Former Sea Pines Resort VP embezzled $1.4 million over 12 years, lawsuit says

Sea Pines Resort alleges a former longtime employee has embezzled more than $1 million over at least 12 years, according to the lawsuit the resort filed last week in the Beaufort County Court of Common Pleas.

The resort claims Jeffrey Kruse, former vice president of food and beverage for the resort, made fraudulent payments to Destination Hospitality Group, a sham company he created, totaling $1.4 million. According to the S.C. secretary of state's website, Destination Hospitality Group is registered to Kruse and was formed in 1999.

The lawsuit notes a system change over in 2006 means records only go back to that year. The suit says fraudulent activity could have happened before that.

The resort alleges the embezzled funds were used for Kruse's "own personal benefit" and to finance his lifestyle, including paying for multiple properties, a boat and vehicles.

Three attempts to reach Kruse on Tuesday were unsuccessful.

Kruse, who has worked at the resort since 2003, resigned in December 2017, according to the suit. In late January, the resort discovered suspicious invoices and payments made to Destination Hospitality Group, according to an affidavit.

Kruse had access to the resort's records and had authority to approve invoices from vendors, the lawsuit said. Between 2003 and 2013, Kruse reported to the resort's vice president of sales and marketing. Between 2013 and 2017, he reported directly to president Steve Birdwell, according to an affidavit.

An investigation by the resort revealed that the hospitality group provided no services to Sea Pines or its customers. The invoices were "fraudulently created by Kruse" and approved by Kruse. He allegedly coded each invoice so that the charges "would not be visible or detectable in a normal financial analysis of the books," according to the lawsuit.

Sea Pines received hundreds of invoices from the group between 2006 and 2017, and mailed hundreds of checks back. The group used a P.O. box belonging to Kruse, the lawsuit said.

After Kruse's employment with Sea Pines ended, the resort received no more invoices from Destination Hospitality Group.

Sea Pines is seeking the total amount embezzled: $1,483,467.56, plus interest, punitive damages, and any additional embezzled funds that are discovered as the resort continues to investigate.

In a statement released last week, the resort said the McNair Law Firm has filed a lawsuit on its behalf against Kruse for "fraud and breach of fiduciary duty."

"During an internal review after his departure, it was learned that Mr. Kruse had engaged in activities that were not known by and were not approved by the Sea Pines Resort," the statement said.

The resort is asking for a constructive trust, which prevents a person from unjustly benefiting from the money or property of another, on equity owned by Kruse, and an order to force him to transfer the interest in his properties, boat, boat motor and cars to Sea Pines.

Properties include a parcel at Port Royal Plantation, a condominium at Palmetto Dunes Resort and a property at Hidden Lakes Circle in Bluffton.

Other assets include a 2007 Pioneer 197 Sport Fish boat, a 2006 Yamaha F150 TL boat motor, a 2010 Lexus GX 460 and a 2016 Lexus GX 460.

Documents discovered on Kruse's resort computer after he left show he was also making personal loans to third parties, which the lawsuit alleges used the embezzled funds.

Loans were made in the amount of $190,000 and $50,000. The lawsuit claims he also intended to make another loan of $7,300.

The resort is asking for a constructive trust over the bank accounts used for the loans, claiming Kruse will otherwise "attempt to remove the assets," according to the lawsuit. It is also asking for return of the remaining balance on the $190,000 loan.

An affidavit also requested a temporary restraining order against Kruse, forbidding him from entering Sea Pines or contacting Sea Pines employees.

This story was originally published March 27, 2018 at 2:02 PM with the headline "Former Sea Pines Resort VP embezzled $1.4 million over 12 years, lawsuit says."