Update: Comptroller fraud
Tue April 17, 2012
Dixon city comptroller out of jail after arrest on federal fraud charges
Read an interesting twist on this case at www.theatlanticcities.com
DIXON — Rita A. Crundwell, the Dixon city comptroller who was arrested Tuesday on a federal charge of defrauding the City of Dixon of more than $3.2 million in public funds since last fall, was released from federal custody Wednesday. Her freedom while she awaits trial, however, rests on a number of conditions agreed upon by her attorneys, federal prosecutors, and federal magistrate P. Michael Mahoney.
Among the conditions: Crundwell cannot have guns in her home, can't sell horses, can't take money from two checking accounts, can't get a passport, must stay within the northern Illinois and western Wisconsin federal court jurisdictions, and will follow a supervisory plan laid out by her pre-trial officer. Her next court date is May 7th.
Earlier in the day, Dixon Mayor James Burke told a crowd made up of reporters and Dixon residents that Crundwell, 58, of Dixon, has been suspended without pay. He explained that he has a six-point plan to move forward from the crisis, beginning with working with the FBI to recover as much of the lost funds as possible. He also said the city would have an independent investigation conducted, get a new certified public accountant to review its finances, and appoint an interim comptroller while Crundwell is on unpaid leave.
FBI agents also allege that Crundwell misappropriated more than $30 million in city funds since 2006 to finance her own lavish lifestyle.
Crundwell handled all finances for the city as the appointed Dixon comptroller since the early 1980s. She is paid an annual salary of $83,000. She also operates Rita's Ranch outside Dixon and the Meri-J Ranch, headquartered in Beloit, Wisconsin. She has a national reputation for breeding champion quarterhorses.
Also Tuesday, agents executed search and seizure warrants at various locations including Crundwell’s home, office, and farms in Dixon and Beloit, and seized the contents of two bank accounts she controlled. Among other items seized were seven trucks and trailers, three pickup trucks, a $2.1 million motor home, and a Ford Thunderbird convertible, all of which allegedly were purchased with illegal proceeds.
The arrest was announced by Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-In-Charge of the Chicago Office of the Federal Bureau of Investigation.
Mayor Burke reported Crundwell to law enforcement authorities last fall after a city employee who assumed Crundwell’s duties while she was on extended unpaid vacation reviewed financial records. The FBI reviewed bank statements for September 2011 through March 2012 and then expanded the investigation of Dixon's finances dating back to 2006. The investigation is continuing, officials said.
The U.S. Attorney's office provided the following account of the events that led to Crundwell's arrest:
The complaint says that Crundwell, who receives four weeks of paid vacation annually, took an additional 12 weeks of unpaid vacation in 2011. In October, while Crundwell was away, a Dixon employee who served as her replacement requested all of the city’s bank statements. After reviewing them, the employee brought the records of a particular account to Mayor Burke’s attention.
The September 2011 statement for that account showed three deposits totaling $785,000, as well as 84 checks drawn totaling $360,493, and 40 withdrawals totaling $266,605. Mayor Burke was unaware that this account existed, the complaint states. Burke went to law enforcement since none of the withdrawals appeared to be related to any legitimate business of the City of Dixon. Bank records show that the primary account holder is the City of Dixon, a joint account holder is listed as RSCDA, and the checks written on this account list the account holder as “R.S.C.D.A., C/O Rita Crundwell.”
The City of Dixon maintains numerous bank accounts, including a Capital Development Fund. Between September 2011 and February 2012, approximately $2,783,912 in various tax funds were electronically deposited into one of the City’s accounts. Crundwell allegedly caused these funds to be moved around to other bank accounts held by the city, and eventually transferred most of these monies into the Capital Development Fund account.
Between September 2011 and March 2012, in her capacity as comptroller, Crundwell wrote 19 checks totaling $3,558,000 on the Capital Development Fund account payable to “Treasurer,” and deposited these checks into the account listing RSCDA as the joint account holder. She then allegedly took $3,311,860 from the RSCDA account by checks and online withdrawals, using only $74,274 for the city’s operations. Crundwell allegedly used the remainder of those funds, more than $3.2 million, for her own personal and business expenses, including approximately $450,000 relating to her horse farming operations, $600,000 in online credit card payments, and $67,000 to purchase a 2012 Chevy Silverado pickup truck.
After discovering the recent transfers of $3,558,000 in city funds to the RSCDA account, the FBI obtained additional bank records from July 2006 to March 2012. The complaint says Crundwell allegedly deposited a total of $30,236,503 in city funds into the RSCDA account and paid out more than $30 million for her own personal and business expenses.
Other personal purchases allegedly made by Crundwell include a 2009 Liberty Coach Motor Home for $2,108,000, a 2009 Kenworth T800 Tractor Truck for $146,787, a 2009 Freightliner Truck for $140,000, a 2009 Chevrolet Silverado pickup truck for $56,646, and a 2009 Featherlite Horse Trailer for $258,698. Between January 2007 and March 2012, Crundwell incurred charges of more than $2.5 million on her personal American Express credit card account, including more than $339,000 on jewelry alone, and allegedly used Dixon funds to pay the entire amount of charges.
Wire fraud carries a maximum penalty of 20 years in prison, and a $250,000 fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater.
If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
Assistant U.S. Atty. Joseph C. Pedersen is prosecuting the case. He noted that the criminal complaint is only a charge and is not evidence of guilt. The defendant is presumed innocent and is entitled to an indictment by a federal grand jury and a fair trial. The government has the burden of proving her guilt beyond a reasonable doubt.
AUDIO: The big question around Dixon, if allegations against the city's comptroller are true, is how no one noticed that $30,000,000 had disappeared. WNIJ's Susan Stephens reports.
Link to feature by NPR's David Schaper: http://www.npr.org/2012/04/19/150901002/illinois-town-treasurer-accused-of-embezzling-30m