A Lesson From a Hotel Industry Tragedy

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On Feb. 18, well-respected state hospitality association official Tom Sponseller disappeared from his office in Columbia, SC, the first event in a long, multi-faceted tragedy that undoubtedly could have been prevented. This tale is a pertinent lesson for anyone in the hotel business—or any business—who serves on boards of directors of industry organizations or non-profit charitable groups.

As executive director of the South Carolina Hospitality Association, Sponseller was the executive in charge of the group's finances. As many overworked, overstressed executives do, over time he placed confidence and trust in an employee, Rachel Duncan, to handle the association's books. She betrayed that trust and over five years embezzled close to $500,000 from the group to support an online gambling habit. Just days before Sponseller disappeared, she confessed her crime to him. Distraught and full of remorse, Sponseller took his life. Duncan recently pleaded guilty in federal court to wire fraud and tax evasion and will undoubtedly spend years in jail. It was a tragedy for everyone involved, including the families, friends and associates of Sponseller and Duncan.

But, as I said, the tragedy could have been avoided and it provides a tale of caution for all of you. As a columnist for the Chicago Tribune recently noted, anyone who sits on a organization's board of directors needs to remember one phrase: “trust, but verify.” And while groups such as state and local hotel associations must rely on paid staff to handle daily operations, including the handling and accounting of funds, the board members have the ultimate responsibility to fulfill their fiduciary obligations to the group.

According to the Tribune story and other news accounts, the chairman of the South Carolina association said he couldn't remember when an audit of the group's books was performed. “We made mistakes,” he told the reporter, seemingly with no trace of the understatement involved in the comment.

As respected business leaders in their communities (both geographic communities as well as communities of fellow hoteliers), it's important hotel owners and operators volunteer to serve in leadership roles. Presumably, you have the business savvy, strong moral code, enthusiasm and creativity to help groups thrive and grow. But showing up periodically for meetings and accepting as true whatever staff members report is an abjuration of your responsibilities. Get involved, stay involved but remember: trust but always verify.

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