Those allegations included thousands of dollars in alcohol, lavish dinners and first-class travel for him and his wife.
NEW ORLEANS – Faculty at LSU’s Health Sciences Center are calling on the new chancellor to investigate his predecessor’s spending of charitable funds following a joint WWL-TV and Times-Picayune investigation last week.
The LSU Health Faculty Senate sent Interim Chancellor Steve Nelson a letter expressing concern about news reports detailing former Chancellor Larry Hollier’s expenses. Faculty members called them “flagrant abuses of LSU New Orleans Health Foundation funds.”
Those allegations included thousands of dollars in alcohol, lavish dinners and first-class travel for himself and his wife — all while Hollier was paid more than $1 million as chancellor of LSU Health in New Orleans.
“We implore the Board of Directors to investigate the lack of fiduciary oversight and take the necessary actions to ensure that donor funds are used as intended – now – before our donors decide that LSU Health is not worthy of their gifts. their finances,” said the letter from Faculty Senate President Judy Crabtree.
The LSU Health Foundation, an LSU-affiliated charity, defended Hollier’s spending using the Chancellor’s Discretionary Fund, saying the reimbursements followed all policies and procedures. But the foundation has not produced a policy saying what can and cannot be charged to the chancellor’s account.
“The foundation claims it has always followed the policies contained in its governing documents — the Guidelines document, Membership Agreement and PM-48,” foundation spokesman Greg Beuerman said. “These guidelines are used to review all expenditures of Foundation funds.”
The “guidance document” provided by Beuerman specifically states that it is guidance only, not a policy, and applies only to endowed funds – which the Chancellor’s Discretionary Fund is not. PM-48 is an LSU school policy that states that all expenditures on behalf of LSU employees by LSU affiliates, including the LSU Health Foundation, “are subject to the … affiliation agreement with LSU- in and the organization’s policies and procedures”.
Beuerman declined to provide a copy of the LSU Health Foundation membership agreement.
He said “ultimate authority and oversight” over the chancellor’s expenses comes from the LSU board or its designee. According to PM-48, all reimbursements to LSU employees of more than $1,000 must be reported quarterly to the board or its designee. News outlets reviewed 600 pages of receipts and expense forms for Hollier since 2018 and found 27 reimbursements of more than $1,000.
Beuerman did not provide any of the quarterly reports submitted to the university, but said they were all “reviewed to ensure compliance based on their standards.” LSU said the board’s appointee during most of Hollier’s time as chancellor was his vice chancellor for finance, Keith Schroth.
Schroth’s own spending using a foundation credit card was called “personal, inappropriate or excessive” in a law firm investigation from 2009. An internal LSU audit in 2021 alleged that Hollier helped the boy of Schroth and Schroth to receive additional compensation without proper approval.
Both Hollier and Schroth resigned last fall after the audit was released. Hollier continues to serve on the LSU Health faculty and is slated to earn more than $750,000 in 2022.
Nelson provided WWL-TV and The Times-Picayune with an LSU School of Medicine policy established when he was dean of the medical school. It regulates the proper use of foundation spending accounts by medical school employees and expressly prohibits charging for alcohol, using first-class flights or accommodations without prior approval from the dean, or spending more than $105 per person at dinner, all public records show. Hollier did it repeatedly.
The policy also urges medical school officials, before spending the foundation’s money, to consider: “If this were my money, would I spend it this way?” and “If this transaction appeared on the front page of the local newspaper, would I still be? comfortable with it?”
Beuerman said the Medical School policy did not apply to Hollier, however, because as chancellor of the LSU Health Sciences Center for 16 years, he oversaw not only the medical school but five other entities, including the nursing school and dental school.
Nelson’s spokesman said the LSU Health Sciences Center attempted to get “the foundation to develop policies and procedures for refunds for non-endowed funds,” including the chancellor’s discretionary fund, in 2019.
But spokeswoman Leslie Capo said those efforts were “opposed by the foundation.” She said the foundation’s chief financial officer, Tim Hemphill, wrote, “Discretionary funds are to be used at the discretion of the holder as they see fit within the mission of LSUHSC.”
Three days after the initial WWL-TV and Times-Picayune report, the foundation’s board chairman, Warren Gottsegen, sent a letter to board members proposing an independent audit “that would include internal control recommendations for the Discretionary Fund of Chancellor”.
Gottsegen’s letter called Hollier’s spending reporting “irresponsible” and “misleading,” but also went on to say, “Of course, we have relied and continue to rely on the Chancellor to use those funds expressly for the benefit of KLSH”.
Gottsegen also noted that “The foundation has previously tried to limit such spending, but was shot down by leaders at the LSU Health Sciences Center.” LSU denies this claim.
Gottsegen’s letter was leaked to WWL-TV. When news agencies asked him about the audit, Beuerman replied that no separate audit will be conducted. Instead, Beuerman said the annual audit of the foundation’s financial statements will continue as usual.
This report likely does not resolve the issue of whether Hollier did anything improper: The firm Postlethwaite & Netterville has said in its previous reports that it does not comment on internal controls.
“We do not express such an opinion”, wrote the auditors. The firm’s CEO did not return a message seeking comment.
The only section of the most recent 30-page audit that referred to the foundation’s reimbursements is a single sentence that lists the total amount the foundation paid to all ZELS employees.
– Times-Picayune staff writer Joseph Cranney contributed to this report