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South Carolina Hospitality Association's Rachel Duncan
Agrees to Plead Guilty to Tax Evasion and Fraud

By John Monk, The State, Columbia, S.C.McClatchy-Tribune Regional News

April 20, 2012--The accountant who was fired from the S.C. Hospitality Association in February has admitted she embezzled $480,000 from the group and used the money for online gambling.

She also has admitted she evaded paying federal income taxes and committed wire fraud connected to the transfer of stolen money abroad.

Rachel Duncan, 41, has agreed to plead guilty next week to federal charges involving the wire fraud and tax evasion, according to documents filed in court by the U.S. Attorney's office in Columbia. Federal wire fraud statutes encompass the transfer of stolen money by electronic means.

From 2006 to 2012, Duncan used much of the $480,000 she stole to gamble on the Internet, transferring funds from the Hospitality Association by writing checks to herself, then depositing them into her personal bank account, the filings say.

She faces a maximum of 23 years in prison and $350,000 in fines but will probably be sentenced to much less.

She will pay restitution to "each and every identifiable victim who may have been harmed by her scheme," according to the plea agreement. A judge will determine the amount of restitution.

Duncan will appear Wednesday at the Matthew Perry Courthouse in Columbia to plead guilty with her attorney, Greg Harris.

Thursday, Harris said, "We are withholding all comment until next Wednesday."

Duncan, for years an obscure player in the world of S.C. lobbyists and their staffs, attracted attention in February when her boss, association executive director Tom Sponseller, disappeared. Amid allegations of missing association money, Columbia police launched an intense manhunt for Sponseller that ended 10 days after he was first reported missing.

Despite searching the building that is home to the group's offices four times, police did not find Sponseller's body for 10 days. They finally located him in a storage room off an underground parking garage, a self-inflicted bullet wound in his head.

According to a note he wrote just before he took his life, Sponseller said he was upset because Duncan -- whom he wrote he regarded as his daughter -- had just informed him in mid-February that she had stolen money from the association for years to support an online gambling habit.

Sponseller for years had been one of the state's top lobbyists, working on laws that affect the state's multi-billion-dollar tourism industry. During the 10 days he was missing, Gov. Nikki Haley, House Speaker Bobby Harrell and then Senate President Pro Tem Glenn McConnell each called the association or Sponseller's family to express hope for his safe return.

Prosecutors say Duncan wrote checks to herself from the association's accounts. Besides embezzling funds from "the Association and affiliate organizations" by writing checks to herself, she also transferred association money to her debit card "after association members paid dues or fees," the filings say.

Once the money was in her account, the filings say, Duncan used Western Union and another money-transfer service to deposit money into an online gambling account.

She also electronically transferred funds from her own bank account at the S.C. State Credit Union "to various shell companies around the world which served as payment processors for an Australian online casino," the filings say.

The tax evasion charge involves her federal income tax filings from 2006 to 2011, according to court papers.

Duncan broke the law when she filled out these tax forms because she "failed to report all of her illegal income to the IRS, namely the funds she stole from the Association. Each federal tax return was filed under penalty of perjury," the filings say.

The specific year for which Duncan has agreed to a guilty plea in tax evasion is 2010, when she filed a tax form saying she made $41,339 in taxable income "whereas she then and there well knew and believed, her taxable income was substantially more than $41,339," her plea agreement says.

Hospitality Association officials previously have said that Duncan's pre-tax salary was $70,000 when she was dismissed in February.

Association officials have apologized for not having adequate controls on Duncan, who was the only person who handled the group's money. Sponseller didn't check what she did, and no annual audits were performed. The group is instituting standard business practices that require more than one person to oversee money and regular audits.

Association spokesman Bob McAlister had no comment.

Federal criminal plea agreement &

Federal information filing

Reach Monk at (803)771-8344.


(c)2012 The State (Columbia, S.C.)

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