Rachel Duncan tells The State: ‘I will be sorry for the rest of my life’

Just hours after the S.C. Hospitality Association’s former accountant admitted to embezzling nearly $500,000, she apologized to people she worked with through the years.

“I never meant to hurt or abuse anyone’s trust,” Rachel Duncan told State newspaper reporters. “At this time, I beg forgiveness and mercy. I will be sorry for the rest of my life.”

Duncan, 41, pleaded guilty Wednesday morning before U.S. District Judge Joe Anderson to using stolen S.C. Hospitality Association money to wire funds to overseas casinos as part of her online gambling addiction.

Prosecutors also revealed new information about her relationship with her former boss, Tom Sponseller, chief executive officer of the Hospitality Association.

After the hearing, Duncan and her attorney, Greg Harris, met with reporters from The State, saying Duncan wanted to apologize for the theft and to express sorrow over the death of Sponseller. Duncan said she has been unable to speak about the investigation or Sponseller’s Feb. 18 suicide because she had to wait until her court appearance.

She said she deeply regrets the embezzlement and the broken trust between her and the employees, board of directors and members of the Hospitality Association, which represents the state’s restaurants, hotels and motels.

She also said she wanted to make it clear that she accepted full responsibility for the theft and that no one else received any of the stolen money.

Duncan will be sentenced this summer on one count of federal tax evasion and one count of wire fraud. Because she is not considered a flight risk, she was released on a $25,000 bond.

Duncan faces a maximum of 23 years in prison and $350,000 in fines but will qualify for a reduced sentence because she is cooperating with federal authorities who are investigating online gambling operations, said Assistant U.S. Attorney Winston Holliday.

Authorities are using Duncan’s specialized knowledge of the murky, illegal online gambling world in other investigations, Holliday said.

Duncan admitted to stealing $480,944 from the S.C. Hospitality Association between June 2006 and January 2011. She was fired in February from her job as director of accounting and member services.

Her embezzlement came to light when Sponseller’s family reported him missing Feb. 18 and Columbia police launched a massive search for the well-known executive.

Duncan said she had confessed her embezzlement to Sponseller two days before he disappeared and that she cooperated with police in their search.

“I was just floored. I didn’t know what to think,” she said of his disappearance.

Police discovered Sponseller’s body in a storage room in the underground parking garage of their 12-story office building Feb. 28, 10 days after he had killed himself, Coroner Gary Watts determined. Two high-ranking police supervisors lost their jobs because of missteps in the search.

Holliday’s courtroom explanation of the embezzlement also revealed that investigators found photos of Duncan “that were of a sexual nature” on Sponseller’s office computer.

Those pictures were evidence that the couple’s relationship was more than what Sponseller indicated in a letter he wrote before committing suicide in February, Holliday said. In the letter, Sponseller described their relationship as one of a father and daughter. He said he regretted that the money went missing on his watch.

Duncan told reporters from The State she did not have a sexual relationship with Sponseller and said she did not know how those photos got on his work computer. “I did not give him any pictures of me,” she said.

She said the two were close friends, often eating lunch together and meeting outside the office for cigarette breaks.

“We shared a lot of stuff with each other,” Duncan said.

Law enforcement also found photos of Duncan with bruises on her face, Holliday said. Sponseller was not responsible for the bruises but appeared to be acting as a close friend by documenting apparent domestic abuse, Holliday said after the court hearing. He declined to elaborate.

Holliday also said in court that anyone who attempted to harm Duncan would face federal prosecution. Later, he would not specify whether he was referring to whomever bruised Duncan’s face or someone who might want to intimidate her for cooperating with investigators.

Duncan declined to comment on the photos of her bruised face.

During Wednesday’s hearing, Holliday explained how Duncan stole the money by writing herself checks and by refunding money from one of the association’s credit card terminals to her debit card. She would transfer money to herself after the association’s members paid their dues and fees, he said.

Duncan sometimes gambled from her office computer, Holliday said after the hearing.

The prosecution shed light on the complex, international financial transactions that take place between gamblers and online casinos. In Duncan’s case, she used Western Union and another money transfer company to wire money from her bank accounts to a prepaid Visa card, Holliday said.

Duncan then used the Visa card to deposit funds in online gambling accounts, he said. She also wired money from her bank account to various shell companies around the world. Those companies served as payment processors for an Australian online casino.

Holliday said sources in Columbia’s financial community tipped off authorities to Duncan’s illegal activities.

Duncan was charged with tax evasion because she did not report the stolen money on her 2010 federal tax return.

Holliday said there was no evidence that Sponseller had received any of the embezzled money. The prosecutor went on to assert to the judge that Sponseller did not have “full knowledge” of the missing money.

Holliday said Sponseller at least had to have had an idea there were discrepancies in the association’s finances. The association’s books had not been balanced for up to a year before investigators from the U.S. Secret Service confronted Duncan about her wire transfers, he said.

“We obviously wanted to talk to him after the debriefing of Mrs. Duncan, but we didn’t have the opportunity to do so,” Holliday said.

Representatives of the Sponseller family attended the hearing but declined to speak to the media.

This story was originally published April 26, 2012 at 12:00 AM.