Out of $500,000 spent on the Problem Gamblers Help Network within the last three years, auditors found about $90,000 worth of inappropriate spending, overbillings for treating patients and undocumented or mislabeled expenses.

The $500,000 represents about just 4 percent of the funds First Choice Health Systems received during that time to run the program for the Department of Health and Human Resources, Legislative Auditor Aaron Allred said.

First Choice CEO Scott Boileau said his company continues to work with auditors to explain expenses. The company also has already agreed to repay more than $16,000.

The amount to be reimbursed reflects spending on such items as flowers, travel, food and other areas not covered by DHHR's grant with First Choice.

The spending included $1,573 to fly two daughters of a problem gambler to New York, for the taping of her interview by a national news program. Another $675 covered charges for a cell phone in the name of an employee's spouse.

The expenses also included $1,200 in Christmas bonuses, $360 for a 2005 staff dinner at a New Orleans seafood restaurant and $68 for a horse carriage tour of that city.

"There were errors in judgment made," Boileau said. "We've acknowledged, just simply on the basis of that review, that they were not appropriate expenses, and we're willing to pay them back."

The audit involved only 234 expenditures out of 7,600. Legislative leaders asked Allred's office to audit another 4 percent of spending.

"This sounds like a tip of the iceberg situation," said Senate President Earl Ray Tomblin, D-Logan.

The audit also faults DHHR for its oversight of the spending. The Lottery Commission, which had provided the program's funding to DHHR, began contracting directly with First Choice this summer to run the help network.

At the June interim meetings, Mia Moran-Cooper, the program's outgoing director, alleged the Lottery tried to water down the network's advertising campaign and sought the names of Lottery employees who had sought treatment for gambling problems.

A First Choice official called her allegations "unsubstantiated, misleading or false," while Lottery Director John Musgrave has requested an investigation to resolve them.

Neither Moran-Cooper nor her allegations were a topic of Monday's meeting, and Boileau declined to comment about her afterward.