MYRTLE BEACH, SC (WBTW) – News13 Investigates found a $23 million discrepancy in a lawsuit alleging the Myrtle Beach Area Chamber of Commerce sent millions of tax dollars to “crony companies.”
Karon Mitchell filed the lawsuit against the Myrtle Beach Area Chamber of Commerce, the city of Myrtle Beach, and Horry County on Thursday. Mitchell argued the chamber funneled tax money to eight “crony companies” because of ties to current and former chamber employees.
The tax revenue comes from the accommodations tax collected for hotel stays and the tourism development fee, which is a penny sales tax charged in Myrtle Beach. Much of the money goes to the chamber to advertise the Myrtle Beach area.
Arguing the chamber didn’t properly solicit bids for taxpayer-funded spending, Mitchell claimed more than 46 percent of the money collected over the past three years went to companies with ties to chamber employees.
News13 compiled a database of the chamber’s spending of taxpayer dollars to fact-check Mitchell’s claim. News13 used transparency reports posted on the chamber’s website. The documents show approximately $74 million of taxpayer money spent between 2015 and 2017.
The chamber’s data verifies much of the spending tied to the eight companies. The lawsuit’s claim for a company called Visibility and Conversions, however, didn’t match the chamber data.
Mitchell’s lawsuit said the company received $28 million -- by far the biggest amount described in the lawsuit -- over the last three years. News13’s database only showed $4.3 million of payments specifically to Visibility and Conversions.
Using only expenses directly attributed to the companies, News13 found the eight companies only received 14 percent of the tax money over three years, instead of the 46 percent described by Mitchell.
Mitchell’s attorney, Tucker Player, told News13 the discrepancy is “easily explainable.”
Player said the chamber listed generic descriptions, such as "search marketing" in place of actual vendor names for some of its “internet advertising” purchases.
“I believe that went to Visibility and Conversions,LLC,” Player said. “V&C was paid for all of those services in previous years. Either they received those funds last year, or that money is unaccounted for altogether.”
“Internet Advertising” purchases with apparent generic descriptions instead of vendor names totaled $27.7 million between 2015 and 2017.
Asked for evidence that the money went to Visibility and Conversions, Player cited a footnote on the chamber’s transparency reports. “That footnote stated that much of the advertising was purchased through 4 entities and V&C purchased internet advertising through 4000 websites for the Chamber,” Player wrote. “If you look at the internet/digital advertising purchased with taxpayer money since 2011, there was only one name that consistently appeared. V&C.”
“If that money didn’t go to V&C, the Chamber has a much bigger problem, because that $27.7 million is essentially unaccounted for,” Player said.
In an interview with News13, Mitchell echoed the explanation from her attorney. She said she and Player did have to assume that some of the generic spending items went to Visibility and Conversions. She also said it made sense because the company had previously been listed as receiving payment for similar work. She added that the reason some assumption had to be made was because the chamber did not specifically list the recipient of millions of dollars of spending.
News13 asked the chamber for an explanation of the generic vendor names.
Mitchell also explained some of the other accusations made in her lawsuit. One of those claims was that the chamber funneled tourism tax money through the crony companies to contribute to politicians supported by the chamber. Mitchell provided an example as a way to explain she and her attorney have done a lot of digging to find connections.
"Go to the Minnesota senator who's on the I-73 committee in Washington. See how many people in Myrtle Beach gave him money," Mitchell said.
"And some of the names there are connected?" asked reporter Brandon Herring.
"Yes sir," Mitchell replied. "I won't give it to you. You do your homework."
Another claim in Mitchell's lawsuit is that the city and county "failed to conduct any meaningful review of the 'reports' provided by" the chamber. Mitchell said her biggest concern is with the city's response.
"How many times have we been to the city and how many times have we called on the city council to look into it?" Mitchell asked. "And it seems that they keep turning a deaf ear, and I guess that's the reason I'm at this place now."
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