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Indictment: Crundwell defrauded $53 million since 1990

Published: Tuesday, May 1, 2012 2:12 p.m. CDT • Updated: Wednesday, May 2, 2012 12:18 p.m. CDT
Caption
(Courtesy Google/Google Street View)
In this screen capture taken from an undated Google Street View, Rita A. Crundwell's property at 821 E. Fifth St. in Englewood, Fla., is seen.

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.

Prosecutors seek money, assets in Crundwell case

DIXON – Federal prosecutors intend to recoup "as much ... as possible" of the more than $53 million in city money former Comptroller Rita Crundwell is accused of misappropriating since 1990.

In addition, they intend to seize and sell a number of Crundwell's assets – including five properties, one a Spanish-style home in Englewood, Fla. – if she is found guilty of federal wire fraud, according to documents filed Tuesday.

Prosecutors listed those assets – which they say were bought with city funds – as part of an indictment handed up Tuesday.

In the meantime, neither she nor any of her associates may sell or otherwise "devalue" two Dixon properties, according to a temporary restraining order issued Tuesday by Federal Judge Philip Reinhard.

Read the 6-page application for a restraining order

Crundwell, 59, owns RC Quarter Horses LLC, and keeps most of her 311 horses at her ranch at 1556 Red Brick Road, and at 1679 U.S. Route 52, where her company is based.

Prosecutors say she also keeps some horses at a ranch in Beloit, Wis. It is owned by Percott Co. and is managed by her longtime boyfriend, Jim McKillips.

In addition, she has some horses in Texas, North Dakota, Ohio, Oklahoma, Connecticut, Georgia, and Florida, the indictment says.

Also Tuesday, prosecutors filed a civil lawsuit in which they accuse Crundwell of using city money to buy and care for her horses, an accusation they say she admitted to during an interview with the FBI the day of her arrest.

The goal of the suit is to be able to sell the horses and give the proceeds to Dixon.

“The government is pursuing both criminal and civil forfeiture proceedings to ensure that every available tool is being used to recover proceeds of the alleged fraud in order to recoup as much money as possible for the city of Dixon, its residents and taxpayers,” Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, said in a news release Tuesday.

In the meantime, the U.S. Marshal's office is expected to hire a contractor to care for the horses. One had not yet been hired as of Tuesday afternoon, said Randall Samborn, a spokesman for the U.S. Attorney's office.

April 17, the day of Crundwell's arrest, federal agents raided Dixon City Hall, her home, her horse ranch and the ranch in Beloit. They took into federal custody a number of vehicles, documents, jewelry and other items.

Federal prosecutors have two ways to permanently keep property they think is connected to criminal activity.

The first is by criminal forfeiture, in which prosecutors can make the seizure permanent only after a defendant is convicted. In those cases, the burden is on the defendant to prove that the assets were not bought with illegal funds.

In a civil forfeiture, a criminal charge or conviction is not needed. Law enforcement need only to show that there is probable cause the property was involved in a crime.

Civil suits are filed against the property itself, which is why the suit names the horses they wish to seize – one of which is called "Have Faith In Money."

Crundwell assets

The federal indictment handed up Tuesday against Rita A. Crundwell included a list of assets that, if she is convicted, would be forfeited. They include:

• Single-family residences at 1679 U.S. Route 52 and 1403 Dutch Road, both in Dixon, and another in Englewood, Fla.

• A horse ranch at 1556 Red Brick Road, Dixon.

• 80 acres of vacant land in Lee County.

• Numerous vehicles, including a 2009 Liberty Coach motor home, four Chevrolet Silverado pickup trucks, and a 1967 Chevrolet Corvette Roadster.

• Multiple horse trailers.

• A 2000 20' Playbuoy Pontoon Pleasure Boat and a 1998 Cobalt deck boat.

• More than $220,000 seized from two bank accounts.

If convicted, Crundwell also would be responsible for repaying the $53 million she is accused of taking.

More online

We've compiled our list of stories, documents and multimedia resources surrounding the Crundwell case here.

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