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What happens to Crundwell's loans, assets?

Ex-prosecutor says forfeiture part of criminal process

Published: Monday, April 30, 2012 1:15 a.m. CDT • Updated: Tuesday, May 1, 2012 4:50 p.m. CDT

DIXON – Rita A. Crundwell was known as someone to go to for help, Fire Chief Tim Shipman said about the embattled former comptroller.

Shipman, a longtime family friend, said he approached Crundwell for a “fairly short-term” personal loan in 2008.

“I needed some assistance, and I approached her as a friend,” Shipman said. “Rita’s reputation prior to this, she was the most giving person, and she assisted people.”

Now, the 59-year-old Dixon woman is known for something else.

Crundwell was led out of City Hall in handcuffs April 17 after being charged with federal wire fraud in what prosecutors say was a scheme to misappropriate more than $30 million in taxpayer money over the past 6 years.

After her arrest, agents seized documents and assets from her Dixon home and horse ranch; her company, RC Quarter Horses Inc.; and the Meri-J horse ranch in Beloit, Wis., where she is a client.

Among documents seized from City Hall were personal loan agreements Crundwell had with Shipman and his wife, Diane, and with Public Works Director and City Engineer Shawn Ortgiesen and his wife, Angela. The amount and terms of the loans have not been disclosed.

Both men told Sauk Valley Media last week that they assumed Crundwell’s money they borrowed came from her horse business.

Taking out the personal loans did not violate city policy, Mayor Jim Burke said.

Among the seized documents was a $2,000 loan agreement between Crundwell and Donald Wolber, who is not employed by the city. Sauk Valley Media has been unable to reach him for further information or comment.

It’s not yet known how many other personal loans Crundwell gave, nor is it known whether the loan money she used came from city funds.

For now, those who received loans or other items from Crundwell, such as cars or property, will have to “sit tight and wait for an indictment,” said Juliet Sorensen, a former U.S. attorney in Chicago and clinical assistant professor of law at Northwestern University.

Prosecutors have 30 days from April 17 to indict her on any other charges. In an indictment, prosecutors will include “forfeiture allegations” – a list of items they believe were bought with “fraudulent proceeds,” Sorensen said.

“If those forfeiture allegations include these loans, then, yes, those loans may be subject to criminal forfeiture,” and it will be up to the government to decide how they will be repaid, she said.

That decision won’t be made until the case is resolved, she said.

If Crundwell is found guilty or makes a plea agreement, a criminal forfeiture hearing will be held, either before a jury or a presiding judge.

Such hearings are like a mini trial: Prosecutors and defense attorneys can present evidence and make arguments to the jury or judge to aid in a decision, Sorensen said.

A large-scale financial fraud case involving many forfeiture allegations can result in a lengthy forfeiture hearing, she said.

During the search of Crundwell’s home and property, agents seized vehicles, guns, jewelry, art, and other items.

Anything Crundwell may have bought for others, such as a home or a car, also can be subject to seizure if it is determined that they were bought with money she took, Sorensen said.

When it comes to “real property,” prosecutors consider a number of factors when deciding whether it is “worth seizing,” Sorensen said.

With a home, for example, prosecutors will consider the equity of the home, or any environmental hazards, she said.

“[Crundwell] may have made the down payment on the home, but if there is little equity in the home, that asset probably is not worth pursuing by the government.”

Reporter Emily Coleman contributed to this report.

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