State Will Probe Lupus Funds Controlled by Assemblyman

Reponding to allegations by lupus support groups, the state attorney general’s office has said it will audit allocations of public funds by a state board that supports research on the disease and is headed by the wife of Assemblyman Tom Bane (D-Tarzana).

State prosecutors will also investigate funds distributed by a nonprofit lupus foundation run by Bane, said Duane Peterson, spokesman for Atty. Gen. John K. Van de Kamp. The attorney general’s office is responsible for ensuring that funds raised by nonprofit groups are used for their intended purpose.

At the same time, Van de Kamp’s office has undertaken a preliminary review of the lupus groups’ assertion that Bane may have had a conflict of interest in sponsoring a controversial blood bill, Peterson said. The review will determine whether there is a basis for a formal inquiry.

Bane, who chairs the influential Assembly Rules Committee, said Tuesday: “I support the investigation. I’m very happy over it. I’m always happy with the truth.”

He has maintained that he and his wife did nothing improper in supporting research on lupus, a debilitating and potentially fatal autoimmune disease.

The audits and preliminary review were prompted by a June 12 letter from Dr. Daniel J. Wallace, a medical adviser to the American Lupus Society’s Southern California chapters and the Lupus Foundation of America, the two largest lupus organizations in the nation. Nancy G. Horn, president of the Greater Los Angeles Chapter of the Lupus Foundation of America, also requested an inquiry.

Wallace challenged the propriety of $801,473 in grants that the three-member lupus board, headed by Marlene Bane, made to Dr. Raymond L. Teplitz, a longtime friend of the Banes and a contributor to the veteran assemblyman’s campaign committee.

Wallace said that, according to an analysis of Teplitz’s medical publications, the lupus research “contracted for by the state was simply not done, unless it was done so badly that it was not publishable.”

‘Proved Basic Facts’

In a June 22 letter to Wallace, Assistant Atty. Gen. Carole Ritts Kornblum said that all funds distributed to Teplitz should be audited.

Teplitz, who is on the UC Davis faculty, declined comment Tuesday. Bane has said Teplitz’s “basic research proved basic facts about lupus.”

Wallace also raised questions about the National Lupus Erythematosus Foundation, which was founded in 1957 to fund lupus clinics and promote research on lupus. Bane chairs the foundation, which is run out of his Van Nuys district office. Marlene Bane, who suffers from lupus, is on its non-salaried board. The foundation has raised several hundred thousand dollars from a number of sources.

Wallace wrote that even though the foundation’s bylaws stipulate that its Board of Directors meet annually, one member said he had not spoken to the Banes or been told about any board meetings in 15 years. Three other board members told The Times last week that they had not been contacted for meetings or other foundation matters for more than a decade.

Between 1984 and 1987, the most recent year for which records were available, the foundation reported dispersing $10,000--which went to the Lupus Foundation of America. In 1983, it allocated $100,000 for Teplitz’s research. It listed a balance of $274,092 at the end of 1987.

Unlike other lupus support organizations, the national foundation chaired by Bane “provides no services for lupus patients, supports no ongoing research and has no speakers program,” said Wallace, a Los Angeles rheumatologist and co-author of a recent text on lupus.

Auditors will review the foundation’s annual reports to determine whether the organization is being operated as a charity, is fulfilling the purposes of its charter and is active or moribund, said Deputy Atty. Gen. James Cordi. If improprieties are found, the attorney general could demand changes in management, seek monetary damages against board members or file a civil suit, Cordi said.

Request Denied

Van de Kamp denied Wallace’s request that the foundation’s assets be frozen “until these funds can be allocated to lupus.”

In his letter, Wallace also cited Bane’s sponsorship of a 1986 bill creating an exemption from a law prohibiting the use of paid donor blood unless volunteer blood was unavailable. The 1977 ban was intended to reduce the incidence of transfusion hepatitis; Bane says, however, that new technologies have made the use of platelets--a blood component that helps clotting--from paid donors safer than those obtained from volunteers.

The state Department of Health Services and volunteer blood banks, which opposed the measure, maintain that the prime beneficiary is the HemaCare Corp., a Sherman Oaks blood firm whose medical director, Dr. Joshua Levy, is Bane’s longtime friend and a campaign contributor. Levy was appointed to the Lupus Appropriations Board in 1985 at the Banes’ recommendation.

“The Banes at one time told our sources that they were stockholders in HemaCare,” Wallace wrote. “If this unsubstantiated allegation is true, is it illegal?”

Bane said Tuesday that neither he nor his wife has ever owned stock in HemaCare.