonable request. After all the Academy is the nation's premier scientific adviser, right?
David Heath: That's true, but the Academy can also be used to create delays. I asked William Ruckelshaus about this, he ran the EPA under both presidents Nixon and Reagan.
William Ruckelshaus: Anytime that the EPA or any other agencies that has regulatory authority over these kinds of chemicals find something wrong it ought to be immediately published to the extent that that's delayed or stalled in some way is really incontestable, particularly if it's done on behalf of the industry that manufactures the chemical and has economic benefit associated with it.
David Heath: He said that these delays can actually cost lives.
William Ruckelshaus: The longer you delay it the more roadblocks can be thrown into its control, the higher the risk for the public that something terrible will happen.
Al Letson: The EPA's work on arsenic and Formaldehyde is on hold but what about other chemicals?
David Heath: Actually all chemical assessments right now have been delayed. Congressman Simpson acted on behalf of two pesticide companies who make a weed killer containing arsenic. Those companies hired a lobbyist named Charlie Grizzle, who had been a former EPA official and knew the ropes. At the same time he was also working as a lobbyist for the Formaldehyde industry, and at the same time he was lobbying against the arsenic assessment. He was lobbying to delay all chemical assessments, about 50 in all. I asked Grizzle about that.
Were you behind that Formaldehyde language and the committee report?
Charlie Grizzle: We, in the interests of full disclosure we formally represented the Formaldehyde Council and now represent [inaudible 00:32:18] chemicals.
Al Letson: Wait, wait, wait. Obama's EPA is taking orders from chemical industry lobbyist?
David Heath: Effectively they are, yes. This language didn't even appear in the bill, it appeared in a committee report attached to a bill. It's not legally binding. I showed this language to Charles Fox, he's a former EPA official who worked under the Clinton administration.
Charles Fox: This is what we consider advisory language. The agency is not obligated to implement that language in the report but it is, for lack of better word, strongly encouraged to do so and the agency knows that this language is coming from their appropriations committee so it is certainly something they will pay attention to.
David Heath: The EPA could have chosen to ignore this?
Charles Fox: Absolutely.
Al Letson: Why didn't the EPA ignored it?
David Heath: That's a really good question. I asked Dr. Kenneth Olden that very thing, he's the person who oversees the office that does these assessments. He took over that job about two years ago and he's won a lot of support from House Republicans and the chemical industry. In fact this year despite congress cutting $60 million from the EPA budget they actually explicitly said that they weren't going to cut any money from Olden's office. I asked Olden why the EPA didn't ignored this language and he said it wasn't his decision.
Dr. Olden: It more or less dealt with a policy issue in the regulatory arena that we don't in fact deal with. That's my position.
David Heath: You're saying that those decisions are actually made in a higher level, didn't you?
Dr. Olden: David, I stick with my answer.
David Heath: Also, I asked Olden when the EPA was going to complete more of these assessments.
Dr. Olden: It takes more than one year to see a final product, in other words an assessment. If you're building airplanes and it takes 10 years you can't expect to see finished products in three years. We are doing as much as humanly possible and I think the agency is pleased and the scientific community is pleased. I feel good about what we've done.
David Heath: Since Olden came to the EPA in 2012 his office has actually only completed four chemical assessments.
Al Letson: Only four chemical assessments since 2012, what's the EPA been doing?
David Heath: They've really gotten away from the plan that they had put out to do more of these assessments and they really have focused on fulfilling the wishes of the House Republicans.
Al Letson: Specifically what does that entail?
David Heath: One part of it is that they're holding more public meetings. When they do these chemical assessments now they have a meeting so that people can have input into what they're doing.
Al Letson: That sounds good, right? That gives the average Joe a chance to listen in and see exactly how all this is working, correct?
