COLUMBIA -- A former S.C. Hospitality Association accountant who embezzled money to support a gambling addiction was introduced to video poker at Columbia bars and restaurants in the late 1990s.
When video poker was banned in South Carolina stores and gaming halls in 2000, Rachel Duncan turned to the Internet.
"Scratch-off games also became a hobby, but nothing fueled her more than the secret life she lived through online video poker gambling," Columbia attorney Greg Harris wrote.
The details of what drove Duncan to steal from her employer come from documents filed in anticipation of her sentencing Tuesday in U.S. District Court. Her attorney told The (Columbia) State newspaper she is expected to agree to repay $367,508 to the restaurant, bar and hotel lobbying group.
Harris filed the documents in an attempt to convince a judge to reduce the sentence for his client, who pleaded guilty in April to wire fraud and tax evasion. The filing includes a descriptive narrative of Duncan's life and how she became a gambling addict. That addiction led her to steal hundreds of thousands of dollars and to blow every penny on video poker and slots.
Duncan blames sexual abuse by her father, a painful divorce, a lifetime of financial trouble and a sometimes abusive relationship with her current husband. The State newspaper has reported that James Duncan paid a fine in August 2006 after being charged with simple assault in connection with a domestic violence incident.
Duncan was captivated by video poker games she played with friends, and played frequently, Harris wrote. The games were banned in 2000, but "for Mrs. Duncan, the ban came too late."
Duncan turned to online gambling, the documents said.
Duncan, 42, has been free on a $25,000 bond since her guilty plea.
The Hotel Association conducted an audit that found nearly $500,000 missing from its accounts, but attorneys negotiated the reduced repayment amount of $367,508, Harris said. It's a debt that Duncan will not escape, and it will hang over her head the rest of her life, he said.
"It's either pay it off or death," Harris said about the restitution.
The U.S. Secret Service's investigation into missing money at the Hospitality Association came to light in February when its former executive director, Tom Sponseller, went missing. He was found dead in a room off the parking garage of his Lady Street office building. He had committed suicide, leaving behind a three-page note that described Duncan's confession of stealing the money and the investigation.
The two had a close relationship, often eating lunch and taking cigarette breaks together. When Duncan pleaded guilty, Assistant U.S. Attorney Winston Holliday said investigators found sexual pictures of Duncan on Sponseller's computer, but she denied that they had a sexual relationship.
In the court documents filed this week, Duncan's attorney twice explains that she has worked to separate Sponseller's name from the theft.
"Like many people who knew Sponseller, Duncan was horrified to learn of his death," the motion said. "She has worked hard to clear his good name, and to show that he had no knowledge or involvement in her crimes."
Duncan, the middle sister of three girls, was born and raised in Auburn, N.Y. In high school, she was an honor roll student, cheerleader and ski team member.
"Despite her facade of normalcy and success, the family hid terrible secrets," the motion said.
Duncan hid her father's sexual abuse from her mother, only recently admitting it while receiving counseling for the gambling addiction, the motion said. Her father left the family when she was 12, leaving her mother to struggle alone in raising the three girls, including the oldest, who is mentally disabled.
Duncan dropped out of Niagara University in New York after she became pregnant. She and her husband moved from Buffalo to Columbia in 1995 to start a new life in a more affordable area, the document said. But they divorced a few years later.
Duncan hid her gambling addiction when she married for the second time in 1999.
"Once again, the family facade appeared normal, but Mrs. Duncan's secrets ran deep," the motion said. "She played video poker and slot almost every night after she put her children to bed, and while her husband worked the night shift. Sometimes, she played at work when she thought she could hide it from co-workers."
Duncan became so obsessed that she needed more money to pay for her online bets.
She opened a secret, personal checking account and began funneling money from the Hospitality Association into it. An analysis of Duncan's bank records found hundreds of diverted Hospitality Association checks and credit card refunds going into her account as well as hundreds of offshore wire transfers going out to gambling payment processors, the motion said.
Those offshore accounts served as various shell companies for an Australian online casino called SilverOakCasino.com, the motion said.
'SHE WAS A THIEF'
Duncan faces a maximum of 23 years in prison and $350,000 in fines, but under federal sentencing guidelines her sentence will be between two and three years, Harris said.
Judges always demand that people repay stolen money, said Holliday, with the U.S. Attorney's Office. Because the amount Duncan will be ordered to repay is so large, it's unlikely the judge will assess an additional fine, he said.
Duncan's earning potential once she completes her prison sentence is low, all involved agree. Few employers will want to hire a gambling addict who embezzled money from her former boss. Harris said Duncan has found some manual labor work since she was fired.
The Hospitality Association realizes any payment will trickle in slowly over the course of Duncan's life.
Last spring, association leaders briefly considered trying to recover money from her but decided it would be a "waste of time" given that she gambled away everything she took, said Rick Erwin, the Hospitality Association's board chairman.
"If there were resources available, we'd be going in that direction," he said.
Still, Erwin hopes that Duncan's sentence includes repayment of a "significant part" of her earnings from any job she obtains after imprisonment.
"She was a thief," he said.