Dixon settles with auditors, bank for $40 million
Funds will be received by end of year
DIXON – The city reached a $40 million out-of-court settlement this morning with its former auditors and Fifth Third Bank, who the city said were to blame for former Comptroller Rita Crundwell's theft of nearly $54 million over two decades.
Mayor Jim Burke made the announcement this morning during a special meeting of the Dixon City Council, during which the council approved the settlement.
The agreement was reached Friday in Chicago, Burke said.
Including about $10 million more the city expects to receive from the sale of Crundwell's assets, the city could recover about $50 million. The city's attorneys will receive about $10 million from the settlement, meaning Dixon actually would recover about $40 million.
There still is no timetable for when the city will receive money from the sale of Crundwell's assets, Burke said.
The lawsuit settlement money is expected to be handed over to the city by the end of the year, the mayor said.
A special meeting led by Finance Director Paula Meyer will be scheduled in early October. She will give a presentation on the economic impact of the recovery and address the city's debts and deferred projects. The public will be given an opportunity to comment.
Burke and Devon Bruce, who represented the city in the lawsuit, met with about 40 attorneys and insurance representatives for 17 hours Friday before reaching an agreement.
Of the parties named in the lawsuit, CliftonLarsonAllen is expected to pay nearly $36 million, Fifth Third Bank nearly $3 million, and Sam Card about $1 million.
The mayor was pleased with the amount.
"I think the amount they settled for speaks for itself," Burke said.
As part of the agreement, the city will file no further lawsuits against the defendants or their representatives.
The suit, filed in June and amended a number of times, named CliftonLarsonAllen LLP, Janis Card Company, Samuel S. Card, CPA, Fifth Third Bank, Todd Etheridge and Ron Blaine as defendants for their negligence in detecting Crundwell's theft. The suit asked for $53 million in damages.
Fifth Third Bank had made a motion to dismiss the suit, before accepting entering into the agreement with the city.
Crundwell was sentenced to 19 years, 7 months in prison Feb. 14 for federal wire fraud. She is serving her sentence at a correctional facility in Waseca, Minn. and has since appealed her sentence. That appeal is ongoing.
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