Aug. 12, 2012 --The South Carolina Hospitality Association is recovering from the black eye suffered from the embezzlement of nearly $500,000 by a former staffer, its new leaders say.

"There has been a lot of change," chairman Rick Erwin of Greenville said. "We're getting there."

The changes near final adoption are part of the organization's effort to restore credibility with its nearly 1,500 members, lawmakers and the public.

Turmoil has surrounded the group since the death of Tom Sponseller, the executive who largely created it, and the subsequent discovery of the missing money.

Accounting and legal fees associated with the effort could cost as much as $150,000, Erwin said.

Correcting the mistakes is crucial for the group -- a coalition of lodging and restaurant interests -- that is a key player in the state's $14-billion-a-year tourism industry.

"We've learned a valuable lesson," said Bobby Williams, an association leader who is chief executive officer of the Lizard's Thicket restaurants. "We're all re-energized."

Undetected theft won't happen again, Erwin promised. Steps planned to prevent that include:

--Establishing an annual audit instead of relying on the four-person association staff to handle finances without independent review.

--Holding a yearly meeting in which reports on performance are available, open to questions from association members.

--Requiring checks be signed by a rotating set of board members as well as an employee.

The check-signing change already is in place, with the remainder of the package expected to be approved by association members by mid-September, Erwin said.

A yearly check on spending by outside experts "is probably the most important change as regards our finances," he said.

In addition, the association may shrink slightly the size of its 60-member board and 10-member executive committee to simplify management.

Legislative leaders say it's vital for the association to clean up its house after the lapse, even though it hasn't undermined the group's political influence.

"It's critical that they have due diligence going forward," state Senate president pro tem John Courson, R-Richland, said. "If they get their internals restructured right, they'll be fine."

The association's attention will turn shortly to hiring a replacement for Sponseller, the association's trusted long-time executive director who took his life in February after learning of the embezzlement by former accountant Rachel Duncan.

A preliminary review is under way on more than 20 applicants for the job, a pool that Erwin said includes candidates with experience inside and outside of South Carolina.

He hopes the post is filled this fall.

"Like all industries in our state, it's important they have a voice at the State House," said veteran state Sen. Joel Lourie, D-Richland. "Certainly, whoever succeeds (Sponseller) has big shoes to fill."

Besides overseeing association operations, Sponseller was its public face for 20 years at the State House and in communities.

The association got by this spring after his death with assistance from Buddy Jennings, a lobbyist who is a former director of the state agency that oversees tourism.

Local tourism officials also pitched in while the association was in flux, said Rep. Jim Merrill, R-Charleston, who plays a key role in state aid for the industry. It was beneficial "we didn't have any burning issue that was problematic" while the Legislature was at work, Erwin said.

Some association leaders say it may better to keep the new executive director focused on business and finances while turning over legislative lobbying to a team that can call on industry members for help.

Association leaders are happy membership is stable, saying only one business left because of the scandal. "Everybody has rallied around us," Erwin said.

The enthusiasm is accompanied by a message of "don't take your eye off the road," Williams said.

Now association members wait to see what punishment Duncan gets at her sentencing Tuesday, after taking what an audit found was $480,944.

She pleaded guilty April 25 to charges of tax evasion for not paying income taxes and wire fraud in connection with transfer of stolen money abroad.

Duncan has said the embezzlement started in 2006 and continued until early this year to finance online gambling that she said became an addiction.

Reach Flach at (803) 771-8483.

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