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A year later, aftershocks continue

City awaits repayment, administrator resigns, task force yet to meet

Published: Wednesday, April 17, 2013 1:15 a.m. CDT
Caption
(Alex T. Paschal/apaschal@saukvalley.com)
Rita Crundwell is seen Nov. 14 outside of the federal courthouse in Rockford after pleading guilty to a single count of wire fraud.

DIXON – When Rita Crundwell was sentenced to 19 years, 7 months in federal prison on Valentine's Day, many residents said it brought them closure.

Today, on the 1-year anniversary of her arrest at City Hall for siphoning a staggering $54 million from city funds, some questions remain unanswered, including what is the status of personal loans she made to two city employees, and when exactly can the city expect to see the $10 million or so in restitution it is owed from the sale of her assets?

And where is this little river city, the victim of the largest municipal theft in U.S. history, going from here?

When news broke last week that City Engineer Shawn Ortgiesen racked up $13,521.14 in personal expenses on a city-issued credit card over the last 6 years, residents wondered anew about the loans Crundwell made to him and to Dixon Fire Chief Tim Shipman. The money they owe now is owed to the city. The amount of the loans, and how and when they will be repaid, has not been disclosed

The court order issued at her sentencing says only that Crundwell is to "assign two notes payable in her favor from two Dixon administrators who borrowed money from her."

Ortgiesen, who sent a letter of resignation and a check to city officials Tuesday, could not be reached for comment.

Shipman said he is working with federal authorities on terms and conditions for repaying his loan, but would give no further details, because, he said, he wants to cooperate fully with authorities.

U.S. Prosecutor Joe Pedersen said he could not comment on the loans.

As for the other restitution, Jason Wojdylo, chief inspector for the U.S. Marshals Service forfeiture division, said it still could be several months before the city sees the roughly $10 million raised from the sale of her 400 quarter horses, her four Lee County properties, and her vehicles, jewelry, furniture and other assets.

The sale of her one remaining property, a vacation home in Englewood, Fla., is expected to close before the end of the month, Wojdylo said. He declined to say what the offer was; it was listed by Re/Max Alliance for $254,900.

A trailer, a 2005 Chevy Silverado and a 2004 Jeep Liberty – which she was seen driving around Dixon after her arrest – are being auctioned at www.appletowing.com; the auction closes May 7.

What has changed at City Hall?

For 20 years, the former comptroller was able to transfer millions of dollars from city funds into a secret bank account, using fake Illinois Department of Transportation invoices to obtain the money. City commissioners did not sign off on the payments. The city's annual audit did not detect the theft.

In the wake of the incident, the municipal government led by Mayor Jim Burke vowed to change its policies, stating a crime like Crundwell's could not happen again.

Consultants Stan Helgerson and Dave Richardson were brought in immediately as interim finance directors. Finance Director Paula Meyer was hired in August.

They set a path for the city to climb out of the hole Crundwell dug. The general fund, $3.4 million in the red, will be replenished. The city will budget a $900,000 surplus in its general fund for 2013-2014 to help offset the debt.

About $7 million it is assumed Crundwell moved from the motor fuel tax, downtown development, band, Oakwood Cemetery, civil defense, emergency vehicle, working cash, IMRF and Social Security funds will have to be paid back.

Meyer, who was dean of business services at Sauk Valley Community College, implemented a policy calling for all bills to be approved and signed by her and a commissioner, among other system checks, she said. The City Council also must vote on all expenditures at each meeting.

The city's bookkeeping was moved back to City Hall to better monitor finances. During Crundwell's time as treasurer, bookkeeping was done by an outside party, most from CliftonLarsonAllen. The city is suing the company for $53 million-plus, for not detecting the theft.

New state-of-the-art software has been installed that allows department heads to see their budgets in real time and allows Meyer to better monitor finances, she said.

"Before department heads would have to wait 3 to 4 weeks for an end-of-month report," Meyer said. "We can see everything up to date now. When financial reports are several weeks behind, they become useless."

