CHICAGO – The former comptroller of a small Illinois city faces nearly 20 years in prison under the sentence handed down by a federal judge following her conviction for stealing more than $53 million from city coffers over two decades.
Rita Crundwell, 60, used the funds to pay for a lavish lifestyle and quarter horse farming business while the city of Dixon struggled to balance its books and was forced to cut services. Crundwell was sentenced Thursday by U.S. District Judge Philip G. Reinhard in federal court in Rockford, Ill.
Federal authorities said the case is believed to be the largest theft of public funds in state history. “While the city was suffering, the defendant was living her dreams,” said Assistant U.S. Attorney Joseph Pedersen, calling her conduct in the face of the city’s “dire financial straits… especially egregious.”
Crundwell was arrested last April and then entered a guilty plea late last year to wire fraud and agreed that she engaged in money laundering in connection with her theft of $53 million from the city. She still faces criminal state charges.
The city, located about 100 miles west of Chicago that boasts on its website of being the boyhood home of President Ronald Reagan, has a population of just 15,700 and annual expenses of about $17 million, according to its most recent comprehensive audited financial report. The city has about $11.7 million of general obligation debt certificates outstanding. It does not carry public ratings, according to the rating agencies.
Federal authorities have held several auctions of Crundwell’s assets – including 400 quarter horses, a luxury motor home, jewelry, her homes, other property, a 2005 Ford Thunderbird convertible, and a 1967 Chevrolet Corvette. The auctions have raised $12.4 million.
Crundwell began working for the city’s finance department while in high school in 1970. She began stealing from the city around 1990 when she established a special capital fund bank account she alone controlled and began moving money around various city funds and accounts to shield her theft.
She stole $5.8 million in 2008 alone and averaged about $2.5 million. She hid her actions from auditors by creating false invoices showing she was depositing funds into the special account and was able to keep the account hidden by preventing other employees from viewing bank statements.
At the same time, during meeting with city officials and council members, she blamed the city’s fiscal woes on the economy and the state’s chronic lateness in forwarding various payments. Alarms were raised by another city employee who was filling in for Crundwell while she was on vacation in 2011 after the employee reviewed city bank statements. The mayor then alerted authorities.
Dixon Mayor James Burke at the time of Crundwell’s arrest said the city had no suspicions because none were raised by its auditors and it was plausible that the city’s struggles were due to the economy, rising health care costs, and a drop in landfill revenues.
“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,” he said at the time when the theft was thought to have been limited to $30 million. “The city of Dixon was no different.”