David Heath: True, it sounds good. What's happened is that the industry pays scientists to go to these meetings and these meetings end up being dominated by industry scientists. The EPA has actually acknowledged this and has come out with a plan to try to bring in more independent voices into these meetings. But I attended one of these public sessions just two weeks after they announced these reforms and every single scientists who made a presentation at that hearing was an industry scientist.
Deborah Proctor: I'm Deborah Proctor, I work for ToxStrategies and my attendance today here has been supported by EPRI, which is Electric Power Research Institute.
John Hays: John Hays, I'm from Summit Toxicology and my work here has been supported by the American Chemistry Council.
Chris Kirman: Chris Kirman from Summit Toxicology through American Chemistry Council.
Mark Harris: I'm Mark Harris with ToxStrategies supported by ACC.
Nancy Beck: This is Nancy Beck from the American Chemistry Council.
David Heath: To give you a sense of what happens at these meetings here's some exchange between Nancy Beck, now she's a scientist with the American Chemistry Council, which is the chemical industry's chief trade association, and a woman, a scientist at the EPA named Catherine Gibbons.
Nancy Beck: I think for these open meetings it'd be really helpful to have these type of information not see it the first time in the draft.
David Heath: If you listen closely you'll hear that Beck is actually asking for more delays.
Nancy Beck: ... scientific issues that would be incredibly helpful.
Catherine Gibbons: But I think it's an extremely a laborious process.
Nancy Beck: Right.
Catherine Gibbons: We get a lot of information -
Al Letson: David you spend a couple of years looking into all of these stuff, I'm curious why do you think this is so important? What is it about this story that really grabs you?
David Heath: It's a big issue, after all we're all exposed to toxic chemicals so if the government is not doing anything we can get sick from it, we can get cancer from it, and we don't really know exactly how many of these chemicals can possibly make us sick. That is something that has to be decided by scientists doing the research and that's just not happening right now.
What's really interesting to me about it is that President Obama made this a top priority and it seems so easily achievable, he didn't have to get approval from congress to do it. It was really just tweaking the inner workings of a bureaucracy. It seems like a no brainer and yet the administration is just not been able to accomplish this. I guess that they just found that the politics were just so overwhelming.
Al Letson: David Heath from the Center for Public Integrity. Thanks a lot for coming in and talking to us today.
David Heath: Thank you.
Al Letson: Next on Reveal, inside the business of making babies.
Marisol Garibay: He kept saying, "Bring more girls. Bring more girls." I kept saying, "Bring more money. We need help."
Al Letson: What happened to the couples who invested everything to become parents?
David: There are a lot of people who bought into this and they are not stupid people, they are not uneducated people.
Al Letson: That's coming up on Reveal.
We want to hear from you, talk to us on Facebook and Twitter, that's @reveal.
From the Center for Investigative Reporting and PRX, this is Reveal. I'm Al Etson, and if you're like me when you think of Cancun you think of beaches, boozes and bathing suits, and for some couples the resort town is the perfect place to make a baby. No, it's not what you're thinking.
Not too far from those beach side hotels reporter Sandra Bartlett and I visited a home on an ordinary street in Cancun.
Sandra Bartlett: This is a house where nine Mexican women live. They've been recruited to carry a baby for a foreigner. They're surrogate mothers.
Al Letson: In many European countries it's illegal to pay a surrogate. In the US it's expensive. A surrogate package starts at a $100,000.
Sandra Bartlett: Most people use an agency because the agency has all the contacts. They have a catalog of egg donors that the clients choose from, they recruit the surrogates, and they have the connection to the fertility clinic that harvest the eggs from the donor and implants the embryo into the surrogate.
Al Letson: Surrogacy is a lot cheaper in Mexico. It costs about $50,000 there and business is booming. You've got a situation with a lightly regulated industry, desperate parents, and a lot of money being exchanged, what could possibly go wrong?
Sandra Bartlett: There's a lot that could go wrong, prospective parents who've paid tens of thousands of dollars can end up without a baby, with no explanation of what went wrong.