An internal audit of the city's 13 credit card accounts, done in response to the Crundwell crime, turned up Ortgiesen's apparent misuse of funds, Burke said.

He issued a memo saying the city is working toward instituting management policies addressing credit card use, vehicles, gasoline consumption, petty cash and travel reimbursement of elected officials and city employees.

Meyer is reviewing the policies and plans to recommend one to the City Council for adoption.

"This was done as the city is adopting better management practices," Burke said. "We're going to continue to press forward with these, and if we find anything else, we're going to be up front with people about it and let them know."

About three weeks ago, Meyer put a stop to a common practice that allowed department directors to use cash at their discretion from the sale of salvageable items. She said department heads complied and turned in about $600 to $700.

A governmental task force created to see if Dixon's form of government played a role in Crundwell's scheme, and if it should be replaced, meets May 1 for the first time.

What's next for Crundwell?

Crundwell remains in Boone County Jail, awaiting assignment to a federal prison.

Neither the U.S. Marshals Service nor the Federal Bureau of Prisons will say where she may end up or how long it might be before she is assigned.

She has asked to serve her time in a federal prison close to Beloit, Wis., where her longtime boyfriend, Jim McKillips, lives. The judge has agreed to recommend the BOP grant her request, but it's up to officials there.

Crundwell also faces felony theft charges in Lee County Court. A status hearing is scheduled for April 30, where her attorney, Bob Thompson, will argue his motion to dismiss the state charges that he says constitute double jeopardy.

Crundwell timeline

April 17, 2012

Dixon's longtime comptroller Rita Crundwell, 59, is arrested at City Hall and charged with federal wire fraud. According to the criminal complaint, Crundwell wired $175,000 in city funds from a bank in St. Paul, Minn., to a bank in Cincinnati in November 2011 for her own personal use. 

An affidavit filed in support of the complaint says she stole $30 million from city coffers since 2006. 

She is taken to the Ogle County Jail pending a bond hearing. Federal agents seize items from City Hall, her Dixon homes and horse ranch, and the horse ranch managed by her boyfriend, Jim McKillips, in Beloit, Wis.

April 18

A federal magistrate releases Crundwell on a $4,500 recognizance bond.

Dixon Mayor Jim Burke holds a news conference and lays out a six-point plan to move the city forward in the aftermath of Crundwell's arrest.

April 23

The City Council fires Crundwell, who offers a letter of resignation. 

May 1

A federal grand jury indicts Crundwell on a single count of wire fraud. The indictment accuses Crundwell of stealing nearly $54 million from the city since 1990.

Prosecutors also file a lawsuit seeking to seize and sell more than 400 quarter horses and other Crundwell assets.

May 3

U.S. District Court Judge Philip Reinhard allows the U.S. Marshals Service to take over maintenance of her herd.

May 7

Crundwell pleads not guilty to federal wire fraud. 

The City Council authorizes an agreement with Wifpli, a regional firm with an office in Dixon, to redo the city's audits going back to 2006, so the city can develop independent numbers on its loss. 

May 14

The City Council approves a contract with GovTempsUSA, which brings in interim comptrollers Stan Helgerson and David Richardson to handle the day-to-day operations and assist in hiring Crundwell's replacement.

May 25

Prosecutors file a motion asking to sell five pieces of property – at 1679 U.S. Route 52, 1556 Red Brick Road and 1403 Dutch Road, all in Dixon; 80 acres of land in Lee County; and in Englewood, Fla. – and a luxury motor home belonging to Crundwell.

May 29

Reinhard grants the motion to sell the motor home and properties.

The city advertises for a new comptroller and treasurer, a position it renames finance director.

June 8

The city sues Samuel S. Card, CPA, P.C., and Janis Card Co., LLC, the accounting firms that conducted its audits the past 5 years. 

June 15

The judge gives the U.S. Marshals Service the OK to sell more than 400 horses, 21 embryos, 13 saddles, and frozen semen from eight horses. 

