All the Queen's Horses (2017) Movie Script
1
Picture the
small town of Dixon.
The stereotypical
white picket fences
and red, white, and blue
flags flying in front yards,
it's the hometown
of Ronald Reagan.
It's a community, it's
about 16,000 population.
Basically kind of a
conservative county, in a way.
A month ago I was at
Old St. Pat's in Chicago.
And the usher says,
"Where're you from?"
I said, Dixon, and he
goes, "Oh, you're the town
"that the woman stole
the 54 million from."
It is the biggest case of
municipal fraud in history.
The tiny town of Dixon,
Illinois, lost an astonishing
$53 million to one
government employee.
If fraud at
this magnitude is happening
in Dixon, it can
happen anywhere.
Federal agents and
local police carry out...
Man who evaded
police for half a decade
- pleads guilty to wire fraud.
- Nine top officials accused
- of taking $150 million.
- James Hollis may be hiding...
Fraud
is a local, national,
and international problem.
Over the past five years,
we've seen a steady rise
in fraud schemes, specifically
embezzlement schemes
committed by an employee
within a finance position.
Allegedly embezzling thousands
- of dollars from her former...
- $6.4 million over 11 years.
Embezzlement
is a $3.7 trillion problem.
Government entities
are the second most
frequent victims
of embezzlement.
A nationally
renowned horse breeder,
a city employee since the 1980s,
and a world class thief.
The number one
question people ask me
is how does one
person in a small town
steal $53 million,
and no one know,
and get away with
it for 20 years?
Rita and I worked
together from 1991,
up until the time she
was arrested in 2012.
When I first started, my
capacity was deputy treasurer,
under Rita Crundwell.
She made it easy to work here.
She would always say to me,
"If ever you make a mistake,
"don't worry, it can
always be corrected."
In October of 2011, Rita
was out of town and I needed
my bank statements to produce
my treasurer's report.
In the past, Rita
would say to me,
"Now be sure and give them
the list over the phone,
"of the statements
that you want."
I would just run down
the list, but that day
I was under the gun, I
had too much work to do,
and I just called and said,
I want all of the
bank statements.
That's when they came.
I saw this one account that
I had never heard of before.
And, what I noticed on it
was three large deposits.
And it was in care
of her, it was RSCDA,
City of Dixon, in care
of Rita Crundwell.
I didn't know who to go to.
I sat on it for
a couple of days.
I hid it in my car.
In three days' time, the
mayor came into my office,
Mayor Burke, so I
told him about it.
He said, "Go and get me a
copy of that, right now."
My initial reaction
was that there had to be
an explanation for it,
but Kathe kept looking
and she couldn't tie
it into anything.
And so, she asked me if I
was gonna go to the police
with it, and I said,
"No, absolutely not."
He said, "Kathe, I
will take care of this,
"I will go to the FBI, but we
cannot say anything because
"if we're not correct, we don't
wanna harm Rita in any way."
I called the FBI, I said,
I think there's a cancer
in city hall, but I need
to talk with somebody,
and I took the bank
statement along.
The mayor came into the
field office, sat down
and discussed with the case
agents what they'd discovered.
I told 'em, I said, I hope
I'm wrong about this thing.
And he said,
"I don't think you are."
So we were able to go to
the U.S. Attorney's Office
and get a grand jury opened,
and during that grand jury,
subpoenas issued for these
different bank accounts.
I was very scared
because I was told
you keep it quiet, you
say nothing to nobody,
we'll handle the investigation.
So I believe that
when the FBI tells you
to keep your mouth shut,
you keep your mouth shut.
We had it set up that
if the FBI needed
any kind of documentation from
here, I would come in early,
I would make the copies,
I would put them in
a sealed envelope,
put 'em on the Mayor's desk.
Kathe Swanson, she
was very instrumental
in determining what
accounts were real,
what accounts were
fake, how the money
should have flowed
through the city of Dixon.
From there, looking at
all the massive amounts
of paperwork that came in.
They wanted one of our
reports, so I just took it.
Well, two days later,
Rita went looking for it.
And I'm thinking, what
am I gonna tell her?
I have to come up
with an excuse.
And she came up with
the excuse for me.
She said, "Oh, wasn't that
the one that was incorrect
"and we sent it back to
the accountants to redo it?"
And I said, you know
what, you're right.
I had to do this for six months.
I had to keep that
status quo in the office.
I had to ask her how her
trips were, how her dogs were,
so as not to let on that
something was not right,
and I knew about it.
She came to me one
morning and she said,
"I don't know if I can
handle this any longer."
My boyfriend Tom would
say to me quite frequently,
"Are you sure you're okay,
"is there anything
wrong with your kids?
"You don't seem like yourself."
And I would just say, oh,
I have a lot of work to do.
There's a lot going on at work,
I need to get a
lot of things done.
You know, over the
next months, we'd look at
surveillance of the subject
to see what's involved,
the scope of her
and her lifestyle.
One of the things the
FBI wanted to find out
during the investigation
was, did she do this alone?
Was she hiding
for somebody else?
She had loved ones,
family members that worked
also for the city of Dixon,
they were in the area.
She helped support nephews,
she'd given loans out to family,
she had a boyfriend who was
also involved in a business.
Are they involved?
But once they got hold
of the RSCDA account,
it was pretty obvious
what she had done.
They could see where the
money went from there.
When we had discovered,
through the FBI,
what she was doing and
how she was going about
getting the money and
putting it into that account,
I felt betrayed.
You know, while
we're doing the investigation
she was able to take
$1.5 million from Dixon.
