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Crundwell on the path to a plea?

Attorneys, city officials weigh in on latest legal developments

Published: Saturday, June 2, 2012 1:15 a.m. CDT • Updated: Sunday, June 3, 2012 11:06 p.m. CDT

DIXON – The news that embattled ex-city comptroller Rita A. Crundwell has agreed to sell some of her assets before she has had her day in court left some wondering whether she is headed for a plea bargain.

Some legal experts believe pleading guilty instead of going to trial would be in her best interest, especially if she is cooperating with federal officials.

“Under the circumstances, [a plea] would probably be her best move to decrease the pain,” said Phil Turner, a Chicago defense attorney and former federal prosecutor. “Every month you cut off [of prison time] is a victory.”

Lee County State’s Attorney Henry Dixon believes a plea could come in the next 3 months.

“I can’t imagine that they are not on track to do something on the ultimate issue if they already have a court order to dispose of the assets,” Dixon said. “It’s just connecting the dots.”

Some city officials say the quicker the case is resolved, the quicker the city of Dixon and its residents can move forward.

“I wouldn’t mind it getting over quicker,” Commissioner Jeff Kuhn said. “Get on with our lives, heal the city quickly.”

Crundwell, 59, the city’s top financial officer since 1983, was arrested April 17 at City Hall. Prosecutors say she misappropriated more than $53 million from the city over two decades.

She is free on a $4,500 recognizance bond.

Federal prosecutors have remained mum on many aspects of the investigation, including whether they are in talks with Crundwell or her attorneys regarding a plea deal.

Her lead attorney, federal defender Paul Gaziano, declined to comment on a possible plea or the “progress of the case.”

The case

On April 17, federal prosecutors unsealed a criminal complaint that charged Crundwell with one count of wire fraud.

According to that complaint, Crundwell had wired $175,000 in city funds from a bank in St. Paul, Minn., to a bank in Cincinnati in November for her personal use. The interstate transfer qualified it as a federal offense.

However, an affidavit filed in support of the complaint revealed that she had “misappropriated” $30 million since 2006.

On May 1, a grand jury indicted Crundwell on one charge of wire fraud.

By then, however, the amount of money that was believed to have been misappropriated had nearly doubled, and prosecutors revealed that Crundwell had been funneling money into a secret account since December 1990 to pay for her “lavish lifestyle.”

Crundwell, a nationally known breeder of quarter horses, admitted to federal agents that she had used some of the money to pay for her horse operations, according to court documents.

One count for a guilty plea?

The one-count indictment puzzled many, including Joel Levin, a Chicago defense attorney and former federal prosecutor, who helped convict former Illinois Gov. George Ryan.

“I’m not sure what to make of that,” he said. “Perhaps it signals there is an agreement in the works.”

Prosecutors who try very serious cases, especially ones they expect to take to trial, generally will file multiple charges, Levin said.

Turner agreed.

“When there is only one count in a matter like that, that can be a prelude to a guilty plea,” Turner said.

Juliet Sorensen, a former U.S. attorney in Chicago and now a clinical assistant professor of law at Northwestern University, said it would be purely “speculation” to say that a one-count indictment indicates a possible plea deal.

“The fact that there is only one count in the indictment, while it may be unusual, doesn’t necessarily mean that it’s a sure thing that she’ll plead guilty,” Sorensen said.

Crundwell is presumed innocent until she is proved to be guilty, something that does not change because only one charge was brought against her, Sorensen said.

The statute of limitations also could have been a factor in why more charges weren’t filed, Sorensen said.

Prosecutors have declined to say whether the statute of limitations had a role in determining the number of charges.

Under federal law, a wire fraud case must be prosecuted within 5 years. However, if the wire fraud affects a financial institution, the statute of limitations is bumped up to 10 years.

Assets

After Crundwell was arrested, federal agents raided Crundwell’s home, City Hall, her Dixon horse ranch, and a horse ranch in Beloit, Wis., which is managed by her longtime boyfriend, Jim McKillips.

