|By John Monk and Noelle Phillips, The
State, Columbia, S.C.McClatchy-Tribune Regional News
March 26, 2012--A handwritten letter penned by a prominent hospitality executive before he killed himself blames his organization's former accountant for transferring the group's money through her personal checking account to offshore accounts to pay for online gambling.
The three-page letter, obtained by The State newspaper and verified by law enforcement officials, says that Rachel Duncan, the S.C. Hospitality Association's former director of finance and membership records, confessed to her boss, Tom Sponseller, the association's chief executive officer, who wrote the letter.
"Rachel has worked here for 11 years and at no time would I have thought that she gambled, let alone would steal money," Sponseller wrote.
The letter is the last known communication from Sponseller, who was found dead Feb. 28 in a storage room off the underground parking garage of the Lady Street office building where he worked. He had been reported missing 10 days earlier by his family. A handwriting analysis conducted by the State Law Enforcement Division confirmed Sponseller wrote the letter, said Richland County Coroner Gary Watts, who investigated the cause of death.
The letter sheds more light onto a secret federal investigation tied to the association's missing money, the woman accused of taking it and her relationship with her boss. It is Sponseller's version of the story, and it accuses Duncan of abusing his trust to spend association money on online casino games that gambling experts say are illegal, addictive and impossible to win.
Duncan's attorney, Greg Harris, declined to comment. Duncan did not respond to a letter left at her two-story house in Lexington by reporters for The State seeking her side of the story.
The U.S. Secret Service has said Duncan, who has not been charged, is a target of an investigation. But it has not responded to questions as to whether Sponseller was suspected in any online gambling or receiving any Hospitality Association money. Bill Nettles, the U.S. Attorney for South Carolina, also would not comment.
"This is an ongoing investigation," he said.
The S.C. Hospitality Association, a trade group that represents the state's hotels and restaurants, has reported that an audit of its financial records found $480,000 missing between 2009 and 2012. Sponseller was the group's executive director and lobbyist.
It is unclear if the association will ask its auditors to dig into earlier financial records. But the audit is ongoing, said Bob McAlister, a communications consultant hired by the association.
The auditors determined that Duncan was responsible for taking the money, and the Hospitality Association is turning audit findings over to the Secret Service. Association officials have said there is no "direct evidence" that Sponseller took money, but they said he should have known money had gone missing.
In Sponseller's letter, he wrote that Duncan confessed to him on Feb. 16 -- two days before he shot himself -- that she had taken "upwards of $300,000" over the past four or five years. He also wrote that Duncan told him law enforcement officials had visited her two weeks earlier to confront her with their accusations.
"Rachel has told me she is going to cooperate in any way to minimize or avoid jail," he wrote.
Sponseller's letter was discovered the morning of Feb. 28 by Hospitality Association employees who opened his locked desk drawer while the search for Sponseller continued. They also found empty packaging for a 9mm handgun. Columbia police, who had launched a manhunt for Sponseller, had failed to look inside his desk. Those items led to a fourth search of the office building, which turned up Sponseller's body.
The letter, which was not addressed to anyone, never states any intention of committing suicide, but it makes it clear that Sponseller regarded Duncan's revelations as a crushing disappointment.
"After working so hard to build the association over the past 21 1/2 years, I am ashamed that I let this happen on my watch," Sponseller wrote.
Duncan had worked at the Hospitality Association for 11 years, and Sponseller wrote that he had grown to trust her. She looked for ways to save money and, after several years of checking bank statements, Sponseller said he never saw anything questionable.
"The only thing I would have to get on her about was paying bills on time, she has a habit of writing checks just twice a month and doing so caused some payments to be late, or so she said," Sponseller wrote.
But Sponseller's letter also indicates the relationship went beyond the typical interaction between a boss and an employee.
Sponseller said they became friends, and Duncan "had become like a daughter over the years." The two ate lunch and took breaks together, and Sponseller said it was Duncan's time to talk about personal problems. He said he felt sorry for Duncan and listened to her vent about personal problems, saying, "She has no friends ... ."
Both smoked cigarettes, and people who work in the same building at 1122 Lady St. said the two frequently stood outside the front door to smoke and talk.
But in his letter, Sponseller said he never knew about Duncan's gambling habit, nor did he have any idea she was skimming hundreds of thousands from the association to place bets with online casinos.
Illegal and addictive
Internet gambling is a big business. It's hard to know just how much revenue online casinos earn each year, but estimates range from $15 billion to $30 billion.
Internet gambling is illegal in the United States. The 2006 Unlawful Internet Gambling Enforcement Act made it illegal for U.S. banks and other financial institutions to approve known gambling financial transactions.
But experts who follow gambling and offshore casinos said laws against internet gambling rarely stop anyone from participating in it. Typically, U.S. law enforcement doesn't pursue individuals who bet.
They get caught, however, when federal agencies discover them making large offshore financial transactions, said John Kindt, a nationally recognized gambling expert from the University of Illinois Urbana-Champaign.
Internet gamblers should know that federal agencies monitor all transfers of money and watch for suspicious ones, Kindt said.
To participate in online gambling, people either open their own offshore accounts or establish one with the casino, said Keith Whyte, executive director of the National Council for Problem Gambling, which helps people who are addicted to it. They then transfer money from their personal accounts into that offshore account as if they were making an online bill payment, he said.
But no one ever knows exactly where the online casino is located, Whyte said. For example, the actual company could be based in Costa Rica but have its financial accounts in the Philippines.
"There're legions of scams," Whyte said. "They're located God-knows-where because they're not concerned with the niceties of U.S. laws."
Kindt, who has testified numerous times on gambling issues before state legislatures and Congress, said offshore gambling operations he has studied specialize in fleecing their customers.
"They have one business model -- cheat, cheat, cheat," Kindt said.
Kindt and Whyte said the offshore casinos rarely return any winnings to their customers.
"If you win $10,000, they are going to hem and haw," Kindt said. "These sites never pay off to people who have money in their accounts."
The casinos know their gambling operations are illegal in the United States, so customers are not going to complain to police when they don't get their money returned, Whyte said.
"There is absolutely no recourse," he said.
And the casinos know just how to hook those who are addicted to gambling, Kindt said. "We have a saying, 'Click your mouse and lose your house.' There's no regulation and no way to regulate these days. And there's no way it's a fair game. It's just lose, lose, lose."
But gambling addicts always think their next big payday is just around the corner, Whyte said.
"You're always just one bet away from winning everything back," he said. "The crazy logic with the problem gambler is that to keep on gambling is the solution for losing."
According to Sponseller's letter, Duncan thought she could get her money back.
"She also led me to believe (there) might be a chance to recover some of her gambling funds from the online casino where she played," he wrote.
Sponseller also suggested insurance policies could be found in Duncan's office that would cover some of the Hospitality Association's losses. Association officials said those policies would cover about $20,000, less than 5 percent of what has been reported missing.
Asking for forgiveness
Throughout the letter, Sponseller mentions shame, disappointment and embarrassment.
He said he failed to make sure everything was right and had allowed a problem to become so big that police found it first.
He closed the note with an apology.
"I am sorry it ended like this," he wrote. "I am a huge disappointment to everyone, my family, my friends, my business associates and others. I let everyone down and have embarrassed those who I love the most -- my wife, kids and grandkids. I am so sorry I have failed you.
"Please find a way to forgive me in your hearts."
Reach Phillips at (803) 771-8307. Reach Monk at (803) 771-8344.
(c)2012 The State (Columbia, S.C.)
Visit The State (Columbia, S.C.) at www.thestate.com
Distributed by MCT Information Services