I would sit and I'd
watch her at lunch time
go and get the checkbook
to write her check out,
after she called the money up,
and then she would turn
around and deposit it
into her account
over at the bank.
So the minute we
got the money in,
it was gone in the afternoon.
I called the FBI agent
and I said, if we don't
put a stop to this
thing pretty quick,
there isn't gonna
be anything left.
The night before she
was arrested, we had a
budget hearing in
here and I thought,
boy are people gonna
be surprised tomorrow.
That morning, I went
into the mayor's office.
I said, Jim, I can't
do this anymore.
And he just looked
up at me and he said,
"Kathe, today's the day."
So, I just called
her on the intercom,
I said, Rita could
you stop up here,
and she said, "Sure."
She came down the hall,
I couldn't look at her
because I knew
right then and there
they were already in the
office waiting for her.
So, she come up to the
door, she said, "Yes, sir."
I said, Rita, these
gentlemen would like to
ask you a few questions,
and she said, "Sure."
And I was lookin'
right at her face,
and her continence
never changed at all.
So, with that,
I exited the office.
And then, just like
that, there's like about
15 of 'em, came into city hall.
Come right upstairs and
they shut city hall down.
We brought in
agents from downtown,
used the agents out of Rockford.
Of course the
marshals were with us
because of the amount of
seizures that were going on.
They sealed off the
stairs, it was quite intense.
And at that time
she was approached.
She was given her
Miranda rights and asked
if she would like to
talk to us, which she did
give an interview, that lasted
about an hour and a half.
During that interview,
she was cooperative.
She only thought she'd
taken around $10 million.
If somebody gives a partial
confession or something,
we want that, it locks
their statement in.
And that's what she did.
I think she was a little
overwhelmed, surprised.
You know, 20 years of
her life and basically
everything she knew,
that was all comin' down.
And it hit her like a ton
of bricks very quickly and,
people get emotional and
they probably later go,
you know what, I maybe
shouldn't have done that,
maybe shouldn't have
talked, but they do.
She was in here
singin' like a canary.
We never saw her, they
took her right out
through the council chambers,
and then took her to Rockford.
And immediately it felt like
this weight had been
lifted off my shoulders.
This afternoon, in the
central Illinois town of Dixon,
authorities announced
a 60 count indictment
against a woman
named Rita Crundwell.
During the search warrant
of her multiple properties,
the two homes in Dixon, the
horse farm, also in Dixon
that she owned, conducted
on the day she was arrested
and interviewed, we found
located in the basement,
in a crawl space of her
home, boxes of every record.
And she kept very good
records of her fraud.
It helped to see the
scope of what she took,
what did she do with the money?
And in '91 was when she
took her first money,
which was about
$181,000 that year.
But we were able
to figure that out
because of the records she
kept, and stored in her house.
This case probably one of
the most egregious cases
the FBI has worked, considering
the size of the victim
and the amount of money taken.
And we're not talking
$10,000, a ream of paper,
or some pencils, which you know,
53 plus million dollars
is just unbelievable.
So
Let's take a look
at how Rita pulled
off this scheme.
There were six legitimate
City of Dixon accounts
at Fifth Third Bank.
She routinely moved
funds into the legitimate
capital development fund.
But Rita then set
up an additional
seventh account
no one knew about.
To get the process started,
she created phony invoices
to justify payments for
imaginary capital projects,
such as, fixing sidewalks
and street repairs.
These phony invoices trigger
Rita's transferring money
from the city's legitimate
capital development fund
into her secret account.
It had a similar
name to look like
a legitimate city account.
From her secret account,
she wrote checks for her
personal expenses, such
as spa visits, jewelry,
real estate, a motor coach,
and of course, quarter horses.
She did this process 179 times.
The fraud that
took place in Dixon
is very textbook classic.
It is those where we
set up a side account,
we mask it in the
name of a government,
and that one individual
has control of
money going in and
money going out.
It usually is simple.
It doesn't have to be
a complicated process.
And I think that if she
made it more complicated
she might've gotten
caught sooner.
I made up my mind that I
was gonna go to the press.
I'd never seen so many
news media in my life.
This is a traumatic,
upsetting event
that the citizens and
council are experiencing.
Rita Crundwell will be placed
on administrative leave
without pay until the
issues are settled.
Every effort will be
made to acquire assets
for the benefit of the city.
Crundwell is now free
after posting a $4,500 bond,
only fueling the outrage.
Excuse us.
Any idea why
she wouldn't talk to us today
and just apologize to
the people of Dixon?
Can't answer any questions.
The public was
pretty up in arms
and people were picketing
out in front of city hall and
every day was a news media deal.
Rita, why did you
steal $53 million
- from the people of Dixon?
- Get your ass outta here.
How were you able to get
away with this for two decades?
My first thought was,
Dixon has that much money?
That you could embezzle
that much money
from a little tiny
place like this.
I think she's a very
smart lady and got by with
a lot of stuff because people
just trusted her so well.
More than anything.
Do you think you were just
smarter than
everybody else, Rita?
You know, you have
a trusted employee
and it's human
nature to trust 'em.
You know I hear a
lot of people that say,
Rita was a nice person.
She was a nice person because
she had to be a nice person.
Smaller communities
where we're electing
individuals that we know well,
we go to church with them,
we're much more on
an intimate basis
with our governing bodies, and
I think what you find is that
smaller governments to some
extent maybe lend themselves
more to the notion of a trust
an increased trust factor.
Before Rita,
the largest municipal fraud
in U.S. history was a
case in Washington, D.C.
