The Adoption Scam


Chad and Julia Sandstrom had two biological children of their own, but they wanted to adopt a third. Julia was drawn to the idea because her father was adopted, while Chad thought it was a good way to avoid contributing to the overpopulation problem.

Unlike many adoptive parents who have their hearts set on an infant, the Sandstroms wanted an older orphan. "I wanted to give a child a family," says Julia Sandstrom.

After family friends played host to an orphan visiting from Russia, the couple knew their time had come. In January 2005, they went to a party hosted by the local adoption agency their friends had used. Located in New Hope, Reaching Arms International specialized in placing Eastern European children. The Sandstroms came away impressed by the passion of RAI's founder, Nila Hilton, who had dedicated her life to working with orphans.

Julia Sandstrom checked out other agencies on the internet, but they liked the fact that Reaching Arms was just 30 miles from their Stillwater home. "We could drive to do business there," she says. "It felt more real and safe."

So in February 2005, the Sandstroms visited the office to meet their caseworker and hear about Reaching Arms' programs in Russia, Ukraine, and Armenia. They chose Armenia. It was cheaper than Russia, and easier than the Ukraine. The Sandstroms came through their home study with flying colors and quickly won the Armenian government's approval.

But then months came and went. The following January, their caseworker told them the delay was because older children were harder to find. The Sandstroms asked Reaching Arms to broaden its search to include any healthy female children under the age of four.

In May 2006, they got news that a four-month-old girl had been found. Because Eastern European orphans are at high risk for retardation and fetal alcohol syndrome, the Sandstroms asked the University of Minnesota's International Adoption Clinic to look at their prospective daughter's case file. It offered precious little information—the pictures were blurry and the only medical information was that the baby was born 10 weeks premature.

The Sandstroms asked the caseworker for help getting more details. A week later, Nila Hilton called. Hilton told Julia Sandstrom that the clinic had misdiagnosed other orphans and could not be trusted, the Sandstroms say. Hilton also warned that Armenian officials would be offended if the Sandstroms turned down the baby.

"Mrs. Hilton's telling us we have to make a decision right away," Julia recalls. "Meanwhile, the U is saying this could potentially be a very serious medical issue."

The couple stood their ground, and a checkup with an outside doctor and new pictures proved the girl healthy. Then the family got another shock: They had been told the fees for the Armenian part of the process would come to $8,000, but now Hilton said they'd have to pay $17,000-$20,000. When the Sandstroms questioned her about the increase, Hilton said adopting an infant was more expensive than an older child.

"At that point, we had no bargaining room," says Julia. "Her room was ready, her clothes had been purchased, her picture had been shown to family."

Two weeks before the Sandstroms were supposed to go to Armenia, their caseworker called and said she'd left the agency. Julia couldn't get Hilton on the phone, so she drove to Reaching Arms. The building had been put up for sale.

"It looked like they were ready to cut and run," she says. "We were left high and dry."


In 1991, Nila and Bill Neumiller went on a church trip to Russia and toured a number of orphanages.

"She came back a changed person," recalls Bill Neumiller (now her ex-husband). "She went to minister to orphans, and saw the conditions in which they lived and saw the hollowness in their eyes. And it really affected her."

Both Neumillers were deeply religious, and both were sure Nila was being called to save orphans. Back in Minnesota, she quit her job, enrolled in ministerial training at her Charismatic church, and started looking into opening an adoption agency.

The Neumillers installed a drafting table and a second phone line in their basement, and Nila got to work. To get a state license to place children, she would need to be supervised by a licensed social worker. She met one at lunch a few days later, and the woman agreed to help for free. Nila Neumiller also stumbled upon several Russian immigrants who had good contacts back in the home country.

In 1995, Reaching Arms placed its first orphans, three Russian sisters. Before long, the agency was placing 60 children a year. After homes had been found for 100 children, the Neumillers organized a reunion picnic. The memory still makes Bill Neumiller choke up.

"We noticed how many of the children came from the same orphanage and knew each other," he says. "They ran up and hugged each other and then pointed out their parents."

Over the next decade, the agency placed some 800 to 900 children, Bill Neumiller says. Its newsletters were peppered with stories of families moved to accept not chubby-cheeked infants, but children who are notoriously difficult to place: older kids, children with serious disabilities, and groups of siblings.

