DIXON – Clearly, the defendants saw the evidence was stacked against them, and they decided to settle.
That is how attorney Devon Bruce on Thursday described what transpired last week when Dixon’s former auditors and Fifth Third Bank came to the table looking for an out-of-court settlement for their negligence in former Comptroller Rita Crundwell’s nearly $54 million theft of city funds.
The Chicago attorney, with the firm Powers, Rogers & Smith, spoke to reporters Thursday from his downtown office, reviewing details of the city’s case.
The city of Dixon announced Wednesday it would receive a $40 million settlement from CliftonLarsonAllen, Fifth Third Bank, and Janis Card and Associates of Sterling.
“We struck a blow for justice for the city of Dixon,” Bruce told reporters Thursday. “I think the facts speak for themselves with respect to the size of the settlement from the collective defendants. The defendants, in and of itself, acknowledged what transpired here.”
Bruce said his law office reviewed more than a million documents and took deposition statements from employees of CliftonLarsonAllen and Fifth Third Bank, as well as Sam Card.
The evidence revealed from this research led to the victory, Bruce said.
There’s no question in Bruce’s mind CliftonLarson-Allen conducted the city’s audit from 1990 until the time of Rita Crundwell’s arrest, despite a defense from the auditing firm that it was merely conducting a compilation of services after 2005, which is strictly formatting financial data.
“Clifton did the audit, and part of the audit is to identify fraud, irregularities, and theft in the city’s financial statements,” Bruce said. “That’s the duty and responsibility of the auditor. That’s why you pay auditors. That’s why they are trained and licensed.”
How should they have known about the theft?
Crundwell would transfer money from a legitimate city account to a secret account for fictitious or completed projects. Crundwell created fake Illinois Department of Transportation invoices to make it appear as if she had been paying the state of Illinois for these projects, Bruce said.
“There’s no evidence in this case that any city of Dixon employee ever saw these fictitious invoices,” Bruce said. “The only people who saw these invoices were the auditors of the city. She created these to show the auditors to perpetuate her fraud.”
A number of other undetected red flags were pointed out as well, including a missing emblem on invoices or the omission of proper contact information. Crundwell passed off 179 of these fake invoices, Bruce said.
Auditors did not confirm or verify the projects as they should have, Bruce said.
Also, Clifton, which did some of Crundwell’s personal income tax returns, discovered hundreds of thousands of dollars in income on her tax returns that had no documentation.
Fifth Third Bank’s predecessor bank allowed Crundwell to open the secret account in the name of the city of Dixon to siphon money from city funds, Bruce said. This was done without a proper resolution. Additionally, the bank allowed Crundwell to deposit checks made out to “Treasurer.”
Of the $40 million settlement, $35.15 million was paid by Clifton, $3.85 million by Fifth Third Bank, and $1 million by Janis Card and Associates.