In this particular fraud, a
network of friends and family
stole $48 million
over a 20 year period.
When you compare D.C. to
Dixon, the amount of money
that Rita was able to
steal from this small town
all by herself, makes this
case even more shocking.
One statement from
a town official,
he said, "Rita watches
over every penny
"as if it were her own," and
every penny almost was her own.
Now let's
congratulate your 2011
world champion, Good I
Will Be, owned and shown
by Rita Crundwell
of Dixon, Illinois.
She was leadin'
a big lifestyle.
I thought, and I think
everybody in town thought,
that it was all due to
these horses, you know,
there'd be stories in
the paper that she's got
another national champion,
and she'd have pictures.
And then were stories
that she'd sold horses
for two and $300,000,
so that was the image
that she was conveying, that
was the image that I had.
I must've went by Rita's
horse farm 15 times,
you know, and I
always asked my wife,
who has that many
quarter horses?
It was really kinda mind
boggling and see the spread
that she had, it's
like, oh my gosh.
Nobody ever questioned
the magnitude of that money.
She told people
that her parents were
investors in Campbell
Soup Companies.
I mean certainly her parents
could've owned many acres
of farmland, which
is very high-revenue.
I honestly didn't think
too much about it.
Curious, but like everyone
else, you just kind of,
oh, hm, interesting.
I do know for a
fact, several people,
many people, benefited
from her money.
And I suspect 85%
of it was cash.
Co-workers at the city
thought that she inherited
a lot of money, and that
she got involved in it,
and was very successful.
Of course the family
knew that she didn't so,
you know, was it ever clear
exactly what their belief was?
It was, if they're
benefiting, it's
don't look a gift horse
in the mouth, right?
One of the things that really
struck me about this story
with the horses were the
names that she gave them.
I Execute Class.
Subconsciously, or
ironically to send a message
to the town, the irony
there is obvious.
I'm Money Too.
She Scores.
Packin' Jewels.
Me Myself and I.
Jewelry by Tiffany.
Careful Who U Invite.
Ain't I a Natural.
I Found a Penny.
She Scores, makes
me cry because
she's one of my favorite mares.
And, by Execute, so...
Can you
tell me a little bit why.
She Scores is so special to you?
She's just a great mare and
she won seven world champions,
and she just has a
special place in my heart.
The idea of a small
town, high school educated,
municipal clerk who
was able to both
completely pull the wool
over her town's eyes,
but you know, the second
half of her double life,
which was this grand,
high stakes horse empire.
By day she's wearing
meek, municipal clothes
and by night she's dripping
with jewels and furs.
Is that
what she said?
This is funny.
I met Rita in 2005 at
the American Quarter Horse.
World Finals, in
Oklahoma City, Oklahoma.
I love it.
We always stalled at
the same area every year.
She kept in a small
little circle.
You didn't see a lot of
people walkin' up to her,
or congratulatin' her,
and I think, you know,
I was in awe of her, I
mean, Rita was a showman
and she was very
good at what she did.
When she won, she deserved
it, I mean she really did.
The Oklahoma
City Leading Owner Award
was no surprise, since Rita
Crundwell of Dixon, Illinois
has won the award now for
eight consecutive years.
Congratulations, Rita.
Rita was very
polished all the time.
She always had a
fitted, short top on,
and had beautiful jewelry
on while she was showing.
There'd be times she would
go back to back in classes.
She'd be out there for two
hours, her horse trainer
would bring her another horse,
she'd change her jacket,
and go back out there again.
Everybody was like, how did
Rita come across all this money?
And we were told that Rita had
a boyfriend that passed away
and he was much older than
her and left all her money
to her, and it was believable.
I saw her pull up one day
with a brand new, custom made.
Sundowner trailer just
to haul the horses in.
And you know, the word
was out, it was $250,000.
Rita, how did you
sleep at night?
How did you go to
bed and not think,
whose lives I'm infecting here?
I mean, it's crazy, how
did you sleep at night?
She lived quite a life.
A totally different life
than what she portrayed here.
I had learned that
she had a house in Florida.
I always thought that
she just went down
and stayed at her
boyfriend's mother's house.
The other thing that
was shocking to me
from a mayoral standpoint,
she took off four months
out of the year, why
did you need her?
Rita
taking time off
was unusual because
most fraudsters
don't wanna take time off
because they're scared
that their fraud scheme
will be discovered.
But Rita was so confident that
she took tons of time off.
'Cause she was a friend,
after the council meeting
they all came to her house
and then she had cocktails.
Yes, she would have people
from the city go to her house,
she'd have a barbecue.
She had a pool in her yard.
They were not unlike
parties that other,
say doctors, lawyers, or anyone
with sustenance here had.
So, I mean again, that
was not really questioned.
- Thank you.
- - Could you tell us about your pretty pony.
I bred Skipper W. Mare that
belonged to Terry Stevers,
by Mr. Touchdown Kid, I
leased Terry's alt mares
for two years and I got
all the colts out of 'em.
Rita's wealth was
not necessarily a red flag,
but what should've
been a red flag was
looking at the neighboring
town right next door to Dixon,
and that town was Sterling.
Sterling has a similar
population size,
a similar annual
budget, but yet Sterling
had a surplus, when
Dixon had a huge deficit.
Now Dixon may not have felt
the impacts of Rita's fraud
because they were
borrowing a lot of money
during the time
Rita was embezzling
a lot of the city's money.
18 months before Rita was
arrested, the city manager
of Sterling, Illinois,
actually wrote a letter
to the city of Dixon,
and said, why do you all
have this huge deficit,
because we have a surplus.