"Nila was the visionary," Bill Neumiller says. "She would see things and I would say, 'What do you see?' And then we would work together to establish bricks and mortar."

Her passion was contagious, agrees a former employee who asked to be identified by only her first name, Angela.

"She made a lot of dreams come true for a lot of people," Angela says. "Plenty of times she would put her own money, her reputation, and her energy on the line to get into a country. I think it was because she had a blind faith she would get into these countries."

In 1996, the Neumillers adopted a fifth child, a six-year-old Russian girl. Ten months earlier, Reaching Arms had placed the girl with a New Jersey family who now wanted to send the girl back.

"Our hearts were broken," Bill Neumiller says. "Because of this situation, we didn't have to choose, we just had to react."

In 1999, Reaching Arms opened an orphanage in Ukraine. Friends from the Neumillers' church sent blankets, clothes, and toys and then traveled to the Ukrainian home. Back home, Nila Neumiller spoke frequently about her work to Rotary clubs and other groups.

"The word 'charisma' always comes up with her," Angela says. "Nila naturally attracted people who are energetic and fun-loving, who like to take life seriously, people who don't just blend in."

But she had no patience for the details, according to Angela and another former employee interviewed as a part of the state investigations. According to their sworn statements, and to City Pages' interview with Bill Neumiller, both donations and fees paid by adopting families got deposited into a single bank account. Families' payments for future services paid for the most pressing bills, regardless of which adoption they were for.

It was a constant struggle to pay the bills, Bill Neumiller says. "There was hardly any money to begin with," he says. Add to that the difficulty of working in many countries. "If the process wasn't changing, the government was changing."

"I think Nila tried to hold everything together by a very thin thread," Angela adds. "I think her vision was strong and good and I think she got misdirected by her own weaknesses."

Today, Reaching Arms is out of business. In March, the state Department of Human Services, which oversees adoption agencies, revoked its license after finding dozens of violations of Minnesota's adoption rules. At the state attorney general's request, the agency's books are undergoing a court-ordered audit. According to investigations conducted by both state agencies, Reaching Arms asked for tens of thousands of dollars from families even before determining they were qualified to adopt. Human Services investigators also concluded that the agency charged fees that weren't disclosed up front, increased fees months into the adoptions, falsified documents, and threatened to halt the adoptions of families who complained.

According to affidavits on file in the attorney general's case, several families were ordered to undergo spiritual and psychological counseling with the husband of the agency's director and founder, who is not a licensed psychologist. One family was given a contract to adopt a child from Kenya, even though Reaching Arms was not authorized to perform Kenyan adoptions. Another family had its credit card charged without its knowledge.

Some of the families eventually managed to adopt the children they were offered, albeit through different agencies and at the cost of additional tens of thousands of dollars. Others never got their children.

Nila Hilton—she has been divorced and remarried and was running Reaching Arms with her new husband, Tom Hilton, before it was shut down—declined to be interviewed for this story, as did Tom Hilton. Their attorney didn't return several calls requesting comment. The Hiltons did provide a written statement saying the agency has been wrongly portrayed.

"Part of the reason [Reaching Arms] has remained silent to this point is to protect the confidentiality of our clients," the statement reads. "If we were free to openly discuss the facts involved we strongly believe the negative publicity would not have painted such an ugly picture."


Ann and Andrew Spurbeck live in a yellow farmhouse on top of a ridge overlooking a thick swath of topsoil that's rotated between corn and soybeans. There's a picturesque horse farm across the road, complete with whitewashed split-rail fences, and not far beyond that, pristine Lake Waconia.

The couple's three biological children, ages 11, 13, and 15, sweep in and out of French doors that lead onto a wide wrap-around porch, trailed by a gaggle of friends. They're chasing the dog, which is fetching muddy golf balls knocked into the yard from a golf course on the other side of the ridge.

The Spurbecks don't have as much money as the spread suggests. Ann is a stay-at-home mom and Andrew works in tech support at SuperValu. They're frugal, and the land under the house has been in the family for years.

Still, they feel blessed. And that sense of gratitude is why they wanted to bring an orphan to live in the sprawling, sunny farmhouse.

