WATERLOO, Ont. - The former operators of an Ontario adoption agency that declared bankruptcy nearly two years ago have been charged with fraud.

Waterloo Regional Police and the RCMP say Imagine Adoption agency founder Susan Hayhow and general manager Rick Hayhow were arrested Thursday.

Police allege more than $420,000 of agency funds were spent on personal items, such as vacations, clothing, and home renovations.

The pair is charged with breach of trust, fraud over $5,000 and fraud under $5,000. They have been released pending a May 26 court appearance.

Kids Link International Adoption Agency — which operated as Imagine Adoption — declared bankruptcy in July 2009.

The move left more than 350 families hoping to adopt children from overseas in limbo.

Note to readers: This is a corrected story. The arrest was made Thursday, not Tuesday.