Next hearing on city suit set for July

Attorney plans modification in wake of ex-bank employee’s deposition

Published: Friday, May 10, 2013 1:15 a.m. CDT

DIXON – The next hearing on the city’s suit against Fifth Third Bank and its auditors, filed after former comptroller Rita Crundwell’s theft of nearly $54 million in city funds, was set Thursday for July 16.

As the result of the issues raised in a deposition of a former bank employee, attorney Devon Bruce said he will be amending the city’s suit. He declined after the hearing to give further details.

Fifth Third Bank is seeking to be removed as a defendant in the lawsuit, which seeks $53 million in damages.

The bank was not named in the original suit, but had itself added in February to allow it access to evidence in anticipation of being added.

Bruce told Judge Daniel A. Fish the amended complaint would be filed on or before May 23. Fifth Third then has 30 days to reply.

The city’s lawsuit also names its former auditors – CliftonLarsonAllen, LLP, Clifton Gunderson, LLP, Janis Card Co., LLC, Samuel S. Card, CPA, P.C., Samuel S. Card, Todd Etheridge and Ron Blaine – saying they should have detected the 20-year theft.

It accuses Fifth Third of knowing about Crundwell’s account, to which she transferred city funds for her personal use.

A resolution approved by the Dixon City Council was required to open an account dealing with the transfer of city funds, which did not happen with Crundwell’s secret account, nor does the bank have any valid documents from council members approving the account.

Crundwell created fake invoices from the Illinois Department of Transportation, which she used to write checks to move the city money into and out of the account.

Of the checks used to transfer city funds, 179 were made out to “treasurer,” but at no time did the state treasurer endorse those checks, nor did they have an authorized signature, the suit says.

The bank’s attorney says that all of the claims the city has made against it are barred by the Illinois Fiduciary Obligations Act, which protects banks from liability for its dealings with an account holder’s dishonest finances, if it is ruled to have done so in “good faith.”

 

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