Al Letson: Sandra has been looking into the international surrogacy business for more than a year. She has a story of one agency that took money from couples and then closed up shop. The FBI is now investigating. Here is Sandra.
David: We made a plan and decided because of our ages that's either now or never.
Sandra Bartlett: David and Shawn have been together 24 years, and as they entered their 50's they made the decision to become parents. They considered adoption but decided they wanted a genetic connection to their child. The considered India, the busiest place for surrogacy because it was half the cost of the US.
David: Just as we finally made our decision that we were going to go that route the law's changed in India and we were no longer eligible.
Sandra Bartlett: David and Shawn did research on the internet. David says one surrogacy company stood out, Planet Hospital.
David: I guess they had the classiest and most catchy website and I couldn't find anything negative about them.
Sandra Bartlett: David and Shawn were impressed. Planet Hospital was a leader in medical tourism, kidney transplants in India, plastic surgery in Thailand, and so on, all for foreigners looking for reliable medical treatment at a discount. The company arranged more than 200 medical procedures in dozens of countries.
Rudy Rupak: Planet Hospital is like the admission's desk to some of the best doctors and hospitals from around the world.
Sandra Bartlett: The company was started in 2002 by Rudy Rupak, a former software developer and film producer who once made a comedy about skiers and snowboarders.
Rudy Rupak: Rock yourselves in for a crash course in comedy at Snowboard Academy.
Sandra Bartlett: When David and Shawn talked to Rudy Rupak on the phone he told them he was about to open a new clinic, south of the border.
David: We were very excited because we thought Mexico is very close and since I work for an airline it's very easy to get there if there's ever a problem.
Sandra Bartlett: Rudy Rupak offered a deal, become one of his first clients in Cancun and they get a discount. When the couple meth him in Los Angeles Shawn says they've felt they found someone they could trust.
Shawn: Who we could joke around and we could laugh, and we felt very comfortable.
Sandra Bartlett: After signing a contract with Planet Hospital the couple wired $25,000 to the company's bank account in California. That money was supposed to cover payments to the fertility clinic, the woman who was donating the eggs and another woman who would carry their child. Then in May 2013 David and Shawn traveled to Cancun to make a sperm deposit.
Shawn: We decided we were going to stay in Cancun for the weekend and to celebrate after this was done. We had gone to the pool, we had ordered drinks and we were talking about it and we were planning ... it's like a dream that's finally happening and it was coming true and we were very excited.
Sandra Bartlett: After India banned surrogacy for foreigners Mexico became the go-to place for surrogacy. Clients from Europe, Australia, and South America saw the Planet Hospital website and believed they found a reputable company. The firm had become one of the biggest players in international surrogacy. They had no idea Planet Hospital ran a shoestring operation in Mexico. It didn't even have an office and it's only staff are 35 year old Marisol Morales Garibay worked out of her home.
Marisol Garibay: Buenos dias.
Speaker 37: Buenos dias.
Sandra Bartlett: Her job was to recruit young Mexican women to be surrogates. She was also a chauffeur to clients who came to Cancun to make their sperm deposit. Within weeks of starting work she said she was exhausted.
Marisol Garibay: The work load got really heavy, from picking up one person a week we were picking up three a week. What happened, our house was technically like a showroom.
Sandra Bartlett: Rudy Rupak was back in California signing up clients from all over the world.
Marisol Garibay: He kept saying, "Bring more girls. Bring more girls." I kept saying, "Bring more money. We need another house. We need a second house. I need help."
Sandra Bartlett: Marisol Garibay says within months doctors at the Cancun Fertility Clinic stopped working with Rudy Rupak because they weren't being paid.
Marisol Garibay: He will deposit like $3,000 and get $5,000 with the service. It keeps filing up, before you know it there was a huge debt.
Sandra Bartlett: The problem spilled over to the dozens of couples who'd signed contracts with Planet Hospital for surrogacy services, including David and Shawn. First they were told there was something wrong with their sperm samples. The couple gave new samples. Then they were told the egg donor had to rest, that she had a cyst. Then Rudy Rupak said the fertility clinic was not well run and he's going to buy his own clinic.
