Suit Accuses Banes of Illegally Diverting State Lupus Funds

More than $1 million in state funds appropriated for lupus research has been illegally diverted to non-lupus projects, a coalition of lupus support organizations charged Friday in a lawsuit.

The suit on behalf of taxpayers was filed in Superior Court in Van Nuys against Assemblyman Tom Bane (D-Tarzana) and members of the state lupus board headed by Bane’s wife, Marlene.

It is the latest chapter in a bitter dispute between the volunteer lupus groups and Bane, who pulled the funding plug on the state Lupus Appropriations Board earlier this year. The legal action came three days after the state attorney general’s office announced that it is auditing allocations by the lupus board and by a nonprofit lupus foundation run by Bane.

Those inquiries were initiated in response to letters from representatives of the Lupus Foundation of America and the Lupus Society of America. The organizations, the two largest lupus support groups, also spearheaded the lawsuit.

Funds Freeze Sought

The suit asked the court to freeze $400,000 that a 1987 bill sponsored by Bane redirected from the lupus board to a controversial blood study. It contends that the study would benefit the firm of a lupus board member, creating a possible conflict of interest.

In addition, the lupus groups sought an injunction to prevent $572,000 in unspent money appropriated for lupus research this year from reverting to the general state fund when the 1989-90 year begins today. A hearing on the matter was scheduled for July 26. In the Legislature’s budget sent to Gov. George Deukmejian, the funds would be reappropriated for a Lyme Disease Surveillance and Prevention Program.

“We are incensed that any state legislator would consider any diversion of funds already allocated by the state Legislature,” said Nancy G. Horn, president of the Greater Los Angeles Chapter of the Lupus Foundation of America.

Bane responded that the lawsuit is futile because neither he nor the other defendants have the power to change the 1989-90 budget passed this week by the Legislature. He called the legal action political harassment.

The lupus volunteer groups, he said, are merely “antagonizing those people who have been working on their behalf a lot of years.”

The suit, filed in the name of a Tarzana resident who suffers from lupus, also asserts that the Banes illegally diverted money from the lupus board to obtain campaign contributions for Bane and Assembly Speaker Willie Brown (D-San Francisco). It seeks unspecified monetary damages against the Banes and the other two members of the state lupus board, Drs. Joshua Levy and Kenneth M. Nies.

‘Personal Fiefdom’

Scientists who applied for research grants from the lupus board have said they were contacted by high-pressure solicitors for Bane’s and Brown’s campaigns. Marlene Bane oversees fund raising for both her husband and Brown in Southern California.

“Although we acknowledge that the board has contributed to lupus research in the state during this time, it has also become a sort of personal fiefdom for Tom Bane and for the fund-raising efforts of Marlene Bane,” attorney Debra J. Wegman said.

Bane said solicitors were not supposed to make any connection between tickets to his $500-a-person fund-raising dinner for scientists and “anything they received or hoped to receive.” He said this applied to Brown’s dinners as well.

Under any circumstances, Wegman said, “it’s an unfair pressure on those researchers.”

The lupus board has dispensed $6.2 million to scientists since it was established in 1976. The board received $572,000 for the 1988-89 fiscal year but never met to award any grants--apparently because Tom and Marlene Bane were upset that the state Department of Health Services began to play a more active role in overseeing the board.

The suit alleges that the top recipient of lupus board funds, Dr. Raymond L. Teplitz, was engaged in research projects that “had little or nothing to do with lupus.” Of the $800,000 granted to Teplitz, “less than $50,000 has been spent on lupus research,” the suit asserts. Teplitz is a longtime friend of the Banes and a contributor to Tom Bane’s campaign committee.

Institutions Funded

Bane said Friday that the lupus board funded institutions, not individuals. He added that research Teplitz oversaw while he was at the City of Hope National Medical Center in Duarte “established the genetic factors of lupus” and “perfected a test to determine whether a person did or did not have lupus.”

Teplitz, who has transferred to UC Davis, has declined to discuss his research.

The blood study controversy focuses on Levy, a lupus board member and the medical director of HemaCare Corp., a Sherman Oaks blood firm.

The Legislature set aside $400,000 from lupus appropriations for a blood study in 1987. The previous year, Bane succeeded in passing a bill that created an exemption from a 1977 law that prohibited the use of paid donor blood unless volunteer blood was unavailable. The study, which has not been done, is to determine whether blood from paid donors is as safe as blood from volunteers.

Health Services officials say the prime beneficiary of the measure is HemaCare, another campaign contributor to Bane. Levy, a friend of the Banes and a campaign contributor, was appointed to the Lupus Appropriations Board in 1985 at the Banes’ recommendation.