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Accountant bringing Crundwell into suit

Fifth Third Bank now named as defendant

Published: Tuesday, Feb. 26, 2013 1:15 a.m. CDT

DIXON – Rita Crundwell is now a third-party defendant in the city’s lawsuit against its former auditors, according to court documents filed Monday.

A third-party defendant is one whose guilt is tied to that of an original defendant. The idea is that two cases may be decided in combination and justice may be done more efficiently than having two suits.

Janis Card Co., LLC, Samuel S. Card, CPA, P.C., and Samuel Card, which are being sued by the city for not detecting Crundwell’s theft of nearly $54 million from city funds, made a motion to bring the former Dixon comptroller into the suit. The Sterling-based offices served as the city’s contracted auditor after 2005.

Also, Fifth Third Bank filed a motion to name itself as a defendant in the case, a legal move that will, among other things, allow it access to evidence.

The lawsuit, asking in excess of $53 million in damages, also names CliftonLarsonAllen, LLP, Clifton Gunderson LLP, Todd Etheridge and Ron Blaine as defendants. Clifton and its partners were contracted to do the city’s audit before 2005 and continued to perform financial services.

The motion adding Crundwell says she handled all of city’s finances and stole millions “wrongfully and without authorization” through a secret bank account. It also outlines her scheme of using fake invoices to take city funds.

Crundwell was sentenced earlier this month to 19 years, 7 months in prison for federal wire fraud.

The motion says, if the city is entitled to recovery, Crundwell can be held liable to the degree of misconduct that is attributed to her.

Attorney Tom Falkenberg, representing the Card offices, also made a motion to add Fifth Third Bank as a third-party defendant, claiming the bank was negligent.

The city of Dixon held several bank accounts at Fifth Third Bank, and it owed the city “reasonable care and skill in operating such bank accounts,” according to the motion.

“Fifth Third Bank breached its duty to (the city) when it caused and/or permitted funds belonging to (the city) to be transferred to bank accounts used as personal accounts by Rita Crundwell, as well as providing inaccurate and incomplete responses to (the city) and (the city’s) auditor as to what accounts (the city) held at the bank,” the motion says.

The motion states that if the city is entitled to recovery, Fifth Third Bank also can be held liable to pay damages, to the degree of misconduct that is attributed to it.

The Cards’ filed a defense earlier this month 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.

In an October deposition, Sam Card said 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.

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