Ex-Louisiana Citizens CEO Targeted in Legislative Audit

November 12, 2008

The former chief executive at Louisiana’s last-resort insurance company “extravagantly” overspent the firm’s money, with over $100,000 in questionable expenses including first-class airfare, expensive meals and LSU football tickets, state auditors said in a report released Nov. 10.

But a lawyer for Terry Lisotta, former CEO at Louisiana Citizens Property Insurance Corp., questioned the findings of the Legislative Auditor’s report. Lawyer David Courcelle acknowledged accounting and clerical errors at Citizens, but noted that all Lisotta’s expenses were approved by the firm’s governing board.

“If you’re questioning the expenses of Terry Lisotta, why aren’t you questioning the board? All of these expenses were budgeted and approved,” Courcelle said.

Legislative Auditor Steve Theriot’s office has been investigating Citizens for over a year, as have the FBI and the state attorney general’s office. For two years after Hurricane Katrina struck in 2005, the company was plagued with bookkeeping problems stemming partly from software glitches.

Lisotta has not been charged with a crime. He simultaneously worked for Citizens and fire-rating company Property Insurance Association of Louisiana, whose staff performed most of Citizens’ work, and the Louisiana Automobile Insurance Plan, the state’s high-risk auto pool.

The audit focuses on the $285,000 in expenses Lisotta claimed from 2003 through 2006. Of that, auditors said $106,000 was “questionable” and $52,247 was for entertainment expenses “that appear both unnecessary and extravagant.”

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

The audit says Lisotta used a company credit card in 2005 to spend $1,723 for LSU season tickets, plus a parking pass. Auditors found no documents indicating who attended the games or the business purpose of the tickets.

But Courcelle denied Lisotta intentionally misspent any of the firms’ money. He said Lisotta reimbursed the cost of the football tickets.

Citizens is the state-backed insurer that sells homeowners policies to those who can’t find insurance on the private market.

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