In February 2005, the Spurbecks began checking into several adoption agencies. Reaching Arms placed the kind of kids they wanted—Eastern European children between the ages of four and seven—but it also appealed to them for other, more spiritual reasons.

"They promoted themselves as a Christian and humanitarian agency, and that meant a lot to me," Ann says.

So the couple borrowed $25,000 against their home equity and began the complicated process. The Spurbecks spent six months getting approved, but then a shakeup in the Ukrainian government put a stop to all foreign adoptions. When the country finally began allowing adoptions again 13 months later, the Spurbecks scrambled to update their immigration documents.

Last fall, the Spurbecks were finally told to get ready. They went to the Reaching Arms offices and paid $4,100 to cover their fees and expenses in Ukraine. Nila Hilton took their check and left, promising to wire it to Reaching Arms' Ukrainian intermediary right away, the Spurbecks say.

Their caseworker told them the money would pay for a number of expenses in Ukraine, including the intermediary who would serve as their guide and translator. The guide would first take them to the government adoption bureau, where they would see pictures of available girls, then to orphanages to meet the kids they were most interested in.

The caseworker told the Spurbecks to take their time deciding, Ann recalls. They shouldn't take on a child with whom they didn't feel a bond, and under no circumstances should they pay a bribe.

Ann had heard the same thing over and over from families who'd been through the adoption process: You get a picture, or meet a child, and you just know. The tens of thousands of dollars, the months of forms and checklists and snafus recede, replaced by the certainty that this child should join your family.

But when the Spurbecks arrived in Kyiv last December, they felt like characters in a Kafka novel. For starters, their money never arrived. At the state Department of Adoption, they were shown into a bare room where three women sat at desks. A woman in her late 20s showed them pictures of sibling groups, then of four individual girls—the only orphans in the country eligible for adoption, she insisted. The Spurbecks were told they had one hour to choose a child.

When the couple pressed to see more files, the woman jumped up and grabbed a three-ring binder from the top of a filing cabinet. She stabbed a finger at the photos and hissed, "Has cerebral palsy. Invalid. Can't eat. Can't sit up." Then she looked up at the couple and sneered: "You must not be ready to adopt if you cannot make a decision."

Feeling like they had no choice, the Spurbecks agreed to meet the girl the officials were pushing the hardest. A 12-hour train trip brought them to Tourez, where the orphanage was located. An old coal-mining city, it was desolate. When Ann asked to use a bathroom at the orphanage, a cleaning lady led her to a tiny room that contained a toilet with no seat. The tub was filled with brackish water and the cleaning woman was washing clothes in it.

The Spurbecks had been told they'd see their prospective daughter as part of a larger group of children, to keep her expectations down in case the couple decided not to adopt her. Instead, the orphanage staff brought a single girl into the office. "Daddy, Mommy," she cried, jumping into Andrew's lap and throwing her arms around his neck.

The Spurbecks stayed for several hours, waiting to feel a bond with the girl, but it never materialized. As the Spurbecks were leaving, the orphanage director told their translator they should give him $600 cash and wire an additional $1,000 to his bank account if they wanted to complete the adoption. They refused.

Back in Kyiv, the guide went back to the Department of Adoption and argued for another chance. The officials claimed to be insulted, but eventually said the Spurbecks could come back in 12 days and look at more pictures. But Andrew was already almost out of vacation time, and back home in Waconia, relatives were caring for their three biological children with Christmas just days away.

They called Nila Hilton for guidance. But when they finally got through to her, Ann says, Hilton didn't offer any suggestions, just told them she hoped they would choose a child. "She said, 'Well, I hope you can open your hearts to an orphan,'" Ann recalls.

When the Spurbecks arrived back home, Ann called Hilton and asked her to return the $4,100 that was never sent to Ukraine. They arranged to meet, but when the Spurbecks showed up at Reaching Arms, the lights were off and the only person there was a secretary. "I said, 'Do you even know who we are?'" Ann recalls. The secretary was apologetic, and looked shocked as the Spurbecks explained the reason for their appointment.

The couple stopped for dinner on their way home. While they were eating, Hilton called and accused Ann of abusing her staff. "She said, 'I'm not going to take this verbal abuse from you,'" Ann recalls. "She said I needed to deal with my emotional outbursts before we could talk about returning the money." The Spurbecks never heard from Hilton again.

