Efforts to Debunk Karon Mitchell Lawsuit Flawed

By Paul Gable

(Ed. Note – Some negative reactions heard locally to the Karon Mitchell lawsuit are like the Chinese fireworks pictured above – loud and colorful but, in the end, just smoke.)

On April 5, 2018 at 3:05 p.m., Karon Mitchell filed a lawsuit against the Myrtle Beach Area Chamber of Commerce (MBACC), the City of Myrtle Beach and Horry County alleging misuse of tourism development fee (TDF) and accommodations tax (ATax) public funds.

In response to the lawsuit, MBACC issued a blanket denial of the allegations and at least one local television news outlet in the area attempted to, in its words, “fact check” the allegations.

The MBACC response came in a media statement issued April 6, 2018, by board chair Carla Schuessler:

“Today we had an opportunity to review the lawsuit that was filed against us, and l am disappointed to see that we will have to divert our time and resources to address this case which is full of conjecture, innuendo and inaccurate statements. The Chamber complies with all applicable laws regarding the use of public funds and selects vendors based on best business practices.”

The Chamber statement went on to say it will hold a press conference next week to accurately address the statements in the lawsuit.

The local news outlet broadcast a story April 6, 2018 where it claimed to find discrepancies, between claims in the lawsuit and MBACC public disclosure documents, with respect to public money spent with what are called in the lawsuit “crony companies.” According to the lawsuit, crony companies are companies formed by former and/or current Chamber employees and, in at least one instance, a company owned by a MBACC executive board member.

This appeared to be much ado about nothing as the MBACC public disclosure documents used generic descriptions instead of specific vendor names for some of the expenses listed. If those challenged expense amounts did not go to any of the crony companies, next week’s MBACC press conference can “accurately address” those statements and tell us exactly what company did receive the payments.

Another area addressed in the media story was a statement in the lawsuit that “the chamber funneled tourism tax money through the crony companies to contribute to politicians supported by the chamber.”

Mitchell provided an example of contributions by Myrtle Beach area residents to a Minnesota U.S. Senator who is on the I-73 committee in Washington.

However, we can stay local and provide a specific example with support given to Tim McGinnis, a candidate for the open S.C. House District 56 seat in a special election last fall.

As reported by Grand Strand Daily during that special election campaign, considerable television and radio advertising asking voters to vote for McGinnis was paid for by the Grand Strand Business Alliance (GSBA), according to Federal Communications Commission forms filed with the stations involved.

GSBA is not listed as one of the crony companies in the lawsuit, but it has a close association with MBACC including receiving a portion of the money the Chamber charges businesses to be listed on the website VisitMyrtleBeach.com. These monies go to political action committees controlled by GSBA as contributions from the Chamber, according to departing MBACC President and CEO Brad Dean.

According to MBACC documents, the Chamber established the Myrtle Beach Area Commerce Center, Inc. in 1999 as a wholly owned subsidiary of the  MBACC, to account for activities not related to the Chamber’s tax exempt purpose. The activities of the Commerce Center are primarily related to vacation book and website advertising, according to Chamber documents.

The advertising for McGinnis was placed by Jackie Miller, owner of Miller Direct, which was named as a crony company in the lawsuit.

There was some confusion in the initial documentation included in the public filings with the stations’ involved when the form used for the McGinnis ads had a heading “Proposal for Myrtle Beach Chamber of Commerce.” Miller told GSD she used the wrong form for the proposal. Miller Direct also places advertising for MBACC out of area tourism promotion buys.

McGinnis claimed to GSD that he had no idea who was placing the television and radio ads for him.

McGinnis’ campaign disclosure filing with the S.C. Ethics Commission lists a $1,000 campaign contribution from Jackie Miller. The McGinnis filing also lists a $1,000 contribution to his campaign from William Rosenthal, owner of Visibililty and Conversions, LLC, another crony company named in the lawsuit.

From these facts related to the McGinnis campaign, it can be concluded public monies went to Miller Direct, LLC and Visibility and Conversions, LLC for work related to tourism promotion advertising performed under the direction of MBACC, according to MBACC disclosures. The principals of each of these business entities contributed to the Tim McGinnis campaign, according to filings with the S.C. Ethics Commission. The McGinnis campaign was also supported by GSBA with ad buys, at least a portion of which were funded by MBACC donations, according to FCC documents.

These facts, which appear to support claims in the lawsuit, are far from the conjecture, innuendo and inaccurate statements claimed by Schuessler.

(Ed. Note – an earlier version of this story incorrectly referred to the Myrtle Beach Area Convention and Visitors Bureau as the for-profit side of the Chamber instead of the Myrtle Beach Area Commerce Center, Inc.)


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