DIXON – College students across the country are learning from mistakes made in Dixon.
Former Comptroller Rita Crundwell’s April 17, 2012, arrest for the theft of nearly $54 million over 2 decades made national and international news. The city is still feeling its effects as recovery money trickles in and the city works to switch from a commission form of government to a managerial form.
The theft and the case now are being taught in some accounting and forensic accounting classes at DePaul and Northern Illinois universities, in addition to others around the U.S.
Mayor Jim Burke said that in the weeks and months after the arrest, municipalities around the state and country reviewed their own internal controls for vulnerability to theft.
“I think it’s a positive thing, actually,” he said of the theft being a classroom example. “As far as the city is considered, it is what it is. Nothing’s going to change that.”
Kelly Richmond Pope is an associate professor in DePaul’s accountancy department. She focuses her research on white-collar crimes and embezzlement.
She took an interest in the case almost immediately, and as early as July 2012, less than 3 months after the arrest, was discussing making a film documentary.
Pope recently teamed up with Chicago-based Kartemquin Films to complete the documentary, which, Pope said, features interviews with Burke and City Clerk Kathe Swanson. It will focus less on Crundwell and more on the theft’s impact and Swanson’s role as the whistleblower.
“I think it’s going to be such an important case for municipalities, and really for municipalities and workers, but also the residents,” she said. “It’s sort of saying that if it can happen in Dixon, it can happen anywhere.”
In April 2014, Pope participated in a debate in Chicago with Devon Bruce, the attorney who represented the city in its lawsuit against its former auditors and bank. They discussed an auditor’s responsibility to find fraud.
That debate is now an e-case for colleges and universities, distributed through Helios Digital Learning, an education media company Pope co-founded.
From a teaching perspective, Pope said, she wanted something visual because millennial learners are more engaged when you offer a video. And as an entrepreneur, she said, she wanted to create more engaging content.
And for that, Pope said, “this is the perfect case.”
She said the e-case is being used in classrooms at DePaul, NIU, Wake Forest University and the University of Washington.
Among the college professors who have used Pope’s e-case in the classroom is Chih-Chen Lee, a professor in NIU’s accountancy department.
Lee, who teaches classes on forensic accounting and fraud, uses the Crundwell case when she introduces topics of employee fraud and embezzlement.
For that purpose, Lee said, Crundwell’s theft is a “classic, textbook case” because she started small and carried the theft out for many years.
But that’s not the only reason Lee uses it.
“It’s more recent, and it’s very famous, and it happened in our neighborhood,” she said. “It’s also been shown in [CNBC’s] ‘American Greed.’ I asked my students to watch that. ... And also watch the debate and discuss it in class.”
During the Chicago debate, Bruce showed evidence from the civil lawsuit, which included the fake invoice and checks Crundwell wrote, some of which included typos and other mistakes.
“Students are fascinated by ... how obvious some of the red flags were,” Lee said, adding that auditors drove on the roads that, according to the audit materials, Crundwell fictiously said were involved in road work
Crundwell stole much of the money by creating more than 179 fraudulent invoices purportedly from the Illinois Department of Transportation to the city.
Lee said the teaching moment for her students is that audits, which provide “reasonable assurance” that the money is there, shouldn’t simply be done by a checklist.
“They should actually pay attention to some small red flags and put things together,” she said.
That notion is what Pope said she tried to emphasis in the documentary, which will be titled “All The Queen’s Horses.” (Crundwell was a nationally renowned owner of competition quarter horses.)
Pope said if auditors, employees or citizens see something suspicious, they should say something.
“Kathe was merely just doing her job, and she discovered this massive fraud,” Pope said. “... Doing your job is how you can find something like this.”
Pope said she hadn’t reached out to Crundwell, who is serving a sentence of 19 years, 7 months at a federal prison in Waseca, Minnesota. She said she doesn’t think Crundwell could justify the crime and didn’t want to increase the public anger against her.
“I wonder what she would add to the documentary,” Pope said “... I really don’t know she’d tell us.”