MYRTLE BEACH, SC (WBTW) – The woman who accused the Myrtle Beach Area Chamber of Commerce of funneling tax money to “crony companies” dropped some of her allegations while adding others, including a claim that the chamber lied to the state to receive money. The changes appeared in an amended lawsuit filed by Karon Mitchell on Monday.

Mitchell, a former Myrtle Beach city council candidate and ex-hotel owner, sued the chamber, the city of Myrtle Beach, and Horry County, in April. The amended lawsuit drops Horry County as a defendant.

Mitchell’s lawsuit calls for, among other things, competitive bidding for spending funded by taxpayers. The money comes from the accommodations tax collected for hotel stays and the tourism development fee, a one-percent sales tax charged in Myrtle Beach. Much of the money goes to the chamber to advertise the Myrtle Beach area.

Mitchell’s lawsuit claims companies were picked by the chamber solely because of their ties to current and former chamber employees. The chamber has called the allegations “baseless” and said it followed the law when spending taxpayer money.

While the initial lawsuit described eight companies as “crony companies,” the new lawsuit only gives that designation to six. Battle Strategies and Miller Direct were re-categorized as “other chamber connected companies,” joining Fahlgren Mortine, an additional company named in the amended lawsuit.

Political contributions

When the lawsuit was filed in April, it said some or all of the companies “redirected” taxpayer money “in the form of political contributions to politicians supported by the [chamber].” The allegation didn’t include any substantiation.

That allegation remains in the amended lawsuit, but it also adds explanation with a section for “political contributions by crony companies and chamber connected companies.”

The lawsuit ties $43,000 of donations by William Rosenthal and Visibility and Conversions, LLC to “various political candidates and political action committees, including the Grand Strand Statewide PAC, the Grand Strand Restaurant PAC, and the Myrtle Beach Lodging PAC between 2010 and 2018.”

The lawsuit identifies Visibility and Conversions, LLC as one of the “crony companies” receiving taxpayer money. Rosenthal is a former chamber employee.

The lawsuit also documents political contributions by Scott Brandon, Brandon Advertising, Fuel Interactive, Miller Direct, Jackie Miller, Steve Miller, and Fahlgren Mortine.

All of the contributions mentioned in the lawsuit total approximately $227,500.

Examples listed for the companies follow a pattern – no specific transactions listed, no allegation of where the money came from, and no companies named for converting tax money into political contributions.

New allegations and edits

Among the new allegations made in the lawsuit is a claim that taxpayer money is either unspent or unaccounted for. Spending reports and tax receipt reports for 2017 don’t document what happened to $907,605 in taxpayer money, the lawsuit indicates.  

The lawsuit also says the chamber holds taxpayer money in “reserves” rather than spending it. More than $7.8 million is in reserve, the lawsuit says.

In another new allegation, Mitchell accuses the chamber of “providing false certifications” to receive grants from the South Carolina Department of Parks, Recreation, and Tourism. According to the lawsuit, the state grants one dollar for every two dollars of private money pledged for “destination specific marketing.”

The chamber received $6.7 million in grants from the state between July 2015 and June 2016. By the state’s formula, it should’ve collected $13.4 million in private money to get the grants, the lawsuit says. Between January 2016 and December 2017, the chamber received about $6.5 million of private money, according to the lawsuit.

The amended lawsuit deletes a claim that Visibility and Conversions operated out of a storage locker. It also removes the allegation that nearly half of taxpayer money sent to the chamber over a three year period went to eight “crony companies.” 

The chamber didn’t immediately respond to a request for comment about the amended lawsuit.