"It's taken a toll on us," Ann says. "I was imagining a little one, you know?"


At their first meeting with Reaching Arms, Beth and Brad Kantor were offered a baby boy from Guatemala, they say. The couple hadn't filled out a single form before Nila Hilton stuck her head into the meeting and showed them a picture of a three-month-old boy.

They had two biological children and wanted another, but Beth wasn't anxious to go through another pregnancy. Besides, they liked the idea of taking in a child that might not otherwise find a good home.

"The thought of children out there with no one, no parent to love them, breaks my heart," Beth Kantor says. "That's not the case in our family, we find it so easy to love them."

By the summer of 2005, the Kantors finally had the money to begin the adoption process. They wanted to adopt from Guatemala because the children are relatively healthy, alcoholism rates are low, and the money they sent to the country would go toward taking care of orphans. Beth drove back to Reaching Arms with the completed paperwork and a check for $15,300. They were told the baby would be home by Christmas.

They quickly realized it wouldn't be that simple. For the first month after they signed the contract, the Kantors' caseworker wouldn't return Beth's calls. When the couple finally reached her, she blew up, saying that they asked too many questions and needed to "stay in line."

Nila and Bill Neumiller had separated earlier in the year, and Nila had remarried. Her new husband, Tom Hilton, started working at Reaching Arms. In October 2005, the agency sent a letter to current and former clients offering Tom Hilton's counseling services.

"Families may continue to need counsel and support in dealing with difficult issues long after the adoption," the letter stated, according to the state licensing investigation. "You may be in relationship to RAI through ways other than adoption. We welcome you and your family to also benefit from [Tom Hilton's] counsel."

Tom Hilton was a licensed drug and alcohol addiction counselor, but not a psychologist. But Beth Kantor knew none of this when she called Nila Hilton to complain about her calls not being returned. Tom Hilton called Beth back and asked her to come in for a meeting. When she got to the agency, Beth says, Tom Hilton grilled her.

"He asked about my sex life with my husband, my sexual history," she says. "Did I believe in Jesus? Yes. Did I believe in the devil? I said I had some problems with the devil. He said, 'You're going to have problems with your adopted child if you don't cast the devil out of your family.'"

The devil's hold on them was the reason she couldn't get pregnant, Tom Hilton continued. Beth didn't bother setting him straight about their biological kids. Instead, she tried to get out of the meeting without upsetting him.

"We were repeatedly told that if we were difficult, they would disrupt our adoption," Beth says. "We decided to lay low, to not ask so many questions."

A few weeks later, Tom Hilton again told the Kantors to undergo "mandatory spiritual counseling" with him, the couple says. Beth asked if they could see their own minister or counselor. Tom Hilton replied that the agency could put their adoption on hold if they didn't come to counseling.

One day, Beth went to Reaching Arms' New Hope office to turn in some paperwork. The caseworker needed her husband's signature on several different Guatemalan powers of attorney. Beth said she'd drive back with the signed form, but the caseworker said not to bother, Beth recalls. "She said, 'Just hold it up against a window [and trace the signature], that's what I do.'"

In February, the Kantors received a form letter from Nila Hilton asking for donations. Reaching Arms was on "the brink of ruin," she wrote, because of "uncertainties that come with international adoptions."

Terrified, the couple hired an attorney, who advised them to immediately terminate their contract with the agency. When they tried, the Hiltons again threatened to stop their adoption, Beth says. This time, the couple ignored the threat: They were already talking to Reaching Arms' Guatemalan agent, who agreed to take their paperwork to another agency.

But Reaching Arms had one more surprise for the Kantors: The agency withheld their home study and sent a letter to the Department of Human Services saying the pair had refused to attend the mandatory counseling sessions, Beth says. And because their tempers had been called into question on the record, the Kantors' second home study was extremely thorough.

"We had to pay for a new home study and make sure it was ironclad," Beth says. "We had to spend extra time proving we didn't have anger issues."

It was another six months before their adopted son, who was then 17 months old, finally came home.


Rick Spaulding and Tinia Moulder thought it was strange that Reaching Arms offered them a baby just days after they signed a contract with the agency in November 2005.

