DIXON — A defendant in the city's lawsuit against its auditors says the city was careless and negligent with its own finances, according to court documents filed Monday.
The city of Dixon is suing Janis Card Co., LLC, Samuel S. Card, CPA, P.C., and Samuel S. Card, saying they should have detected the theft of nearly $54 million by ex-comptroller Rita Crundwell.
Crundwell, 60, on Thursday was sentenced to 19 years, 7 months in federal prison after admitting to the thefts. She still faces 60 counts of theft in Lee County.
Both Card firms, located at 501 E. Fourth St. in Sterling, are accused of professional negligence and negligent misrepresentation.
The offices served as the city's contracted auditor since 2005.
The lawsuit also names CliftonLarsonAllen, LLP, Clifton Gunderson LLP, Todd Etheridge and Ron Blaine as defendants.
In response to the city's claim, the Cards' attorney, Tom Falkenberg, filed a defense that said the city had been negligent or intentionally had failed to keep tabs on its assets. The document also claims the city was careless or negligent in regard to financial activities.
"It was the duty of the Plaintiff to use ordinary care to protect its own financial assets," the document says.
The defense argues a statute of limitations for accountants could come into play. This statute says the city had 2 years from knowing the theft occurred to file the lawsuit, or 5 years from the actual date. The city argued in its motion that the statute of limitations should not come into play in this case.
The defense also says the city failed to mitigate any damages.
"The Plaintiff failed to mitigate these damages by otherwise creating, exacerbating, and not correcting their own financial problems. Accordingly, the Plaintiff should be barred from any recovery for these damages."
It argues the damages were caused by others for whom the Card company is not responsible.
In an October deposition, Sam Card said that he and his mother's small Sterling accounting office, which became Dixon's contracted auditor after 2005, did not do its own audit work. It only reviewed and signed off on audit work done by CliftonLarsonAllen, which allowed one of the nation's largest firms to keep its account.
Clifton requests documents
Clifton attorneys filed a subpoena for documents from the city in 16 areas, namely exchanges between the mayor, commissioners and city employees; executive sessions or budget planning; references to money transfers; and documents prepared by the city's law firm in regard to RC Quarters Horses.