Lawyer: Ex-La. Citizens Chief Will Refuse to Testify Before Panel

The former head of Louisiana’s state-backed “insurer of last resort” will refuse to testify before a legislative committee investigating alleged misspending and mismanagement at the firm, his lawyer said Oct. 15.

Terry Lisotta, chief executive officer of Citizens Property Insurance Corp. until early this year, is among 60 people to be subpoenaed by the Legislative Audit Advisory Council as it probes allegations that Lisotta spent the company’s money on fishing trips, plane tickets for his wife and other personal expenses.

Lisotta’s lawyer, David Courcelle, said Lisotta hasn’t received the subpoena yet. When he does, Courcelle said, Lisotta will agree to appear before the committee but will invoke his 5th Amendment rights and refuse to testify.

Federal prosecutors have also subpoenaed Lisotta, in the wake of a state audit accusing him of fraud and theft in his oversight of the firm.

The audit by Legislative Auditor Steve Theriot’s office said Citizens might have misspent over $1 million in 2004-05. Theriot’s audit accused Lisotta of using company money for personal expenses on business trips to Bermuda, New York and Florida, plus fishing and quail hunting trips. The audit examined a fraction of the $1 million in spending; Theriot’s office is now investigating how the rest of the cash was spent.

In its probe of Citizens, the legislative committee has subpoenaed 46 people and is in the process of serving another 14 – including Lisotta – with subpoenas. It has heard from witnesses that included current and former board members of Citizens and the Property Insurance Association of Louisiana, the agency that managed Citizens until recently. Lisotta served as head of both Citizens and PIAL.

Chad Brown, a former chairman of Citizens’ governing board, testified that Lisotta gave budget presentations at the board’s monthly meetings, but provided few details about how the company’s money was spent. Brown denied that Lisotta had carte blanche to spend Citizens cash and get reimbursed.

“He did not have a blank Citizens check,” said Brown, a top official in the state Department of Insurance.

Theriot’s audit said Lisotta often spent the firm’s money without approval from anyone, and committee members expressed frustration that none of the witnesses could recall who- if anyone – authorized Lisotta’s expenses.

“Explain to me how this little country club worked,” Sen. Tom Schedler asked Brown at one point.

Brown acknowledged that the board’s audit subcommittee should have held more meetings, which could have led to greater scrutiny of expenditures.

Also testifying was Robert Wooley, who was state insurance commissioner in 2003, when the Legislature created Citizens as the homeowners insurance company for people who can’t get a policy on the private market.

Wooley recalled that Citizens was created at a time when Louisiana’s insurance reputation was still marred by the federal imprisonment of three of Wooley’s predecessors. Asked why he didn’t take a more active role in Citizens’ affairs, Wooley said he wanted to avoid the perception that he was “creating a political empire” and running the firm for his personal benefit.

“My No. 1 priority was not to go to jail,” said Wooley, who resigned the post in 2006.

Lisotta is the focus of the probe for some lawmakers, but Schedler, the chairman, repeatedly said investigations into Citizens and PIAL will likely lead to allegations of wrongdoing far bigger than Lisotta’s expense accounts.

“Mr. Lisotta’s spending is just the tip of the iceberg,” said Schedler, R-Mandeville.

The committee’s hearings will resume with further testimony on Nov. 7. Those expected to testify include Insurance Commissioner Jim Donelon, plus other current and former Citizens board members.