Dixon Mayor's statement on financial scandal

Apr 18, 2012

Dixon Mayor James Burke held a news conference Wednesday morning in Dixon, Ill., to address several issues regarding the arrest of City Comptroller Rita A. Crundwell on a federal charge of misappropriating $3.2 million in city funds.

Burke thanked the FBI for its efforts and ann0unced that Crundwell is suspended without pay pending resolution of the charges against her. He said he "literally became sick to my stomach" while meeting with agents on the case.

The mayor declined to answer any questions from reporters in attendance, including WNIJ's Susan Stephens. Here is the text of Mayor Burke's statement:

"I would like to thank the FBI for their comprehensive response to our request for a criminal investigation into this matter. This is a traumatic, upsetting event that the citizens and Council are experiencing. Last October, I contacted the Rockford FBI Office and requested a meeting concerning a bank statement brought to my attention by the City Clerk, Kathe Swanson, that suggested a misappropriation of city funds. While meeting with Agent Pat Garry in his office and presenting the information to him, I literally became sick to my stomach and told him I hoped that my suspicions were all wrong.

"When the charges were made against Rita Crundwell yesterday, and she was arrested, I could see those same sick feelings manifested in the faces of City employees. All of those responsible for affairs of the City can empathize with the thoughts and emotions that the citizens are experiencing. We realize the main question is how can someone allegedly steal $30 million and get away with it for so long?

"The City has an annual audit prepared by two independent certified public accounting firms. One firm compiles and presents the basic financial statements dealing with funds, assets, income and expenditures. That firm is Clifton, Larsen, Allen. The second firm, Samuel S. Card, Sterling, takes that information and reviews and issues an independent auditor's report. The results year after year disclosed no instances of non-compliance or other matters required to be reported under government auditing standards.

"Furthermore, the Illinois Governmental Account Audit Act requires the City to file its annual audit and other financial documents with the Illinois Comptroller's 'Office. The audit review showed no adverse findings or red flags about the City of Dixon Audit. Fifth Third Bank, where many city accounts are held, plus the account that Ms. Crundwell transferred funds into, never reported anything suspicious.

"Many have asked how the City did not realize $30 million had been stolen from our community. It is no secret that communities across the country are struggling financially. The City of Dixon was no different. We are a tax-capped community, which means we cannot raise property taxes to meet expenses.

"Like Lee County, we have seen a sharp decline in revenues from the landfill. Cash flow problems were complicated because the State has been substantially behind on income tax payments.

"The City is self-insured, and we have experienced a significant increase in health care costs.

"The City has also invested in our infrastructure with many projects which have benefited our community. These facts combined led to a plausible reason for the financial problems our community is facing.

"Through discussions and input from the City Council, we will undertake the following steps to restore the credibility and confidence going forward:

  • "Working with the FBI, every effort will be made to acquire assets and convert them to cash for the benefit of the City.
  • "The City will be retaining an independent investigator to look at any instances of wrongdoing outside the purview of the FBI. Having said that, we do not believe any other city employee committed a wrongdoing, but that is why we will have an independent investigation.
  • "We will be taking immediate steps to retain an interim comptroller.Rita Crundwell will be placed on administrative leave without pay until the legal issues are settled.
  • "The Council will appoint an independent panel consisting of a CPA, banker, and attorney to research internal financial controls and make recommendations to assure this never happens again.
  • "The City will be interviewing and retaining a new certified public accounting firm to conduct the annual city audit.

Finally, I want to say although this whole situation is a setback for Dixon, this is a strong city that will recover. We have strong leadership, both professional and non-paid volunteers, in every facet of the community. This is a beautiful city bursting with vitality, and citizens should be proud of its past and confident in its future.

In summary, I have tried to make a comprehensive, forthright, candid statement that responds to many of the questions being asked without saying things that could hinder the Federal Government's case against the accused.

I will not be taking any questions, but as the voice of the City Council, I will keep the media and public fully informed of every action we take to correct any and all deficiencies and any new developments.