He was trying to alert
the city of Dixon
that something seemed wrong.
Former Dixon
comptroller, Rita Crundwell,
made her second federal
court appearance.
The main topic of that hearing
was the care and concern
of the 300 plus
horses that Rita owns.
I was directed by
Magistrate Judge Mahoney,
of the U.S. District Court,
to seize and care for
horses belonging to
former city of Dixon
comptroller, Rita Crundwell.
We have 400 horses, and they
are on 22 farms in 13 states
that span 17 federal
judicial districts.
You know, this case is
remarkable, and it's unprecedented.
In this particular case,
there's been an agreement
to sell the assets before
a guilty plea is entered
or a trial for which
could, may or may not
result in a conviction.
The reason for that is because
these are live animals.
The horses eat, they breathe,
they require daily care,
and they're expensive.
We're spending about
$200,000 a month
for the care of the horses.
It's a lot that
goes into an animal.
This is the defendant's
trophy room.
Not many people have a
herd of 400 show horses,
many world champion horses.
Our interest would be to
try to get all $53 million.
I don't know that the
herd's ever gonna bring
anything close to that.
Our purpose today is to let
the perspective buyers know
that what we have here
is a very valuable herd.
Out of
the office we start with.
Good I Will Be...
Preliminary estimates are that
we should expect 1,500
people here on the farm.
We're being told by the experts
that we should anticipate
what is sometimes
been referred to as
the Willy Nelson concert crowd.
$500 real now heard here,
and another one of 1,500,
another one on the half,
now
five, 600!
600, 600, 700, 800...
It's amazing what millions
of dollars can buy you,
and how fast they can
disappear in two days.
25,
80, double 80, and now
We're here
to bid on some horses
and hopefully we can bring
back, some of the money
back to Dixon, Illinois.
I've been in the
horse business all my life,
and I've never seen
anything like this
no place in the United States.
I think
it's absolutely gorgeous
and I've been doin'
this for 30 years
and I can tell ya, I've
never started a horse sale
with one as good as this one.
And
200,000, yeah, 200.
Yeah, 250, 250, yeah three.
250, hear 300
now 500,000, yeah 500
500, even 600, and 25
and 625.
Thank you, thank
you, that's 750.
750, now 775, 750,
give me 775,000.
Sold in $775,000.
I was glad to see what
that horse went for, Willy.
They had told me earlier
that it would probably go for
anywhere from 500,000
to a million dollars.
So, it was really
gratifying to see that.
That's 11.875 grosses, if you...
97,000 plus
dollars of horse semen
that she actually
had stored and frozen
for breeding purposes,
that was sold.
55, now 55, now
656, now 65, now 70...
Today we've
recouped about 7.4 million.
Our goal is to recoup
several million more.
Much of the money will
not be recoverable,
and that's not unusual
in a fraud case.
I was able to track
down some people
who knew Rita as a
child, and they described
just a normal kid who was
very smart, very pretty,
very charming, and had
a great love of horses.
Her mother also showed horses.
So you could see where
Rita's interest developed.
She always got the
best horses to show.
She was sort of
the golden child.
Rita is a Dixon
High School graduate.
And when she was
still in high school,
she spent one of them days
with the city
government, you know.
And, she caught on and
everything worked well
and she did her job very
well, at least we thought.
I guess the rest is
history.
I want her to be prosecuted
to the full extent of the law.
Boy, I guess I don't know.
If guilty, yeah, I, white
collar crime is crime.
I mean, because someone is
blue collar and it's
a violent crime,
doesn't make it less of a crime.
In the face
of overwhelming evidence,
Rita pled guilty to wire
fraud and money laundering,
on November 14th, 2012.
Three months after
her guilty plea,
Rita arrived at the federal
courthouse for her sentencing.
She faces a maximum
of 20 years in prison.
The hardship Rita caused Dixon
would be the central
focus of the hearing.
The prosecution put together
a PowerPoint presentation.
For each year of
her crime spree,
they had a couple of
boxes outlined in black,
where they would relay
the budget committee's
discussions of what
needed to be cut.
But then on every page, they
had a box outlined in red.
And during these drastic
cuts to the Dixon budget,
there were comments
like, Rita spent $6000
on a custom-made saddle.
Miss Crundwell upgraded
her motor coach.
She upgraded that
thing five times,
until she finally bought
one that was $2.1 million.
But particularly, in
year 2008, is when she
crossed the $5
million threshold.
And again in 2009,
more than five million.
And again in 2010, she
stole more than $5 million.
And I think she did that
because beginning in 2008
was the start of the recession,
and she had the best excuse.
Showing all of her assets
made everybody realize
that she just kept buying
and the people of
Dixon were suffering.
The thing that bothers me is,
how many projects,
and/or services,
have not come about
in the city of Dixon
because the tax
dollars weren't there.
If people ask, well who's
suffered because of this?
Everybody in this city suffered.
And of course it
was a domino effect.
Later on, we found
out in the city.
Repairs and raises
and layoffs and,
it was a big impact on Dixon.
I think a lot of
people were talking about
whether if anybody else was
involved in this situation.
Somebody else had
to know about it.
She may have taken money away
from people who
really needed it.
And that to me is a worse crime.
Yeah.
I was trying to recognize the
pain she caused to the city.
But, in spite of that, life
is never over 'til it's over.
And, I literally
believe that anybody
right up to their
last breath has got
the possibility to
change their life around.
Rita was given
close to the maximum sentence,
19 years and seven months.
I was in a seat where
I could look at her.