June 20

Marshals solicit contractors to run a multi-day auction of Crundwell's horses and related items. 

July 13

Marshals solicit bids for Crundwell's 2009 Liberty Elegant Lady Coach luxury motor home. The minimum bid is $1 million. 

July 23

Marshals announce that Professional Auction Service Inc. of Round Hill, Va., will sell Crundwell's horses in a multi-day, live auction. 

Aug. 1

Marshals reject the lone bid for the motor home because it fails to meet the $1 million minimum.

Aug. 3

Marshals announce that they will auction the bulk of Crundwell's horses and related items during a 2-day auction in Dixon in late September. Horses elsewhere will be sold online earlier that month, they said. 

Aug. 10

The City Council hires Paula Meyer, dean of business services at Sauk Valley Community College, as the new finance director.

Aug. 20

The City Council makes Public Works Director and City Engineer Shawn Ortgiesen its personnel director. 

Sept. 4

Marshals announce they are selling Crundwell's motor home in an online auction.

Sept. 12

A 2-day online auction of 48 quarter horses brings in more than $1.641 million.

Sept. 17

The judge grants a motion to sell hundreds of Crundwell's personal items, including furniture, art, boats and other vehicles. 

Sept. 20

Then-Lee County State's Attorney Henry Dixon indicts Crundwell on 60 counts of theft of government property in excess of $100,000. The indictment accuses her of theft for stealing more than $11 million in city funds between January 2010 and April 16, 2012.

Sept. 24

A 2-day live auction of the remaining horses, vehicles, tack, and other equipment at Crundwell's Red Brick Drive ranch brings in about $4.5 million. 

Sept. 25

After a monthlong online auction, Liberty Coach, the RV company that sold Crundwell her motor home for more than $2 million, buys it back for $800,000.

Oct. 20

A live auction of 10 vehicles in Chicago brings $182,950.

Oct. 22

Crundwell makes her first appearance in Lee County Court, where Public Defender Bob Thompson is appointed to represent her.

Oct. 31

Crundwell pleads not guilty to the Lee County charges.

Nov. 14

Crundwell pleads guilty to federal wire fraud; her sentencing is set for Feb. 14. As part of her plea agreement, she agrees to pay back the $54 million.

An online auction of breeding lab equipment and a box trailer brings in $56,450.

Nov. 28

Marshals announce that they have received unsolicited bids totaling $1.69 million on Crundwell's ranch, her Dutch Road home, and the farmland in Lee County. 

Dec. 6

A 3-week online sale of Crundwell's vehicles, including her 1967 Chevrolet Corvette Roadster, brings $191,160.

Dec. 8 

A multi-day online auction of Crundwell's personal property brings in $275,734.

Feb. 1

Crundwell's nephew, Rick Humphrey Jr., and his wife, Brenda, buy the Red Brick ranch for $1.1 million.

Feb. 12

Prosecutors reveal Crundwell may have started taking money from Dixon 2 years before she admitted to, saying she took $25,000 from Dixon's Sister Cities Association starting in 1988.

Feb. 14

Crundwell is sentenced to 19 years, 7 months in federal prison for wire fraud and is taken into custody.

Feb. 20

Thompson asks the judge to throw out the Lee County theft case, citing potential double jeopardy.

Feb. 23

Crundwell's jewelry sells for $258,375 at auction.

Feb. 25

Crundwell's attorneys appeal her federal sentence, and she is named a third-party defendant in the city's lawsuit against its former auditors.

Her brother, Richard Humphrey Sr., Rick Humphrey's father, buys the Dutch Road home and 40 acres of farmland for $610,000.

March 4

Crundwell appears via video in Lee County Court at a status hearing wearing an orange jumpsuit.

Coming up

A hearing is set for April 30, where her attorney, Bob Thompson, will argue his motion to dismiss the state charges that he says constitute double jeopardy.

Timeline compiled by Tara Becker and Derek Barichello

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