Former LSU Health Sciences Center executive Keith Schroth in the late 2000s racked up thousands in expenses on an LSU foundation credit card for routine outings at bars, Ruth’s Chris Steak House and Harrah’s casino, newly obtained records show.
The total amount improperly charged to LSU Health Foundation New Orleans over a two-year period was as much as $18,100 — far more than the “maybe three, four, $5,000” in spending Schroth has previously acknowledged.
An outside law firm’s investigation tallied more than 130 charges to bars and restaurants, including 26 charges at Harrah’s and 28 charges at Ruth’s Chris. Many of those “appear to be purchases of alcohol only,” which was prohibited, the New Orleans-based Liskow & Lewis firm wrote in its 2009 report.
But, according to Schroth, that spending was not deemed problematic by the chancellor at the time, Larry Hollier, and Schroth’s then-direct supervisor, Steve Nelson. Nelson was dean of the School of Medicine in 2009 and now serves as interim chancellor after Hollier stepped down last month.
In 2009, Schroth was Nelson’s chief finance officer. Schroth said his supervisors signed off on his expenses, which he said stemmed from meetings he had with healthcare system representatives.
“They got approved by the chancellor and the dean,” Schroth said Thursday. “They were all for business.”
Nelson and Hollier didn’t return messages seeking comment Thursday. Hollier previously told The Times-Picayune | The Advocate that he had seen no problems with the spending by Schroth, whom he elevated last year to the center’s top financial position, vice chancellor for administration and finance. “We didn’t feel there was any issue,” Hollier said.
Hollier also defended Schroth after questions around his credit-card spending were raised internally last year, a compliance officer wrote in a memo.
Schroth also stepped down last month after Chad Leingang, the LSU Health Foundation New Orleans’ former president, told the newspaper that Schroth’s credit card spending in the late 2000s was “abusive,” though not all the details were initially available. A university audit in September also raised concerns around Schroth.
Schroth said in September the amount of his flagged purchases “wasn’t that significant.”
“If I had to guess, maybe three, four, $5,000,” he said. He said Thursday that those comments referred to the amounts he spent each month.
In the period from 2007-9 reviewed by Liskow & Lewis, Schroth charged more than $18,100 on his card. It’s not clear what portion of that total spending was flagged as abusive.
Hollier and Nelson also possessed cards billed to the foundation, and spent $57,000 and $13,800 over the same two-year period, respectively, the report said. The report drew no conclusions about whether any of that spending was inappropriate, but recommended eliminating the credit cards because they “give the impression of an unlimited, unmonitored expense account.”
The foundation no longer uses credit cards. Leingang revoked Schroth’s card in August 2009. Liskow & Lewis issued its findings a month later.
Schroth vaguely referred to other financial concerns around the foundation in the late 2000s, and claimed the review of his spending was retaliation from Leingang. “There were financial findings” about the foundation, Schroth said, without adding specifics. “There were issues.”
Asked about this, Leingang said, “Keith Schroth is making stuff up.”
“The foundation’s finances under my leadership had 13 years of clean audit reports, with no material weaknesses, no reportable conditions and no audit adjustments,” said Leingang, who left the foundation in 2016.
The foundation — with 16 full-time staffers, a 25-member board and more than $7.6 million in donor contributions last year — has a mission to raise money and help foster business relationships for LSU Health in New Orleans.
Its leadership in September declined a request to turn over a copy of the Liskow & Lewis report.
The report’s contents had raised alarms within the organization as recently as December, when Schroth held the chief financial post at LSU Health in New Orleans, according to an internal LSU memo.
The foundation’s chief finance officer, Tim Hemphill, alerted LSU compliance officer Frank Wasser and then-chief of staff Louis Colletta to Schroth’s previous spending, Wasser wrote in a five-page memo.
In a meeting with Wasser, Colletta and Lori Ferro, another compliance official, Hollier defended Schroth. He insisted that “Schroth had actually approached him with concerns that the P-card system, as it existed at the time, was not sufficiently monitored and could have led employees to mismanage funds,” Wasser wrote.
Wasser shared his memo with LSU’s Office of Internal Audit in January. In a scathing 67-page report in September, auditors criticized Hollier for improperly pushing for raises for Schroth and Schroth’s son, actions that violated university policies and prompted strong pushback from human resources.
The audit did not mention Schroth’s credit card spending. In September, an LSU spokesman said the university didn’t have a copy of the Liskow & Lewis report. The Times-Picayune | The Advocate obtained a portion of the report this week.
The lawyer who drafted the report, Leon J. Reymond Jr., told the newspaper he is not authorized to discuss it. A spokeswoman for the foundation said neither Hemphill nor the organization has anything to add on the subject.
Either way, the law firm’s conclusions in the 2009 report are clear: Schroth’s use of the card violated policy and often was “personal, inappropriate or excessive.”
Schroth submitted summary receipts, rather than itemized receipts, for his spending at Harrah’s and near-weekly outings at Ruth’s Chris, the report said. Many of the purchases were for alcohol only, and “almost half of these charges were incurred after 8 p.m.”
Schroth said his receipts may have been labeled Harrah’s because he frequently visited the Ruth’s Chris there. He never spent foundation money at the casino, he said.
Schroth said he followed all foundation requirements while submitting receipts. “They had all the receipts as approved by Dr. Hollier and Dr. Nelson,” he said.
Leingang, in a 2009 email, wrote that Schroth also bought drinks at the Windsor Court hotel and Lucy’s bar. Schroth didn’t always submit receipts or cite a business purpose, including vague descriptions like “LSU opportunities” and “LSUHSC processes and regulations,” the Liskow & Lewis report said.
Schroth said he rang up the expenses at gatherings with healthcare representatives, with whom he was trying to develop business ties for LSU Health in New Orleans. “It was all professional,” he said. “I did business that way.”
In one three-month period, Schroth used the card at Ruth’s Chris a dozen times, “evidencing a weekly routine of dinner and/or drinks,” the report said.
The report said two LSU officials — Hollier and Ben Lousteau, then a fiscal analyst — also joined outings that Schroth expensed to the foundation. The report does not say how often this occurred, but stated it violated LSU policies to expense meetings that only involved school officials.
“That would have been a rare occasion,” Schroth said.
Lousteau is now interim chief finance officer for LSU Health in New Orleans. He acknowledged attending gatherings with Schroth in the late 2000s, but said he couldn’t recall specifics and didn’t know how Schroth paid for the outings.
“Whether that was something that Keith did or didn’t expense, it’s not something I can speak to,” he said.