Action for Research into Multiple Sclerosis
of America, the Houston-based charity started with a gift of more than $1
million from British rock stars, is in the hands of a court-appointed
receiver who will recommend whether to rehabilitate or liquidate the
State District Judge Louis Moore Monday
appointed attorney Ron Sommers, who recently served in the Rainbow
Foundation receivership case, to take charge of ARMS' assets. Sommers will
determine whether lawsuits need to be filed against former ARMS officials.
The five remaining ARMS board members agreed
to the receivership, saying it ``is in the best interest of the public and
especially of victims of multiple sclerosis,'' ARMS attorney J. Randolph
Ewing said after the agreement was reached Monday in the attorney general's
As part of the agreement, the state promised
not to sue ARMS President Ira Morel and the four other board members, all
Assistant Attorney General John Vasquez said
the five ``acted in the best interests of the corporation by agreeing to the
receivership.'' Allegations by British rock star Ronnie Lane, who initiated
the investigation, seem to pertain to people formerly on the board, Vasquez
Lane and his Scottish physician, Dr. Phillip
James, say ARMS officials misappropriated and mismanaged funds designed for
multiple sclerosis research. Records furnished to the attorney general's
office show that former ARMS director Mae Nacol was paid $206,202 in
salaries, legal fees and reimbursements. Nacol, who resigned in November,
says an audit last fall found no wrongdoing.
The attorney general's office said Monday the
organization spent no more than $200,000 on research and education,
including some brochures and a grant to Texas A&M University.
Sommers will tell the court by April 25
whether he thinks ARMS should continue to function. Moore will hold a
hearing at 1:30 p.m. April 28.
However, Vasquez says it is likely the
receiver could initiate separate suits against former officials and
directors, possibly even before the April 25 date.
``I think there have been some allegations
made that have good basis,'' said Vasquez, head of the attorney general's
charitable trust division.
Vasquez said his examination of ARMS' records
revealed that ARMS is ``in imminent danger of insolvency,'' with only
$100,000 remaining from the $400,000 on the books Oct. 1.
Ewing said that after Monday's two-hour
meeting, the board members unanimously agreed to enter the consent order
with the state rather than commit the remaining $100,000 to attorneys to
fight the state's threatened suit.
He said their decision ``shall in no way
constitute an admission of guilt or wrongdoing by the corporation or any of
its directors, officers or employees.''
Larry Hysinger, attorney for Lane, said he
applauds the attorney general's action, because ``the most important thing
at this point is to stop their (the current ARMS) spending.''
But he said he regrets the five are exempt
from litigation, because ``it's not the spirit of the law to have a
charitable foundation bargaining away its immunity by granting a
receivership on it. Everyone should stand on their own liability.''
Although current board members have some tie
to Nacol, Hysinger called them ``minor characters'' in the drama. Lane,
contacted in Austin, said, ``It feels a lot better knowing they're not
getting away with it scot-free.''
The receiver will also look at whether ARMS
can likely raise funds in the future and whether there is a need for the
If the judge allows ARMS to continue, a new
board will be appointed. If ARMS is dissolved, the assets could be
transferred to another charity, possibly ARMS of England, the parent charity
of ARMS of America, Ewing said.