Audit targets expense reports

• By TED GRIGGS
• Advocate business writer
• Published: Nov 11, 2008 - Page: 1A - UPDATED: 1 a.m.

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The most recent state audit of Louisiana Citizens Property Insurance Corp. questions $106,579 in expenses turned in by the company’s former chief executive officer.

“These are expenses that may not have been incurred, appear personal in nature, or appear to have no legitimate business purpose,” the state legislative auditor says in the report.

An earlier audit examined roughly 10 percent of the $285,249 in expenses turned in by former Citizens Chief Executive Officer Terry Lisotta, said Dan Daigle, assistant legislative auditor for the Compliance Audit Division of the state Legislative Auditor’s Office.

The more thorough exam turned up “a few more schemes here and there,” but basically more of the same abuses, Daigle said.

“It’s all pretty disturbing, particularly the first part where he was reimbursed for expenses he hadn’t incurred,” Daigle said. “But it’s all pretty troubling.”

The report included findings such as guest receipts being turned in for restaurants that the auditors were told did not use guest receipts and from one restaurant that was closed when the meals were supposedly purchased.

The audit covers Louisiana Citizens, the state’s property insurer of last resort; Louisiana Automobile Insurance Plan, the auto insurer of last resort; and the Property Insurance Association of Louisiana, which acted as the third-party administrator for both.

Lisotta was chief executive for all three agencies but did not submit separate expense reports for each agency. Instead the staff at
Property Insurance Association of Louisiana reviewed his expense reports, reimbursed the expenses, and allocated the costs among the agencies at Lisotta’s direction, according to the report.

The audit’s major findings included $39,648 in questionable travel expenses for trips whose business purpose could not be validated or whose cost appeared excessive; $19,162 for expenses Lisotta apparently did not incur; and $47,769 in questionable costs for hotel movie charges, office parties, LSU season tickets for football and a variety of other entertainment.

The $47,769 in questionable expenses included $1,102.75 which the report said Lisotta was reimbursed for soft drinks, beer, chips, paper plates and towels bought at a New Orleans Sam’s Club.”

“There is no documented public purpose for this expense. Mr. Lisotta’s calendar indicates a dance party for his daughter’s prom on this night,” the report states.

The travel expenses cited included three nights at the Hilton Sandestin Hotel for a Reinsurance Association of America convention in May 2006. The association said it did not have a convention in Destin, Fla., on those dates. A copy of Lisotta’s hotel reservation included a comment saying Lisotta did not want anyone to know he was there.

There were also two airline tickets to Europe, cost $6,036, for meetings with reinsurance companies. All but one of the legs of the trip were first class or business class. The comparable state rate for the trip was $1,036 per ticket.