San Diego needs inewsource

Support local investigative journalism with a gift today and your donation will make double the difference through our year-end challenge. 

Or sign up for our email list.

Two audits describe a history of poor financial oversight, misspent gift funds and shoddy recordkeeping at UC San Diego’s Shiley Eye Institute, where researchers develop new cures for eye diseases and doctors provide clinical care for patients.

The audits were published seven years apart and show Shiley and UCSD’s Ophthalmology Department, which houses the institute, have not:

  • Collected documents from faculty that disclose potential conflicts of interest or time commitments.
  • Conformed to federal or research sponsor requirements on grant awards.
  • Inventoried equipment.
  • Done enough to prevent potential drug diversions.
  • Trained cashiers.
  • Adequately safeguarded medical records.

The most recent audit also shows more than $129,000 of donations meant for research were used to pay tuition costs for a Shiley vice chairman’s master’s degree.

The Shiley Eye Institute, which houses the UC San Diego Department of Ophthalmology and conducts clinical care and research, is shown in this photo from May 2019. (Brandon Quester/inewsource)

The Shiley Eye Institute broke ground in 1990 after Donald Shiley, an engineer, medical device inventor and entrepreneur, along with his wife, Darlene Marcos Shiley, donated $1 million to UCSD to create a comprehensive eye care facility.

In 2019, the institute’s physicians performed nearly 6,000 surgeries and saw roughly 129,000 patients across the UCSD Health System. They conducted 43 clinical trials and provided vision screenings, care and more than 1,000 free glasses to San Diego’s underserved children.

UCSD departments undergo periodic review by the university’s Audit and Management Advisory Services. In 2012 and 2019, those auditors reviewed Shiley’s finances, travel records and other documents, then issued a final report.

Taken together, the audits found fault with the institute’s spending, research awards, clinical operations, inventory maintenance and policies about staff activities outside of the office.

Why this matters

Poor management and inadequate controls over taxpayer-funded clinical institutions conducting research can lead to wasted public monies and dangerous conditions for patients.

Dr. Robert Weinreb has directed the Shiley Eye Institute and chaired the school’s ophthalmology department since 2011. Dr. David Brenner is UCSD’s vice chancellor for health sciences.

Neither responded to multiple inewsource requests for comment about the audits.

Missing paperwork, misspent money

One of the problems the audits found involved an issue uncovered in an inewsource investigation into Dr. Kang Zhang, the institute’s former chief of eye genetics. He resigned last summer as inewsource was reporting on his undisclosed business and foreign government interests. The institute never collected conflict of commitment reports from him.

Without those forms, Shiley had no record of Zhang’s membership in China’s 1,000 Talents Program, which the FBI says incentivizes scientists to steal intellectual property developed at U.S. universities.

It also didn’t have a record of Zhang’s role as primary shareholder and founder of a multimillion-dollar Chinese biotech company that specializes in the same work he performed at UCSD.

The failure to collect conflict reports from Zhang was part of a pattern.

The 2012 report found Shiley collected just 61% of conflict of commitment disclosures from its faculty. To correct the problem, the institute’s human resources manager was to implement a process to prevent this going forward, according to the audit.

When auditors examined the issue again in 2019, they found Shiley hadn’t collected disclosures from its 31 faculty members for at least two years.

UCSD spokesperson Jackie Carr told inewsource that in response to that audit Shiley has collected all the required disclosures for the past fiscal year and fixed some of the problems identified in the latest report.

The 2019 report also found donations meant to study Graves’ disease, an autoimmune disorder that causes hyperthyroidism, were used to pay for Shiley Vice Chairman Dr. Don Kikkawa’s master of business administration degree. Kikkawa is a professor at UCSD and chief of the division of oculofacial plastic and reconstructive surgery.

Some of the funds Kikkawa used were marked for “unrestricted” use, the report found, but they didn’t amount to the more than $129,000 spent on his tuition fees.

“I was asked and supported by the department to further my education and bring back valuable skills to the department and university,” Kikkawa emailed inewsource. “I did not direct which funds to use, as this was a department decision. As I understand, after being discovered this was corrected immediately.”

Carr, the UCSD spokesperson, told inewsource that a different gift fund, without restrictions, was identified following the audit’s findings and used to pay for Kikkawa’s tuition.

Both audits faulted UCSD for not conducting an inventory of its hundreds of thousands of dollars worth of equipment in years. They also identified flaws in the way money was overseen at Shiley.

Some examples cited included inadequate controls over travel expenses, a lack of training for people handling cash, misuse of expense cards and subordinate employees approving their supervisors’ expenses, which “increases the risk of inappropriate use of funds,” the auditors said.

The 2012 audit included a list of corrective actions for management to ensure the problems didn’t happen again.

The 2019 audit did the same.

Citations and References

UC San Diego Department of Ophthalmology Audit Project 2012-49. April 2012.

UC San Diego Department of Ophthalmology Report 2019-15. September 2019.

Brad Racino is the assistant editor and senior investigative reporter at inewsource. He's a big fan of transparency, whistleblowers and government agencies forgetting to redact key information from FOIA requests. Brad received his master’s degree in journalism from the University of Missouri...

Jill Castellano is an investigative data reporter for inewsource. When she's not deep in a spreadsheet or holed up reporting and writing her next story, she's probably hiking, running or rock climbing. She also loves playing board games and discussing the latest chapters with her book club. Jill...