The couple didn't take that first child, but two months later Reaching Arms offered them another. This time, Spaulding and Moulder agreed to take the girl, and handed over their first big payment: $15,250. In celebration, their friends surprised them with a trip to Guatemala to visit the child.

Soon after the couple arrived there in February 2006, Spaulding started to suspect there were problems. The baby was lovely and healthy, but paperwork that Reaching Arms was supposed to send weeks ago had just arrived. They knew they were a few months from being able to take the girl home, but the first steps, like the process of making sure the baby was legally adoptable, hadn't even begun.

Back home, they started asking questions but got few answers. "We kept hearing, 'Oh, we're going to do that,' and, 'We'll do that,'" Spaulding says. "Over a five-month period, we were told 15 times that they were on top if it."

Reaching Arms' staff came and went with alarming speed. The couple went through two caseworkers. After the second left, Nila Hilton took over the case.

In September, the couple visited Guatemala again to see the baby they planned to adopt. Their caseworker was no longer with the agency, so Spaulding called Nila Hilton to ask for a translator and a contact person to set up a meeting with the child's foster mother. She told him that the agency didn't provide this service. Spaulding countered that the agency had provided the service the first time they visited Guatemala.

Tempers flared. After Spaulding told Nila Hilton it didn't sound like she "had a thorough understanding of the Guatemala process," she hung up on him, Spaulding says. She called back 10 minutes later, accused Spaulding of having "anger issues," and threatened to quash the adoption. Hours later, Tom Hilton called and said that if the couple still wanted to adopt, Spaulding and Moulder would have to agree to counseling with him at a rate of $40 a session.

While reading an online adoption forum, the couple discovered that they weren't the only people who had questioned the Hiltons only to be accused of having anger issues that could derail the adoption. The families all felt the same way, Spaulding says: "We could not question the Hiltons or complain at the risk of losing our daughter."

Ten months into the process, Spaulding and Moulder concluded that playing nice wouldn't bring the baby home. So they started lodging complaints. They called the Minnesota Department of Human Services, the state Attorney General's Office, and a private attorney. They prodded the angry families they'd met online to do the same, and they kept calling until they were sure investigations were underway.

"The people at DHS and the Attorney General's Office who are pursuing this are doing a great job," says Spaulding. "It was horrible watching families get dragged in during the six months the investigation has gone on. I called DHS once a month. I kept asking, 'What are you going to do? Why are you letting them get new families?'"

The investigation took seven months because new families kept calling to complain, making it larger and more complex, a DHS spokeswoman says. Investigators ultimately interviewed more than 30 families. State officials can't stop agencies from doing business until their license is revoked, something that's never before happened in Minnesota.

In March, the state finally revoked Reaching Arms' license. Earlier this month, the Children's Home Society took over its unfinished cases. Two weeks ago, Spaulding and Moulder learned that their adoption had entered its final phase. They hope to bring their girl home in a few weeks, but they also know that because their case involved Reaching Arms, it's getting extra scrutiny at every step.

"We're just angry we've been put in this situation," says Spaulding. "We thought the kind of scrutiny we went through to become adoptive parents would apply to the whole process, and we were wrong."

Shortly after the new agency called them with the news, Spaulding's cell phone rang. Nila Hilton's number came up on the display. He couldn't bring himself to answer, but he did listen to the message she left. It said she was calling because she had "good news."


When the Sandstroms finally realized Reaching Arms wasn't going to help them finish adopting a baby girl, Julia Sandstrom swung into action. She got her paperwork from the agency's social worker and called a friend who had twice used the agency to adopt from Armenia.

The two set up a command post at the Sandstroms' kitchen table. They found a translator, as well as the email address for Reaching Arms' Armenian contact.

Their Armenian hosts turned out to be charming, efficient, and prepared to spend the month showing the Sandstroms around the country and teaching them about the culture.

"They were nice and kind and honest. They really made sure everything on their end went well," Julia says. "We saw the entire country. We saw every hot spot, all the major historical sites."

It felt like a vacation, except at the end, in October, they brought their baby home. People adopting from Armenia have to promise the government there they will raise the child in the Armenian culture, so the Sandstroms found Minnesota's Armenian community.

"It's opened our family to a whole new world," Julia says. "We have a whole new set of friends."

Best of all, their daughter is 15 months old and everything they ever dreamed she would be.