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Ex-comptroller pleads guilty in Dixon scandal

(AP photo)
Rita Crundwell stands outside of the federal courthouse Wednesday in Rockford. Crundwell, the former comptroller of Dixon, pleaded guilty to allegations she embezzled more than $50 million from the small city in Illinois to fund a lavish lifestyle that included a nationally known horse-breeding operation. She pleaded guilty to a charge of wire fraud and will remain free until her Feb. 14 sentencing hearing.

ROCKFORD – Rita Crundwell was known for many things.

Locally, she was the hometown girl who became the city’s top financial officer in 1983, eventually making $80,000 a year with just a high school education.

In the horse industry, she was known worldwide as a top breeder of champion quarter horses.

Now she’s known as the woman who – in the words of Gary Shapiro, acting U.S. attorney for the Northern District of Illinois – committed “one of the most significant abuses of public trust ever seen in Illinois.”

The ousted Dixon comptroller Wednesday admitted stealing $53,740,394 from the city since 1990 – money she used to buy five properties, including a vacation home in Florida, a custom RV, vehicles and jewelry and amassing a herd of more than 400 horses and the equipment needed to show and care for them.

When U.S. District Judge Philip Reinhard asked Wednesday morning for her plea to a single count of wire fraud, Crundwell softly replied, “Guilty.”

She will be sentenced at 9 a.m. Feb. 14. The crime carries up to 20 years in prison.

She remains free on a $4,500 recognizance bond, despite a request by prosecutors that she be taken into custody Wednesday.

Crundwell, in a white turtleneck sweater, Versace glasses and a bejeweled hair clip, declined to comment after the plea.

One of her attorneys, Paul Gaziano, told a throng of reporters that Crundwell’s plea will “save the government the burden and expense of a lengthy trial.”

“Rita, from the day of her arrest, has worked with the government to accomplish the sale of her assets, including her beloved horses, all with the goal of hoping to recoup the losses for the city of Dixon,” he said. “I think the people of the city of Dixon ought to know that.”

Dixon Mayor Jim Burke said he was pleased with Crundwell’s guilty plea.

“If she’d have gone for not guilty, Lord only knows how long it could be dragged out,” he said Wednesday.

According to the indictment filed May 1, Crundwell was charged with wire fraud for transferring $175,000 from a bank in St. Paul, Minn., to a bank in Cincinnati on Nov. 2, 2011. In her 26-page plea agreement, though, Crundwell admitted depositing millions into a secret bank account – known as the R.S.C.D.A. – that she opened in 1990.

The money, which amounted to $53,740,394, was skimmed primarily from the city’s money market and capital development accounts.

She fooled auditors by showing them fictitious invoices, supposedly from the state of Illinois, while telling City Council members the state was late with its payments.

In reality, the money had arrived and had been moved into the secret account, according to the agreement.

“If nothing else, what we have in this case is an object lesson in how not to manage public funds,” Shapiro said at a news conference afterward. “This is a crime that should never have been allowed to occur.”

The agencies involved will find everything Crundwell owns and “liquidate it at the best possible price and return as much of the money as we can to the folks in Dixon,” he said.

As part of the plea agreement, Crundwell agreed that she owes Dixon $53,740,394, minus any money repaid before sentencing.

William Monroe, acting special agent in charge of the FBI’s Chicago office, said Crundwell had lived the dream for 21 years.

“Unfortunately, this dream was being funded by the taxpayers of Dixon,” Monroe said.

Almost immediately, Crundwell already agreed to forfeit a number of assets, including five properties that she admitted were bought with illegal funds. Her herd, vehicles, trailers, tack and motor home have sold, all for about $7.4 million. Numerous other personal items will be auctioned in December, the U.S. Marshals Service has said. Proceeds are being held in escrow until the case is closed.

City Commissioners Dennis Considine and Jeff Kuhn said they were disappointed that Crundwell wasn’t taken to jail Wednesday, but said they were happy to see some resolution to the case.

“I think it’s a process, and that’s what we’re really after, for the benefit of the community that we keep moving forward,” Considine said. “Our cash flow is better, so things are good. The emotional part of it should subside some ... as soon as she’s sentenced, then we can move forward from here, I hope.”

Kuhn said he wants Crundwell to get the full 20 years.

“She’s hurt a lot of people, a lot of very innocent citizens of Dixon, the council,” he said. “She’s hurt us, and she deserves to pay for it.”

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