She would not look at anybody.
And all I could think
about was, you know,
for 20 years I worked side
by side with this woman.
And I never knew her,
I never really knew her.
The judge
ordered Rita to pay
the city of Dixon restitution,
and he imposed an agreed
forfeiture judgment
in the same amount.
This means Rita's restitution
is over $100 million.
Based on her $65 per
month prison salary,
it would take her over 120,000
years to pay back the city.
I knew that when they
were going to take her,
right then and there,
I closed my eyes
so I could listen to the
click of the handcuffs.
I knew that justice was served.
They took her so quickly,
she didn't even have time
to turn around and say
goodbye to her family,
because they were
sitting behind her.
She was gone.
At a time when the city
of Dixon is suffering,
and different department
heads are having to make
drastic cuts to their budget,
the defendant sends out
a bunch of covers, and those
covers have cartoon characters,
one was of a cat that
was scared, another one
has a big dollar sign
being cut in half,
just prior to the defendant's
arrest, showed an individual
in the ocean with
a life preserver.
Well at the same time, she's
stealing millions of dollars
from the city of Dixon
to fund her dream.
So, that's what
our argument was.
Thank you all.
I couldn't come to
work the next day.
I sat home crying, frantically.
And all I could think about
was, did she have a blanket
last night, was she cold, you
know, where did they take her?
So, it's like, first
you're angry, you're upset,
you're betrayed, then,
your emotions of, is she okay?
And to me, it was so
confusing for me and, I just,
I couldn't understand why
I was feeling like that.
Jim big
day yesterday for you
up in federal court.
After thinkin' about it
now for almost 24 hours,
what do you think
about went down?
Well you know,
I've heard from people, Jim,
that say, oh, she's
gonna go to one of those
country club prisons and it
won't be so bad after all.
She did appeal her
sentence, stating that the
19 years was unduly harsh.
She lost her appeal, and
since then there hasn't been
anything further, so at
that point the FBI then
works with the, we're at
work with the U.S. Marshals
along the way to
work on forfeitures,
determine what she
has that was seized.
Thousands of man hours
were spent by the FBI alone
when investigating,
and then too seizing
and documenting
all the evidence.
At this point we don't
really spend any more time
as the investigation led
that we could not prove
that anybody else was
aware of the fraud scheme,
and was part of it.
Dixon voters need to
clean house if they are to
rid themselves of this ongoing
corruption and incompetence.
Shameful scandal from the
hometown of Ronald Reagan.
As citizens we look at it
like, you guys dropped the ball
and you're still here
like nothin' happened,
and we keep having to
have cameras in our city
for stuff that's no good for
our city, and we're sick of it.
So, thank you.
You have not been
doin' your job,
you've been doin'
what's good for you,
not for the people of Dixon.
As far as I'm concerned,
you're all fired,
thank you very much.
This is what goes
on in the town,
it's nothin' but greed, abuse
of power, and corruption.
That's right.
And until we get rid
of some of these people,
it'll always be there.
When did I create the sign?
Just about a week before
they was even havin'
the first meeting
after Mrs. Crundwell.
And I thought it'd
be appropriate.
And that's the way
a lot of people think
in Dixon right now, and I do.
I changed my complete,
what I thought of that man.
The city council and the mayor
all should have known
what was going on.
They should've known
about the fraud,
they should've been
looking for it.
They were all complacent
in their duties
to just let her do everything.
One person, or one event,
does not define Dixon.
People are very angry
and rightfully so.
Lot of it's directed at
probably people that governed.
And that's kind of unfortunate,
because those people,
they did the best they
could with what they had.
Officials in
Sterling figured out
there was something wrong.
How in god's name
did another city
see the red flags
and this city didn't?
We have to change
our form of government
to something that is gonna
work, that's more professional,
that's more modern day,
and that's at least capable
of handling the problems
we have before us.
I think we need to...
So, I was vilified.
We would have the same
people comin' up here,
meeting after meeting,
and suggesting that,
and asking for my resignation.
I mean there was
nothing that ever
prepared me for this
kind of an experience.
It hurt him, shocked him,
the way that the anger was,
you know especially against
him and the city council.
You know, he felt
responsibility for it,
it was just the fact that
because he was the mayor
and it went down on his watch.
My question today
is to the auditors.
Why did you never tell
the mayor and the council
that our internal auditing
were completely lacking
and needed to be changed?
People would often
ask questions about,
why are these revenues so small?
How come we haven't
gotten this money?
So on and so on.
But no one ever
followed up on that.
Whatever Miss
Crundwell told them,
they swallowed it,
hook, line, and sinker.
So who really is
responsible for finding fraud?
Is it the auditors who did
the annual audit for the town?
Is it the bank where the city
held their bank accounts?
Is it the city council,
who ran the town?
Or is it the residents?
The local media
felt all along that
the commission
form of government
was the sole reason for
this whole embezzlement.
I mean, we are the outstanding
community around here.
And it got here with this form
of government that we've got.
I mean essentially you have
a handful of city leaders,
who have their own
little fiefdoms,
don't really communicate
a lot with each other.
But more importantly,
they're part time jobs
that pay a pittance.
All of them actually,
they have other jobs.
For instance, one of the
city officials owned a
carpet store, another was a
high school business teacher.
I mean these are the people
who are responsible for
keeping track of
what's going on.
There was not the oversight
from a governing board
perspective, really diving
down and diving deep into
what the operating
budget looked like,
how the dollars were
being allocated,
be it to public safety,
capital projects,
or any of the other
public services.
