The state attorney general's office is
investigating allegations of misappropriation of funds and mismanagement by
the Houston-based Action into Research for Multiple Sclerosis (ARMS) of
Ron Dusek, spokesman for the attorney general's
office in Austin, said Friday his office is reviewing allegations that
ARMS-America officials were involved in ``self-dealing.'' One course of action
would be for his office to appoint a receiver to ``completely take over the
The investigation was requested by Dr. Phillip
James, the Scottish physician for British rock star Ronnie Lane. Lane, an MS
victim, organized a rock tour in 1983 in which he raised the more than $1
million seed money needed to establish the public, non-profit organization,
modeled after ARMS-UK in Britain.
The accusations center on Houston attorney Mae
Nacol, who has been involved with ARMS of America since its inception in
In his complaint to John Vasquez, head of the
attorney general's charitable trust division, James said that Nacol
incorporated her law practice into the offices of the charity and has taken
salary and fees for her staff from the charity funds.
A statement furnished to the attorney's office
shows that ARMS paid Nacol at least $206,202 for legal fees, salary and
reimbursements for expenses and entertainment since December 1984. Her
associate, Barbara Leigh Hunt Nacol, received $71,557 while serving as
president of ARMS.
In the past, Mae Nacol has represented Barbara
Nacol to be her sister. However, Friday she said they are not related. Mae
Nacol also denied any wrongdoing.
Lane, co-founder of the early 1970s British
group The Small Faces, and Nacol became acquainted in the summer of 1984 when
James telephoned Nacol asking her to help Lane. Nacol, who is also an MS
victim and is currently in a local hospital, had founded a hyperbaric oxygen
treatment center in Houston to aid herself and other MS sufferers.
Lane came to Houston for treatment at Nacol's
HBO Medical Center on Travis. Afterward, Lane, who was involved with ARMS of
England, started ARMS of America in Houston. He asked Nacol to direct the
nationwide, non-profit group.
The celebrated 1983 four-city ARMS concert tour
of America also starred Lane's British rock star contemporaries Jeff Beck,
Jimmy Page, Charlie Watts, Bill Wyman, Eric Clapton and Joe Cocker.
Lane said he began questioning ARMS of America
spending practices last November when ``an old Lincoln limousine that Mae had
that was really a piece of trash - a crate - was sold to USA-ARMS for nearly
``All the (ARMS) cars seemed to be sadly
lacking in upkeep,'' he said. Lane also said he was concerned about the ARMS
purchase of a Cherokee Chief Jeep for nearly $9,000.
``I wouldn't have given you $9 for the pair of
'em,'' he said. ``That's what first got me to thinking. That made me sit up.
Before that I'd been sort of asleep.
ARMS funds were also used to pay $3,150 to the
Texas State Bar Insurance Trust, which provides insurance only for attorneys
and their employees, records obtained by the Chronicle show. Of that amount,
$864 was paid in behalf of legal secretary Georgia Swearingen, who at the same
time was paid a salary of $14,772.74 by the non-profit ARMS. Also, attorney
Carol J. Kent was paid a salary from ARMS while she was associated with Mae
Nacol's law firm. Kent's State Bar Insurance Trust was also paid by ARMS.
The records show that N.R. ``Ray'' Ashley, a
member of the executive membership committee, was paid $23,213 for services on
five separate invoices from May through August last year. Other members of the
board allege that the fees were paid for repairs to Nacol's Memorial home and
farm near Houston.
Lane, who frequently uses a wheelchair, also
received money from ARMS, including rent and the salary for O. W. Leatherwood
to help with his care.
Nacol says she resigned from the board in
November when the allegations first began to surface. But Lane noted that the
board Nacol appointed continues to operate the non-profit group.
She said three audits of the funds - one by an
independent firm and two by board members - found no wrongdoing.
She said she paid some operating expenses out
of her own pocket before the group was formally incorporated. She says she was
later was reimbursed.
``He (Lane) wanted things done immediately,''
she said. ``We had attempted to hire an administrator to handle it. It was
such a mammoth task, we couldn't find anyone to do it that was familiar with
``It became very evident that the only way it
would be accomplished was that if I devoted my full time to the organization.
I gave up my law practice and agreed to dedicate myself to ARMS, and that was
what I did.''
Nacol, a criminal lawyer, is a member of
Houston's Nacol jewelry family.
Lane was notified by letter last week of his
dismissal - effective Feb. 10 - as a board director by the ARMS-America
Executive Committee. James was also removed from the board. Lane subsequently
founded his own non-profit organization, the Ronnie Lane Foundation.
``I don't know exactly what's in the (ARMS)
bank account now, but I'm guesstimating it's down to probably $150,000. And
most of it has gone straight into the pockets of those who run it. The
irregularities are blatantly there,'' said Larry Hysinger, attorney for Lane.