Former Hospitality Association worker pleads guilty over fraud

Tom Sponseller

COLUMBIA – The former accounting director of the South Carolina Hospitality Association pleaded guilty today to embezzling about $500,000 from the group, and prosecutors said she appeared to have been intimately involved with the director who killed himself earlier this year.

Rachel Duncan, 41, entered the plea to wire fraud and tax evasion charges in U.S. District Court in Columbia. She was allowed to remain free on $25,000 bond until she is sentenced, likely later this summer.

Authorities have found no evidence that executive director Tom Sponseller received any of the $480,000 that Duncan has admitted she took, according to Assistant U.S. Attorney Winston Holliday. But prosecutors said federal agents did find sexually-oriented photos of Duncan on Sponseller’s work computer while investigating the missing money.

Sponseller killed himself in February, leaving a suicide note in which police said he detailed his despair over Duncan’s apparent misdeeds and said he was despondent they happened on his watch.

But Holliday said today that the sexual photos of Duncan on Sponseller’s computer showed that the pair’s relationship was more involved than the director had implied.

Agents also found photos showing bruises on Duncan’s face – images Holliday said Sponseller appeared to have been gathering for Duncan to help her build some sort of domestic abuse case, although the prosecutor gave no details against whom.

“There’s no other conclusion than that he was documenting these for her,” Holliday said. “That’s what it seemed to do.”

Prosecutors say Duncan, who worked as accounting director of the group that lobbies on behalf of South Carolina’s multi-billion dollar tourism industry, began siphoning money from the association in 2006, writing checks to herself from the association’s accounts and using the group’s point of sale credit card terminal to refund money to her own debit card.

Duncan also transferred stolen money to a prepaid Visa card, then used those funds for online gambling – some of which she did from the association’s computers, prosecutors said. In all, Duncan admitting taking nearly $481,000 from the association until earlier this year.

Duncan also failed to report any of the illegal income on her personal taxes, saying in 2010 that she made around $41,000 – substantially lower than she actually took in, according to prosecutors. Over several years, Duncan underpaid her taxes by more than $85,000, Holliday said.

Local or federal authorities never approached Sponseller directly about the probe into the missing money, Holliday said. Aside from knowledge that there were some problems balancing the association’s books, the director didn’t know about the scheme until Duncan told him herself, just days before his suicide, Holliday said.

“There is no evidence ... that indicates Mr. Sponseller received any of the money from the scheme,” Holliday said. “We obviously wanted to talk to him. ... We just never had that opportunity.”

Sponseller’s body was not found until 10 days after he shot himself to death. His body was found in the parking garage under the office building where the association had its offices. Two high-ranking Columbia police officers lost their jobs because of the way the search for the missing executive was handled. One of them is appealing her dismissal.

Duncan, who faces up to 23 years in prison and fines of $350,000 when she is sentenced, made no comment as she left the courthouse today. Prosecutors said they would support a sentence reduction for Duncan, who Holliday said has helped substantially in their investigation and is continuing to cooperate with an ongoing probe into online gambling.