In reporting this
story I found that
she had made the books
and the numbers so complex
and convoluted that, I mean,
none of the town officials
knew what these numbers meant.
So, when they had a
question, and maybe sometimes
they would think, this
looks a little odd,
someone else would
say, well go to Rita,
she'll explain it to you.
To trust a single person
for any financial function
is a mistake, so you
don't trust one person
to be in charge of the credit
card, and its payments.
You don't trust one
person to be in charge
of the water billing,
collecting the money, billing
the money, you have to
separate out these functions.
Dixon's case was an extreme
example of this because,
they had, not only
did they not separate
individual functions
among multiple people,
they didn't separate any
functions among any people.
Rita picked
up the mail, made deposits,
updated the journals
and ledgers,
prepared and signed checks,
moved investment monies,
and reconciled
the bank accounts.
There was very little
segregation of duties
Rita literally did it all.
While Rita was out
of town, she would have
an employee pick up
the mail for her,
to keep for her
when she got back.
And I know that statement
was one of them.
There's been no policies
in place all these years.
Maybe Rita was smarter than
all of us because she knew
there were no policies in place.
It was clear to me that the
city of Dixon was a victim,
and I thought I could
make a difference
and help the city and
the taxpayers out.
Do I believe
the city of Dixon
had any responsibility
themselves to identify the fraud
that was committed
by Rita Crundwell,
and I think unequivocally
the answer is no.
I did not meet Rita
Crundwell when I was
prosecuting this case, and
nor have I ever met her.
For purposes of my
prosecuting this case
for the city of
Dixon she was for all
intents and purposes,
irrelevant.
The issue was, who was
responsible for identifying
the fact that she was
stealing the money.
Rita developed too
cozy of a relationship
with so many people that
were involved in this thing.
She directed the audit, I mean,
she was the one that really,
in my mind, selected
Clifton to continue
to do the auditing and so forth.
Clifton is a
top 10 public accounting firm
in the United States.
The city of Dixon was a client
of Clifton's local office.
They were hired by the city
to do the annual audit.
And in addition,
they were involved
in the city's
day-to-day operations.
They made a conscious
intentional decision to get all
of the money for every
financial aspect of that city.
They made that decision,
they were there.
Either Clifton was
at the city hall,
or the city hall
people were dropping
financial documents off
there at least once a day.
What has come to
light in the depositions
of one of the
partners at Clifton,
he testified that they did
all the accounts payable,
they actually cut
checks, they did payroll,
they did other
consulting services.
Aside from the fact that
they will have to defend
against the accusation that
they should've discovered
this fraud, I think they have
a bigger issue to defend,
and that is, an
independence issue.
An auditor
provides an opinion
on a company's
financial statements,
similar to how a food
critic provides a review
of the dining experience
at a restaurant.
An auditor reviews the accuracy
of the financial statements,
similar to the way in
which a food critic
provides a thoughtful,
unbiased review
about the food at a restaurant.
Auditors are not
responsible for developing
the financial statements
on the company's behalf,
just like a food critic
is not responsible
for preparing the
restaurant's meal.
People rely on the
opinion of auditors
to make business decisions,
just like people rely on
the food critics review
to decide whether to
eat at a restaurant.
Now imagine if the
food critic was the one
who prepared the food,
then ate the food,
and then published a review
of that same restaurant
based on that meal.
Seems like a huge
conflict, right?
Well, it is.
Exactly, but in this
case, because of Clifton,
Larson's, Allen's
own intentional
they themselves chose
to formulate and create
the financial statements,
which they themselves chose
to charge again to audit.
They were looking
at their own work.
It's asking someone
to prepare a document,
and then asking the same
individual, and getting paid
to do so, and then asking
the same individual
to say, is your document right?
The city argued
that the auditors knew,
or should have known, that
the invoices were phony.
Here's a proper
invoice from the
Illinois Department
of Transportation.
This is the way they're
suppose to look.
And that's the invoice
from Rita Crundwell.
And a nine year
old could identify
the difference between those.
The field audit team looked
at these false invoices
and failed to do anything at all
that they were taught in
accounting school to follow up.
Whether it be, talk
to the city engineer,
make a phone call
to Springfield,
go out and look at these
clearly fictitious projects,
any of which would
have resulted in
a discovery of the theft.
I deposed a number
of the individuals
that were responsible
for the field audit work,
and the actual generation of
the work papers for Clifton
when they did the work
for the city of Dixon.
If
At any point in time
Clifton was doing the audit,
and they would've
walked down the hallway
to ask a simple question
of the city engineer,
excuse me, can you tell
me about this project?
Do you agree the
subsequent events
would have identified
Rita's theft?
Yes.
Do you agree with me
had that been done, the fraud
would have been identified
and Rita would've been arrested?
Yes.
There was 179, as we counted,
of those false invoices
and they failed to react
to any one of them.
They missed it, over and over
and over again, they missed it.
The issue is, you
know, should someone
have known about
that RSCDA account.
Do we have any
proof that Clifton
had knowledge of
the RSCDA account?
And according to them,
in their own depositions,
the answer to that
question is yes.
They were given bank
confirmations on
disclosing the RSCDA account,
and they did nothing.
I deposed both of the
current, as well as the former
head of the Clifton
office in Dixon.
Both of those individuals were
also the key people involved
every year in
performing the work for
Rita Crundwell's personal
income tax returns.
Is it unusual
that somebody would have
over $300,000 cash flow out,
without being explained
by their tax returns?
Well,
it would be unusual.
In 2005, there's over
$300,000 that Clifton,
in preparing Rita
Crundwell's tax returns
identifies as money coming
in to Rita Crundwell
for which there's
no documentation.
