CHICAGO – Dixon, Ill. will collect $40 million under a settlement that ends a lawsuit against the town’s auditors and bank, who were accused by the city of failing in their duties by not uncovering the theft of $53 million by its former comptroller.

The settlement represented good news for the struggling town still recovering from the theft of funds over two decades by Rita Crundwell.

The settlement calls for accounting firm CliftonLarsonAllen LLP to pay $35.15 million, Fifth Third Bank to pay $3.85 million, and accounting firm Janis Card Associates to pay $1 million, according to city officials. The city filed the lawsuit in Lee County Circuit Court questioning why the accountants and bank didn’t catch the fraud despite problems with financial documents.

In a statement, CliftonLarsonAllen said it believed there was a shared responsibility that resulted in Crundwell’s fraud continuing undetected while Fifth Third said the bank settled the matter without admitting liability.

Crundwell was sentenced by a federal judge earlier this year to nearly 20 years in prison following her conviction for stealing the funds to pay for a lavish lifestyle and quarter horse farming business while Dixon struggled to balance its books and was forced to cut services.

Federal authorities have said the case is believed to be the largest theft of public funds in state history. Crundwell had entered a guilty plea to wire fraud and agreed that she engaged in money laundering in connection with her theft.

The city, about 100 miles west of Chicago, has a population of just 15,700 and annual expenses of about $17 million. The city has about $11.7 million of general obligation debt certificates outstanding. It does not carry public ratings.

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 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.

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