November 14, 2012 in Nation/World

Ex-comptroller pleads guilty in $53 million scam

Jason Keyser Associated Press
 
Alex Paschal photo

Rita Crundwell walks pass the media outside of the federal courthouse in Rockford, Ill. on Wednesday, Nov. 14, 2012. Crundwell, the former comptroller of Dixon, pleaded guilty to allegations she embezzled more than $50 million from the small city in Illinois to fund a lavish lifestyle that included a nationally known horse-breeding operation. She pleaded guilty to a charge of wire fraud and will remain free until her Feb. 14 sentencing hearing.
(Full-size photo)(All photos)

ROCKFORD, Ill. (AP) — A longtime bookkeeper pleaded guilty Wednesday to allegations she embezzled more than $50 million from a small city in Illinois to fund a lavish lifestyle that included a nationally known horse-breeding operation.

Rita Crundwell, the former comptroller of Dixon, pleaded guilty to a charge of wire fraud in federal court in Rockford. She was allowed to remain free until her Feb. 14 sentencing hearing. Prosecutors say she siphoned money into a secret bank account while overseeing the city’s finances.

Crundwell did not make a statement during the hearing and answered the judge’s questions with “yes” and “no.” She left the courthouse without speaking to reporters, but her lawyer gave a brief statement that emphasized her cooperation with prosecutors.

“Rita Crundwell today admitted her guilt, saving the government the burden and expense of a lengthy trial,” attorney Paul Gaziano said. “Rita, since the day of her arrest, has worked with the government to accomplish the sale of her assets, including her beloved horses, all with the goal of hoping to recoup the losses for the city of Dixon.

“I think the people of the city of Dixon ought to know that.”

Crundwell’s guilty plea in the federal case enables the U.S. Marshals Service to start selling off millions of dollars of assets still in her name, including about $450,000 worth of diamonds and other jewels, ranch land and a house in Florida.

The marshals already auctioned dozens of Crundwell’s horses and other property, raising $7.4 million, but they say they doubt they’ll recover the full amount Crundwell stole.

Gary Shapiro, acting U.S. Attorney for northern Illinois, said Crundwell’s case is “one of the most significant abuses of public trust ever seen in Illinois.”

Shapiro said he hoped it would serve as a warning for other public officials.

“If nothing else, what we have in this case is an object lesson in how not to manage public funds,” Shapiro said. “This is a crime that should never have been allowed to occur.”

Dixon Mayor James Burke said independent auditors who reviewed the city’s books over two decades failed to catch on to Crundwell’s scheme. Lessons have been learned and changes have been made, he said.

“There are all kinds of things that I wish I would have done differently,” Burke said.

Residents in Dixon, the boyhood home of the late President Ronald Reagan, are largely lower-middle class, working at factories and grain farms. They had come to trust Crundwell to manage the town’s finances with little oversight, and Burke said her plea was welcome.

“We’re very happy that she pleaded guilty,” he said. “There’s no feeling sorry for her at all.”

Burke said Crundwell deserves a long prison sentence, and he hopes her plea will help the town recoup more of its $53 million in losses. He said he would convene a public meeting to discuss how recovered money will be spent.

The wire fraud count carries a maximum sentence of up to 20 years in prison and a fine of up to $250,000. Crundwell’s plea agreement also requires her to pay full restitution.

Crundwell, 59, had worked for the city about 100 miles west of Chicago since she was 17 and started to oversee public finances in the 1980s. Prosecutors say she began stealing money in 1990 to support an extravagant way of life.

Authorities say Crundwell bought luxury homes and vehicles and spent millions on her horse-breeding operation, RC Quarter Horses LLC, which produced 52 world champions in exhibitions run by the American Quarter Horse Association.

Her scheme unraveled when a co-worker filling in during Crundwell’s vacation stumbled upon her secret bank account, prosecutors said.

Crundwell has pleaded not guilty to 60 separate but related felony theft counts in Lee County.

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