DIXON – The city of Dixon reached a $40 million out-of-court settlement 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 in the past two decades.
The agreement was reached Saturday after a 17-hour session in Chicago, Mayor Jim Burke said.
Burke said the amount of the settlement speaks for itself, suggesting it provided vindication for a City Council that has taken its fair share of blame for the theft.
Of the $40 million, $35.15 million will be paid by CliftonLarsonAllen, the city's auditor until 2005, $3.85 million by Fifth Third Bank, which handled the city's checking accounts, and $1 million by Janis Card and Associates of Sterling, which took over the city's audits in 2005 from CliftonLarsonAllen until Crundwell's arrest.
The money is expected to be handed over to the city by the end of the year, Burke said.
With $10 million the city expects to get from the federal government from the sale of Crundwell's assets, Dixon will have recouped $50 million – nearly $4 million shy of the total theft.
"I was really hoping from the very beginning to get at least half of it back," Commissioner Jeff Kuhn said in a phone interview Wednesday. "When I first heard that number, I was like 'Wow.'"
About $10.3 million of the settlement will go toward legal fees, Burke said. Commissioners and the mayor said the caliber of its lawyer led to the strong settlement.
"I hope nobody goes after us for the expenses to gain this recovery," Dixon city Commissioner Dennis Considine said. "We hired a very talented law firm, and because of their skills, we were able to fight tooth and nail for [the settlement.]"
A total of 37 participants attended the weekend's negotiations, including the defendants, insurance companies and Lloyd's of London and their attorneys, Burke said.
The mayor and the city's attorney Devon Bruce, of Power, Rogers & Smith in Chicago, represented Dixon.
The meetings started at 8 a.m. Friday and concluded at about 1:30 a.m. Saturday, without anyone leaving.
"Their first offer was $12 million," Burke said. "Devon stayed the course on it. There was no real exact figure we went into negotiations looking to have. My only suggestion was not to leave any money on the table."
Crundwell was sentenced to 19 years, 7 months in prison Feb. 14 for federal wire fraud. She is serving her sentence at the Federal Correctional Institution, Waseca, Minn., and has since appealed her sentence. That appeal is ongoing.