Dixon, IL Comptroller embezzles $53 million to buy horses

Aside

In Richard Daley’s Chicago of the 50s, greed, corruption, and embezzling by local Democrats was widely accepted as business as usual, and that tradition continues in Illinois to this day. How widely accepted? A friend who was born in Chicago tells this story:

It’s 1954. He is nine years old, in the passenger seat of his father’s Buick. A Chicago motorcycle cop pulls Dad over for rolling through a stop sign. That year, the standard practice was to take a $5 bill out of your wallet, wrap your driver’s license in the five, and hand it to the officer. In this case, Dad only had a $20 and a $1. So he asks the cop if the cop can make change. Cop agrees, and hands my friend’s father three fives. Simultaneously, the radio on his bike goes off with news of a major crisis elsewhere. My friend’s father thinks fast, hands the cop a $1, and takes off in the other direction.

When we live in a culture where that kind of corruption is taken so completely for granted, it’s hard to get a rise out of citizens when their government does what their government does.  But the sheer cheek of the fraud perpetrated by Rita Crundwell, the Comptroller of Dixon, IL, deserves its share of OMGs.

In this little town of 15,733 some 100 miles west of Chicago, Ms. Crundwell managed to swindle the taxpayers out of $53 million. That is not a typo. Not a misplaced decimal point or two. It is fifty-three million dollars.

It’s not like the $53 million was a drop in Dixon’s bucket, either. The annual budget of Dixon is between $8 and $9 million a year. But Ms. Crundwell managed to wet her beak with an average of $2.4 million a year. And nobody noticed. Starting in 1983, Crundwell served as the city’s finance officer, until she was arrested in 2012.

How did she do it? With the help of overly trusting elected officials. Crundwell grew up in Dixon. James Burke, the current mayor, knew her since she was a teenager.  After seven years on the job, in 1990, Crundwell opened a bank account in the name of the City of Dixon and an entity known as RSCDA. Which stands for Reserve Sewer Development Account. Pure genius. Who would ever want to look into an item as boring as the Reserve Sewer Development Account?

Because nobody did, the city council let Ms. Crundwell have sole control of the account. Between December 1990 and April 2012, Crundwell transferred funds from the city’s money market account to various other city bank accounts, including the RSCDA account. To make sure nobody caught on, she personally picked up the city’s mail, including bank statements and when she was away, she asked relatives or other city employees to pick up the mail and separate any of her mail, including statements for the RSCDA account, from the rest of the city’s mail.

She created fictitious invoices from the State of Illinois to convince city auditors that the money in the RSCDA account was for legitimate city expenses. Then she used the RSCDA account money to pay for her personal and private business expenses. And flashy expenses they were.

They included purchasing quarter horses for as much as $259,000. Per horse. Full disclosure here: My wife and own a horse farm that raises Arabians, but we have dabbled in quarter horse outcrosses. We have seen run of the mill Quarter horses sell for as little as $1,500, and have seen very nice ones sell for $15,000. So a $250,000 Quarter horse is exceptional with a capital E. In fact, they were good enough to win 52 world championships in different classes. They also earned her the title of leading owner by the American Quarter Horse Association for eight consecutive years prior to her arrest.

You’d think even trusting folks in Dixon would notice this much wealth on the hoof, so she spread it around. She owned two ranches – one in Dixon and the other in Beloit, Wisconsin, as well as various trainers across the country. She also owned a home in Englewood, Florida, 80 acres of vacant land in her home county, a 2009 luxury motor home, and more than a dozen trucks, trailers and other farm vehicles. Then there was her 2005 Ford Thunderbird convertible, 67 Corvette, a pontoon boat, thousands of dollars of jewelry, and approximately $225,000 cash from two bank accounts. Plus, of course, the centerpiece of her activities, 300 very well-cared for horses.

So how did she get caught, after filching over 20% of the city’s budget for 22 years? In the fall of 2011, while Crundwell was on vacation, a city employee discovered the account. The Mayor called the FBI, put her on unpaid leave and then sacked her.

She was arrested in April, 2012, and indicted for embezzling $30 million during the previous six years. One month later, an expanded federal grand jury indictment charged her with embezzling $53 million over the prior 22 years.  In November, she pled guilty, and in February, 2013, Crundwell was sentenced to 19 years and 7 months in prison.

Since she was nearly 60 at the time of sentencing, she may  never walk by the sewers of Dixon again, which brought her such great wealth for decades.

The now-rebounding town of Dixon is also the boyhood home of Ronald Reagan.

http://themunicipalmaven.com/2013/05/15/who-steals-millions-of-dollars-of-city-funds-to-buy-horses-rita-crundwell-thats-who-lessons-in-municipal-mismanagement

http://en.wikipedia.org/wiki/Rita_Crundwell

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