A list of forfeiture items filed with the indictment included a number of vehicles, including a $2.1 million luxury motor home and five properties that, prosecutors believe, were purchased with illegal funds.

Prosecutors say that if Crundwell is convicted, they intend to sell those items, as well as nearly 400 horses, and give the proceeds to the city of Dixon.

The items seized are now in custody of the U.S. Marshals Service.

Federal Judge Philip G. Reinhard ruled that neither Crundwell nor any of her associates could sell or otherwise devalue any of the properties or horses.

On Wednesday, Reinhard granted a motion to sell the properties and the motor home.

Neither Crundwell nor her attorneys objected to the motion.

“To me, that indicates that [Crundwell] is cooperating with the government and is intending to enter a plea of guilty,” Sorensen said. “She’s wanting to signal her good faith and acceptance of responsibility to the judge.”

And selling off the assets now can be a “good strategy” for Crundwell if she ultimately pleads guilty, Turner said.

“I don’t find it unusual at all what she’s doing,” Turner said. “I can understand the strategy. She’s got to take a plea and be as cooperative as possible to get the least amount of time [in prison].”

Under federal sentencing guidelines, a defendant is given a certain number of points based on the person’s criminal history and the offenses involved in the conviction.

Points can be deducted from that amount for a number of reasons, including a guilty plea and cooperation with prosecutors.

Points also can be added for a number of reasons, such as the number of victims involved in the offense.

The points determine a sentencing range that is presented to the judge at the defendant’s sentencing hearing.

“It’s a basic formula, ...” Dixon said. “Federal judges don’t have a lot of latitude.”

Another factor in sentencing will be the amount of money that prosecutors can prove was stolen, Dixon said.

That likely will be negotiated between prosecutors and Crundwell’s attorneys, he said.

“Forget about the $53 million,” Dixon said. “Realistically, what is the actual value of the assets that she stole? Once you have that, it fits right into a [sentencing] formula.”

Dixon said he has spoken to federal prosecutors about the case, but is waiting to see what they do before making a decision on whether to charge Crundwell with state crimes.

What would a plea deal mean for the city?

Sauk Valley Media also spoke with Commissioner Dennis Considine and Mayor Jim Burke about what a possible plea deal could mean for Dixon, and they agree.

Commissioners David Blackburn and Colleen Brechon did not return calls for comment.

A plea deal compared to a trial, with an often lengthy appeals process, would be the quickest way to resolve the case – and for the city to gain whatever restitution it may be entitled to.

“I know that the government is trying to get the best deal they can to put this to bed and get going on the recovery of assets,” Burke said. “There’s a little bit of, maybe, a potential conflict here, a conflict of attitude, I guess you’d call it, rather than a conflict of interest.”

He worries that a plea deal could come with a shorter sentence, he said.

He would like to see Crundwell, if convicted, receive at least 10 years. Anything shorter than 5 years, he said, would be a slap on the wrist.

But even 10 years, he said, would be equated to $6 million per year.

Federal wire fraud carries a maximum of 20 years.

Kuhn agreed, adding that the city would have to get immediate access to any restitution to make him feel OK about a 10-year sentence.

Regardless of the sentence, Considine said, he expects residents to be upset, but he doesn’t expect the sentence to really affect the city’s morale.

“I think the sentiment in the community is that she should get the maximum,” he said. “From looking at the other white-collar crimes, it’s not a priority with the FBI. They’re more into terrorism and drugs.”

Turner said restitution may not come so quickly to the city if Crundwell pleads guilty, considering the time and cost of selling the assets.

What can be sold, Turner said, may not yield as much as the city hopes.

Turner said if the properties are sold at an auction, for example, bidders who are aware of the case may not bid very high.

The value of the vehicles seized also may have depreciated “significantly,” he said.

Prosecutors can collect restitution in other ways, even after a defendant is released from prison, such as collecting pensions and tax refunds, as well as garnishing wages, Turner said.

Still, that may not amount to much, he said.

“It’s not a significant amount of money,” he said. “It’s just a matter of getting what you can get.”

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