DIXON – The day Dixon’s top financial official was arrested – for what prosecutors now say is the misappropriation of $53 million over two decades – she confessed to FBI agents that she used city funds to buy and care for her quarter horses.

Court documents released Tuesday didn’t divulge details of the apparent confession made by former Comptroller Rita A. Crundwell, 59, but they did outline how prosecutors think she moved the money around and covered her tracks.

View the 9-page federal indictment

A federal grand jury Tuesday indicted Crundwell on one count of federal wire fraud, the same charge prosecutors initially levied the day of her April 17 arrest.

Crundwell will be arraigned Monday in U.S. District Court in Rockford. Her case has been assigned to U.S. District Judge Philip Reinhard.

Lee County State’s Attorney Henry Dixon said Tuesday that he plans to meet with federal prosecutors and the lead FBI investigator next week to determine whether his office also will  charge Crundwell.

Dixon declined to say what, if any, state charges she could face. He said he had yet to read the federal indictment, which he previously has said could affect his decision.

In the indictment, prosecutors say Crundwell opened a secret bank account in the city’s name on Dec. 18, 1990, at First Bank South, which subsequently became Fifth Third Bank. The account holder was an unknown entity called “R.S.C.D.A.” Checks written on the account list the account holder as “R.S.C.D.A. c/o Rita Crundwell.”

By that time, Crundwell was 7 years into her three-decade tenure as comptroller, and James Dixon was wrapping up his second and final term as mayor.

“I didn’t notice anything unusual, and she had my confidence,” Dixon said Tuesday. He declined to comment further.

Since then, the indictment says, she has deposited more than $53 million in taxpayer money into the secret account, skimming primarily from the city’s money market and capital development accounts.

That’s $23 million more than the $30 million figure prosecutors originally released, which they said she took in just the last 6 years.

“Wow,” Mayor Jim Burke said when told the new number.

“It’s rather numbing, to tell you the truth, but I don’t know ... If she got off with $30 [million], I guess it isn’t too surprising.”

Investigators say Crundwell used those millions to pay for her “lavish lifestyle.” The criminal complaint, which is information the prosecution files to support its charge, says that in the last 5 years, Crundwell used $2.5 million to pay off her personal American Express card and spent more than $339,000 on jewelry.

She fooled auditors by showing them fictitious invoices, supposedly from the state of Illinois, while telling the Dixon City Council that the state was late in its payments – even though the  money had arrived and had been transferred into the secret account, prosecutors said.

“She was apparently hyping up how much,” Burke said. “She was telling us that there was a million dollars owed. We’re pretty sure now that she was embellishing this.”

The secret account statements were delivered to the city’s post office box, just like its other bank statements, but Crundwell picked up the city’s mail, and while on vacation, had a relative pick up the mail, the indictment says.

The account was discovered when the statement showed up at City Hall, while Crundwell was  on vacation.

City Clerk Kathe Swanson had made a routine request for all bank statements so she could prepare the monthly treasurer’s report in Crundwell’s absence. She took it to Burke, who notified the FBI.

Five months later, on the morning of April 17, Burke met with three FBI agents in his office.

“I got on the intercom and I called Rita,” Burke said in an interview with Sauk Valley Media last week. “She said, ‘Yes, sir,’ just like she always does when I call her on the intercom.”

The agents questioned Crundwell in his office for 2 hours before leading her out in handcuffs, Burke said. He was not present for the interview.