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Woman gets 18 months in prison for massive egg donor fraud

For years, infertile women and men gave Allison Layton their money, trusting that she would spend it as she promised: Making their dreams of having children come true.

Instead, Layton used it to pay personal and business bills, even spending some on her own lavish wedding.

On Monday, Layton, 38, was sentenced in a downtown Los Angeles courtroom to 18 months in federal prison for defrauding would-be parents, egg donors, surrogates and investors in a wide-ranging scheme that one victim said “ruined the lives of many people.”

In handing down the punishment, U.S. District Judge George H. Wu rejected Layton’s last-minute pleas that she be spared from prison and sided with prosecutors, who argued that she should be jailed because of her egregious crime.

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Layton’s offense was worse than other types of fraud, Assistant U.S. Atty. Kristen Williams argued in court filings, because her “conduct took a personal and emotional toll on her victims, for whom a happy occasion was turned into a nightmare of inexplicably lost money and frustrating, often fruitless, attempts to get it back.”

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The FBI, which handled the investigation, focused on Layton’s business dealings between 2008 and early 2012. In all, more than 40 victims lost more than $270,000, Williams said.

As part of a deal with prosecutors in which she pleaded guilty to one count of wire fraud, Layton acknowledged carrying out a scheme to defraud people while she ran Miracles Egg Donation Inc. — a Glendora-based operation that offered to connect hopeful parents with women willing to donate their eggs or serve as surrogates. Her attorney did not return calls for comment Monday.

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On several occasions, Layton took thousands of dollars from clients, assuring them that the funds would be deposited into escrow accounts and used only to pay surrogates and donors as well as to cover the women’s medical expenses.

Instead, Layton often pocketed the money, prosecutors alleged. In one instance cited by Williams in court papers, Layton used clients’ cash to help cover $60,000 in bills she ran up planning her wedding in May 2010. Layton also moved money around in a Ponzi-like scheme, using money from one client to settle up with surrogates or egg donors who were working with other clients, according to court records.

In one instance, an Australian couple reached out to Layton in 2011 after cancer left the woman unable to conceive children. Layton offered to find a surrogate for the couple and charged them $15,000 in fees. She required them to send an additional $25,000 that she said would be paid to the surrogate and cover her medical expenses during the pregnancy.

Within months, however, Layton stopped returning the couple’s increasingly desperate calls and emails. In a letter they submitted to the court, the couple described the hard financial hit the episode took on them, but said the emotional toll has been worse.

In tearful statements in court Monday morning before Layton was sentenced, other victims spoke, Williams said. One couple, who lost much of the $65,000 they paid Layton, said the time and money lost with Layton had denied them the chance to have children. A woman who carried a baby as a surrogate also recounted how Layton left her to pay $14,000 in medical bills.

Dave Bennett, who met Layton through friends, said in an interview with The Times that he was impressed with what appeared to be her thriving company and asked if he could invest. For $30,000, Layton promised a share of the company’s profits but never paid Bennett, claiming she was losing money, he said.

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Bennett has won court judgments against Layton, who has not repaid him, he said. The 18-month sentence for Layton, he said, “is a joke.”

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“I’m still paying off the money it cost me to take her to court. And plenty of people went to her thinking she would help them build a family. She ruined a whole lot of lives,” Bennett said.

According to court records, Layton used Bennett’s infusion of cash to pay off other investors with whom she had been feuding.

When clients confronted Layton and demanded answers, she strung them along with a host of excuses, including claims that payments and refund checks had been lost in the mail or that inattentive accountants were to blame, court records show.

In the midst of her legal troubles, Layton moved with her husband and children to Idaho, where she took a job at a beauty salon. She and her attorney had tried to convince Wu that no good would be served from sending her to prison, saying that much of the problem stemmed from Layton’s poor record keeping.

Williams, however, took a firm stance, saying that the evidence pointed clearly to a woman set on defrauding unsuspecting victims. She added that Layton continued to run Miracles even after coming under scrutiny and being ordered to shut down the operation.

A hearing for how much Layton should pay in restitution is scheduled Oct. 22.

joel.rubin@latimes.com

Twitter: @joelrubin

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