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Dixon sues audit firm for failing to detect fraud

Published: Tuesday, Feb. 5, 2013 5:30 a.m. CDT

DIXON – A north central Illinois city whose former comptroller embezzled almost $54 million is suing its longtime accounting firm for failing to detect the fraud, claiming it missed red flags such as bogus invoices.

Rita Crundwell, 60, pleaded guilty and is scheduled to be sentenced next week for the scam that authorities say lasted 20 years and enabled Crundwell to live lavishly and build a world-renowned quarter horse breeding operation.

The city of Dixon is suing the firm of CliftonLarsonAllen, which audited Dixon’s books and performed other duties, such as check-processing, while the firm’s personnel prepared Crundwell’s tax returns, Crain’s Chicago Business reported Monday. The lawsuit seeks compensation for the entire loss.

Among its claims is that CliftonLarsonAllen overlooked bogus state invoices submitted to the city by Crundwell, who then deposited the six-figure checks into her own account at a local bank branch where Dixon also kept its money.

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