All a city employee who makes
80 some thousand dollars a year.
Other
than just writing it down
and claiming it, that's
the most that she had
in terms of
documentation, correct?
Correct.
You never asked her
for anything further, true?
True.
How do you explain
that at times
they were preparing a
financial statement,
which within the financial
statement that Clifton prepared,
demonstrated that
the city was losing
millions and
millions of dollars?
When the person, who
is at the epicenter,
which they know because
they're doing the annual audit,
the epicenter of
the city of Dixon
is the treasurer/comptroller.
Unexplained income on a tax
return is always a problem.
And had the tax preparer asked
a couple of more questions,
it would have led
that preparer to know
that the unexplained income
was coming from the
embezzled money.
If the auditors are not
to be held responsible for
identifying the theft
of millions and millions
of dollars every year, why
have 'em in the first place?
I think most people
are under the impression
that these audits
are going to uncover
graft and corruption
and embezzlement,
Auditors are not
responsible for finding fraud,
nor should they be.
They became reporting
and disclosing police,
making sure that
the corporations,
in particular, were following
the appropriate regulations.
Am I defending these
particular auditors, no.
I just did not
see, in light of the
overwhelming negligence of
CliftonLarsonAllen's employees,
which came out in
these depositions on
I just did not see how
they could win the case
in front of a Lee County jury.
Most frauds
are discovered by a tip
from a whistle blower,
and not from an audit.
So had Kathe Swanson not
discovered this fraud,
and then reported
it to Mayor Burke,
there's a chance that this
would've never been discovered,
and Rita would've
gotten away with it.
Yes, um-hm.
Being a whistle blower
is, it's very stressful but,
you know, it's all in
how you're brought up.
My parents taught me,
you don't take something
that doesn't belong to you.
And if you see something
wrong, say something, so.
My only regret is, is that
I didn't find out sooner.
Fifth Third
Bank was also named
in the civil complaint.
Remember, the city of
Dixon held six legitimate
city accounts, along
with her secret account,
which she used to funnel
money out of the city.
I think from the banking side,
I think it was shocking
that they opened
the account the
way that they did.
According to them it was
a city of Dixon account,
and for them to see,
on a regular basis,
so many personal transactions,
from jewelry to spas to
equestrian activities.
Many of the checks
that she was depositing
into this bogus account
were made out to Treasurer.
That type of ambiguity is known
within the banking industry
as something that you
should not allow to occur.
Especially in the
amounts of the money
that she was negotiating.
I took the deposition of
one of the Fifth Third Bank
former employees, who
happened also to be
the bank branch manager
when a lot of the most
serious transactions
that Rita had
with Fifth Third
Bank, transpired.
If you were a teller
at a bank branch here in Dixon
and somebody walked
up to you and said,
I'm going to negotiate a check
for hundreds of
thousands of dollars,
and it just says,
payee treasurer,
do you feel comfortable
that the check
can be negotiated as written?
Based on my experience,
it would raise caution.
And what's
the basis of that opinion?
The
dollar amount, number one.
Typically higher dollar
amounts are reviewed closer.
I was able to obtain
a lot of admissions
on behalf of Fifth Third
Bank that I thought
would be very damaging
for Fifth Third Bank
should we go to trial.
The case
never went to trial.
No, I wasn't surprised
by the settlement amount
because I in my
heart truly believe
that the fault
lied with Clifton,
the Fifth Third Bank,
and one way or another
we were gonna get that
money for the city,
whether it be by
trial or settlement.
And we have to become
ACA compliant right now
if we go to that 2 1/2%, if
we don't wait until January.
Correct.
Right.
No, actually taking the
job after she was here,
my first thought was, well,
really, how could
I do any worse?
You know, I
mean it was like, wow.
My plan was, in
addition to this,
was to write up those raises
for the non-union people.
And send something...
The idea of coming
in and creating
a whole new system
of accounting,
and restructuring it all,
just seemed really interesting
and a challenge
that I wanted to do.
I actually changed about
everybody's job duty
and I physically relocated them
in a lot of times into
different locations,
just so that we would
all have a view that
things are gonna be
done differently here.
Our office dynamics
have definitely changed.
My duties have lessened.
I'm just the city clerk
now, I don't do the payroll.
I think it's more of
a professional place.
I still harbor a lot of
bad feelings towards Rita.
I can't help but feel that way.
I don't think I feel
any more sorry for her.
I think she's where she belongs.
I look back at it
sometimes and I think,
how did it all come about?
Why was she caught?
And that I can't
wrap my mind around,
you know, why that day?
I'm sure, you know,
to save the city.
I don't believe that how
Dixon's finances were structured
is probably very
different from many,
maybe even a majority,
of other small towns
all across the United States.
I would also guess that there's
a tremendous amount
of theft out there.
What Rita did isn't
particularly unique.
The only thing that
makes her unique
is the dollar amount
that she took.
What she did is very, very
common, and could be done by
almost anybody in any
size organization.
- Councilman Tucker.
- Aye.
- Councilman Venier.
- Yes.
- Councilman Bishop.
- Aye.
- Councilman Barnes.
- Yes.
The citizens have voted
in a new form of government.
We'll become a managerial form.
The role of the commissioners
from being kind of
an everyday executive authority
over different departments,
now the city manager will
have the executive authority
over the different departments,
and the council will
just be doing policy
as opposed to being involved
on a more of day-to-day basis.
Baskets are held on
by brackets on the...