David: We offered solutions and answers to the problems, there's always a discount related, there's always, "I'm going to do this. I'm going to upgrade this or I'm going to ..." He's like car dealer.
Sandra Bartlett: But on Christmas Day of 2013 Rudy Rupak closed up shop by sending an email to his staff. He didn't tell the clients.
Shawn: We were totally misled. We were totally lied to. We had spent all our money. We had embryos that were fertilized. We didn't know what to do. We didn't know where to go because this is probably our last chance.
Sandra Bartlett: Someone started a Facebook page called Survivors of Planet Hospital, more than 20 couples shared their stories. David said everyone was surprised at how similar they were.
David: There were a lot of people who bought in to this and they are not stupid people, they are not uneducated people, they truly believed as we did that Planet Hospital was real and reputable.
Sandra Bartlett: Three couples forced Planet Hospital into bankruptcy hoping to get their money back. Others complained to the FBI which began an investigation. Marisol Garibay says that Christmas email from Rudy Rupak was a shock.
Marisol Garibay: I immediately called him. I called and he never picked up. That's when I sat on my computer and I emailed and I told him this was B.S., this cannot happen. He was now walking out on everyone.
Sandra Bartlett: It was enough to Marisol Garibay to deliver the bad news to the Mexican women who'd signed up to be surrogates.
Marisol Garibay: Most of them freaked out. Many was really [inaudible 00:45:27] so we had to downsize. we had to leave our property then we're hiding to a smaller place and share more rooms. Some girls they decide, "Hey, I'm sorry, this is too much. I can't do it. I wish to go back." Four of them went back. I ended up with six.
Sandra Bartlett: None of them were pregnant?
Marisol Garibay: No, none of them were pregnant.
Sandra Bartlett: Then Marisol Garibay contacted the clients, people who had already paid Planet Hospital $25,000 or $30,000, including David and Shawn. She promised to find a surrogate mother through a new agency she was creating. Shawn says they wondered if they could trust her.
Shawn: We were put in a dilemma, do we pay another $8,000 or $9,000 to pay Planet Hospital the debt to move forward or do we just throw all the money away and say, "That's it we're done?" We're absolutely done right now.
Sandra Bartlett: The couple decided to pay the fertility clinic to rescue their embryos and signed a contract with Marisol Garibay's new agency.
David: When we actually ended up pregnant ... with a pregnant surrogate I -
Shawn: We were shocked.
David: Was shocked. I was astounded. I couldn't almost not believe that it actually worked on the first try.
Shawn: We couldn't be happy. We couldn't allow ourselves the moment that we've been waiting for and the moment that we've been planning on for so long, we're like, "So what do we do now? Do we believe this?"
Sandra Bartlett: It's a good job. How do you feel? Do you feel okay?
Their surrogate's name is Cecilia Perez.
Cecilia Perez: [Foreign language 00:46:47].
Sandra Bartlett: In October they got the call they were waiting for.
Shawn: She goes, "You've got to be here at 8:30. Hurry!"
I ran here, the second I got here they changed me into some scrubs and everything. She said, "Go in. You're going in there with her." Literally I wasn't there three minutes and all of a sudden it was like, "Boom!" It was like so quick and the doctor was [inaudible 00:47:04]. They cut the umbilical cord and he handed it ... he goes, "Here."
Sandra Bartlett: David arrived a few hours after the birth of their son. They named their baby boy Sebastian.
Shawn: Hold him. Touch him. Don't be scared.
Sandra Bartlett: I'm scared to touch him.
Shawn: Don't be scared. He won't bite.
Sandra Bartlett: It's just little.
Shawn: This morning when I was holding him it was just the most amazing thing. I don't want to give him back. He stood up.
David: He stood up.
Shawn: That was a big step. Did you see it?
