May 27, 2013--It started with a missing person, followed by a suicide and revelations of missing money. It ended in an arrest and prison sentence and an agency reeling from debt and the aftermath of a sullied reputation.

The situation was not hospitable for a firm with hospitality in its name and tied to South Carolina's No. 1 industry, tourism.

Fifteen months after the embezzlement imbroglio, the former S.C. Hospitality Association has distanced itself from the fallout of the scandal by changing its name, bringing in the former head of the state's top tourist agency to rebuild it and putting safeguards in place to prevent a recurrence.

But is it back to its former prominence in the tourism industry?

"We have not totally recovered," said John Durst, president and CEO of the newly formed S.C. Restaurant and Lodging Association and a former head of the state Department of Parks Recreation and Tourism.

"A lot of folks are looking for reassurance that we are back on our feet, which we are, and that we have a clear vision of where we are going, which we do," said Durst, who took the helm in November. "But for some people, there is still a wait-and-see attitude."

Part of the recovery includes repaying nearly $500,000 that the associations's former director of finance and membership records, Rachel Duncan, admitted to stealing from the organization from 2006 until early 2012 to help pay for an online gambling addiction. She was sentenced in August to 30 months in prison with restitution for a good chunk of it, $367,500, once she gets out.

Revelations of her embezzlement to her boss, longtime agency head Tom Sponseller, led him to commit suicide in February 2012, though their was no evidence to tie him to the missing money, just his embarrassment and disappointment that it happened on his watch.

"I knew from Day One ... that we would have to work to pay off that debt," said Durst, Sponseller's longtime acquaintance. "We haven't done it yet. We are chipping away at it."

With Duncan in prison and debts to be paid, the association recently launched a fundraising effort to erase most of its arrears by August.

"Time will tell how ambitious that goal is," Durst said.

Safeguards

To prevent a recurrence of embezzlement, the agency has consolidated its 11 checking accounts into four (three by month's end) and now requires more than one signature. On many of the previous checking accounts, the agency required only one signator, and that person now is serving time.

Now, any nonroutine expenses over $1,000 require signatures from a board member and one of the four people, including Durst, on staff at the agency.

Finances are reviewed monthly by an accounting firm, and the 31-member board has an audit committee and a finance committee. An audit completed earlier this year for 2012 found no problems since the scandal broke in February 2012.

"It was imperative that we have the safeguards in place," Durst said.

While Sponseller was a lobbyist trying to look out for the interest of the hospitality industry in the General Assembly, the newly named association has gone outside for lobbying help by hiring McGuireWoods Consulting. One of its principals and the lobbyist for the S.C. Restaurant and Lodging Association is former state Rep. Billy Boan, the one-time chairman of the budget-writing House Ways and Means Committee and a former chief of staff to former Gov. Jim Hodges.

That was done mainly to give Durst time to travel around the state and meet face-to-face with its 1,400 members, recruit new members and offer reassurance that the agency is back on track with safeguards in place.

Durst acknowledges a dip in renewals after the scandal broke, but he said the agency is holding its own in membership. About 20 percent of those members hail from the Charleston area, including Charlestowne Hotels and its 18 lodgings throughout Charleston and Myrtle Beach, including the French Quarter Inn and Harbourview Inn.

Susan Cohen, Charlestowne Hotels director of corporate development, serves on the executive committee. She doesn't think the agency will ever see much repayment from Duncan for her misdeeds but thinks the association is on more solid footing after the scandal. "I think we are in a much better position than I expected considering how things were with the theft," Cohen said. "People took it as a wake-up call. We had reached a comfort level that things were being handled in a certain way, and they weren't. ... This gave us an opportunity to step back and restructure and look for opportunities to grow."

She said Durst was the right person for the job when they needed someone with industry experience the most. "It's heartening to go to the meeting and see the steps that have been taken," Cohen added.

Mending fences

Durst has been averaging about 1,000 miles a month to do "fence mending" after the agency went through "some rough patches," he said. "I think we have definitely turned the corner"

Durst doesn't mince words when he meets with various hospitality groups across the state. "I put everything on the table," he said. "The last thing we want is any attrition."

He tells them of the past problems and then tries to reassure members or prospective members that the organization is stronger and that networking opportunities are immense. Stronger ties to national organizations in the hotel and restaurant industries have helped.

On the same day in April as Hospitality Day at the Statehouse, Durst's group offered its members a chance to get free expert advice on the effects of the Affordable Care Act.

"We are committed that each member gets a high rate of return on their investment," Durst said.

He also points to being invited to moderate an economic development session at a recent state tourism conference as a signal that things are headed in the right direction for the Restaurant and Lodging Association.

The association also realizes it is smart to latch on to the coattails of other tourism-promoting agencies. It now works hand-in-hand with the state tourism department, the S.C. Travel and Tourism Coalition and the S.C. Association of Tourism Regions to strengthen the goals of the tourism industry in the Legislature.

"I think the organization is getting much stronger and the membership is going to expand and grow," Durst said. "I think the best is yet to come."

Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.

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