The South Carolina Hospitality Association says about $480,000 is missing from its account. A forensic audit found no evidence linking its founder, who killed himself last month, to the lost funds.
The association announced the findings of the audit Thursday, with officials saying they didn't find any direct evidence linking director Tom Sponseller to the missing money.
Sponseller was found dead last month from a self-inflicted gunshot wound in the parking garage under the association's office. His suicide note mentioned his disappointment at the money missing from the organization he built over decades.
The association's former bookkeeper, Rachel Duncan, is a target of an ongoing U.S. Secret Service investigation into the missing funds, though she has not been charged.
The Secret Service monitors offshore wire transfers and found some of the missing money was used for gambling on overseas web sites, according to a NewsChannel 15 source close to the investigation.
Our source says the hospitality association was run "like a one-man show," with Sponseller handling education, lobbying and administrative duties by himself.
Hospitality association board members say it had been years since the association had done an independent audit of its finances.
A Myrtle Beach CPA, who has worked with many non-profits, says it's easy for fraud to occur when the books are under the control of one or two people.
James McIlrath of Duncan, Farmer, Munden, McIlrath & Cobb, PA, said an organization's board members don't need to be financial experts to find out what's going on. They just need to ask the head of their group the right questions.
"If it doesn't sound like a logical explanation, you don't necessarily have to be a financial guru or genius. If something doesn't sound right, maybe you need to look at it at a different level, in more detail," McIlrath said.
Though independent audits can help, often the auditors don't see the books until 3 or 4 months after the end of the year and by the time they find a problem, it's too late to do much about it, he said.
McIlrath said when board members look at the books, they should be familiar enough with their organization to know if something is out of line, like a suspicious trend of checks to an employee. "You might question, well, why do we have 17 checks to Joe or Sally for the month?"
He said it's easy for an employee to write a check for something and then go back later and change the record in the
computer to have the check written to someone else, so it should be a relatively simple task to see if the checks were written and cashed by the same person.
McIlrath said board members need to really be on the lookout for fraud during bad economic times. "If donations are going way down but you don't really have an explanation, you might look and see, is everything we're getting hitting the bank or is it being diverted?"
An audit can cost $3,000 and up, a lot of money for small non-profits. McIlrath said that's why it's important for an organization's board members to be familiar enough with the group's finances to find a problem on their own.