David: [Inaudible 00:47:34] did he drink.
Sandra Bartlett: Shortly after she gave birth Cecilia Perez returned to the home she had lived in for the past year, a place she shared with other surrogate moms and their children. I visited her at the three story home in a quiet neighborhood near downtown Cancun.
Did we wake you up?
Marisol Garibay: [Foreign language 00:47:51].
Sandra Bartlett: Does she want to talk?
Cecilia's resting. She's shy and petite, about 5 Ft. tall. She's 18 but looks younger and not at all like she just had a baby. Her own toddler sits on the floor playing with a toy. with Marisol Garibay translating Cecilia talks about her pregnancy and her plans for the money she's earned, about $13,000.
Marisol Garibay: I'm going to help my family and help my son. I've been considering opening a small store, like a grocery store.
Sandra Bartlett: When I asked Cecilia what it felt like to give away the baby she carried for nine months she laughs.
Marisol Garibay: When I saw him born he looks just like his dad. He didn't look Mexican.
Sandra Bartlett: A week after I spoke to her Cecilia went back to her home, about two hours from Mexico City, where she plan to tell her mother that she'd been a surrogate.
David and Shawn also expected to leave Cancun in a week but there were delays in getting the birth certificate and the DNA test required for Sebastian's US passport, it was two and a half weeks before they were home. The total costs to become parents, more than $80,000, including the $25,000 they lost to Planet Hospital.
Rudy Rupak: Yes.
Sandra Bartlett: Hi, it's Sandra.
For months we tried to reach Rudy Rupak. He didn't respond to our voice messages and emails, but just before our broadcast he agreed to a phone interview.
Rudy Rupak: Look, the buck stops here. I was the number one source of the problem, but the problem was not me taking money and not rendering service, but it was not me taking money and trying to live a lavish lifestyle, the problem was me trying to struggle and negotiate through lots of lunacy in an industry that is fraught with major problems and I thought I've seen it all in India but Mexico sure showed me.
Sandra Bartlett: Rudy Rupak denied that he stopped paying the Mexican fertility clinic and he said he wants to reimburse clients but can't while the case against Planet Hospital is pending in bankruptcy court. He told us he met with the FBI investigators last year.
Rudy Rupak: They knew everything. They knew about the transactions that happened seven years ago in the past. There was nothing to hide from them and I didn't.
Sandra Bartlett: At the end of 2014 a source close to the FBI investigation said it's almost finished. For Reveal, I'm Sandra Bartlett.
Al Letson: That's it for our show today. You can hear more from Reveal on our podcast. We've got a story about why China set its sight on a small Virginia town for its pigs.
Speaker 40: They have pork reserves because the government considers it such a high priority, and what it is, is it's a giant warehouse with a 110 million lbs. of frozen pork. Anyone that's ever seen the Indiana Jones movie where they wheel in the Ark of the Covenant and it's just this never-ending warehouse just lined with stuffs stacked up, it's like that except where it's frozen pork of porks.
Al Letson: That's our podcast. Check it out on iTunes.
You can also talk to us anytime on Facebook or Twitter, that's @reveal.
Our Managing Director is Christa Scharfenberg, our Executive Editors Susanne Reber, our Senior Producer is Mia Zuckerkandel, producer Sandra Bartlett, Delaney Hall, Ingrid Lobet, Jillian Weinberger, and Michael Montgomery worked on this episode.
Our Sound Engineer is Jim Briggs, special thanks to Lisa Pollock and our partners for this week's show Bloomberg Markets, the Center for Public Integrity, and NBC Bay Area. Our music for this show is provided by Ezekiel Honig, you can find his music at ezekielhonig.com, that's H-O-N-I-G.com.
Support for Reveal is provided by the Reva and the David Logan Foundation and by the Ford Foundation.
Reveal is a co-production of the Center for Investigative Reporting and PRX. I'm Al Letson and remember there is always more to the story.