The city needed some fresh
blood, some fresh ideas,
and we got five new councilmen
that were elected back in April.
I recognize that
when you guys come in,
you had a lot of
extra work to do.
But, your ears have
always been open to us,
Paul's door's always
been open to us,
I appreciate the fair
treatment, I thank all of you.
And the rest of the people...
We now have put in
multiple forms of
fraud protection.
Multiple people
have to sign checks.
Multiple people have to approve
the payments in the first place.
I think other small
towns should consider,
not necessarily going out
and hiring a lot more people,
but the people that
you have involved,
your council members,
your elected officials,
even other people who
are employed there,
I think it would behoove them
to really actually understand
accounting, understand
financial statements,
so that they can look at them
and read the story
that they tell.
Financial statements are really
out there to tell a story.
And if you can learn
to read that story,
you might be able to avoid
anybody walking away from this.
Hey, were you
able to get anything
as far as any cost estimate or...
Dixon
Mayor Jim Burke makes
last minute phone
calls on Monday.
If it's possible
to get a requisition
before I leave the office today.
Okay.
5:30 I'll be all finished.
I really, I'm disappointed
I'm not running again.
I think the foundation was
there to get reelected.
This marks
his final day at city hall.
He's completing
16 years as mayor.
I'm gonna
miss it, I hate to go,
but I know it's time to do this.
Here we have
intermediate storage,
so for all of the paperwork
that isn't necessarily
from my administration,
but we still want close by.
Old filings and stuff,
that's kept right here.
Since electronic records
are relatively newer,
that's one of the things
that was interesting
about the Crundwell situation,
'cause it took place
over 20 years and
she was essentially
the master financial bookkeeper.
So you're trying to
put together her work
during that whole situation,
that's one of the challenges
our new finance director faced.
She did keep some
pretty good details,
which helped with
a lot of things,
both in terms of figuring
out what happened
from the FBI side, and in
our case, putting together
the finances and figuring out
which funds she took from.
So whatever those funds were
originally supposed to be
spent on, they could
get their money back.
I was interested in
running for election
basically because of the
Rita Crundwell situation.
Because I saw what was
happening in my own back yard.
So, congratulations, Scott.
People needed to trust
their government again.
'Cause that trust was
shattered by this incident,
absolutely shattered.
We have recovered a
net of about $40 million
from the civil lawsuit
and from Rita's assets.
10 million of it right away
disappeared for lawyer fees.
A good roughly half of that
immediately went
to debt payment.
As Rita was stealing
more and more money,
we were borrowing
more and more money.
And one of the things I
looked at is by the end,
the numbers were eerily close.
You know, she stole close to
somewhere like five million
in the final year,
and the city borrowed
close to about five million.
And then the rest has been
focused mostly on infrastructure.
We redid River Street,
which was a major eyesore
on a major state
highway that was going
right along the river.
Seventh Street washed away,
there was a big gaping hole.
So our focus is,
whatever's been left,
we're trying to use on
what got hurt by the theft.
And by and large that
has been infrastructure.
Anyone who interacts
with the city of Dixon,
under this council
and my administration,
whether you're an auditor,
whether you're contracting
with the city, whether you're
an employee of the city,
we're gonna be watchin'
the money really closely.
The past three years I
think the town is physically,
financially in better
shape than it's been
in many, many years,
since I've lived here.
And basically because they
recouped all that money
from the bank and
the accounting firm.
The people of Dixon are
really, really good people.
I don't want people to think
we're a bunch of boobs.
I don't want people to
think we aren't interested
in what happens in our town.
It's tough when that's the
image we have out there.
So our job has to be now
not only to change things,
but to show people
how we changed,
and what a good
community we are.
I love this city.
My wife and I chose to
retire here, 20 years ago.
Ask anybody that
comes here from any,
from miles around,
we're envied by all the
surrounding towns around
here for what Dixon has.
We're trying to put
the fraud behind us.
You never dream it's
gonna happen to you.
But obviously it can.
I think our hometown boy,
our President Ronald Reagan
said it best,
"We trust, but verify."
Picture the
small town of Dixon.
The stereotypical
white picket fences
and red, white, and blue
flags flying in front yards,
it's the hometown
of Ronald Reagan.
It's a community, it's
about 16,000 population.
Basically kind of a
conservative county, in a way.
A month ago I was at
Old St. Pat's in Chicago.
And the usher says,
"Where're you from?"
I said, Dixon, and he
goes, "Oh, you're the town
"that the woman stole
the 54 million from."
It is the biggest case of
municipal fraud in history.
The tiny town of Dixon,
Illinois, lost an astonishing
$53 million to one
government employee.
If fraud at
this magnitude is happening
in Dixon, it can
happen anywhere.
Federal agents and
local police carry out...
Man who evaded
police for half a decade
- pleads guilty to wire fraud.
- Nine top officials accused
- of taking $150 million.
- James Hollis may be hiding...
Fraud
is a local, national,
and international problem.
Over the past five years,
we've seen a steady rise
in fraud schemes, specifically
embezzlement schemes
committed by an employee
within a finance position.
Allegedly embezzling thousands
- of dollars from her former...
- $6.4 million over 11 years.
Embezzlement
is a $3.7 trillion problem.
Government entities
are the second most
frequent victims
of embezzlement.
A nationally
renowned horse breeder,
a city employee since the 1980s,
and a world class thief.
The number one
question people ask me
is how does one
person in a small town
steal $53 million,
and no one know,
and get away with
it for 20 years?
Rita and I worked
together from 1991,
up until the time she
was arrested in 2012.
When I first started, my
capacity was deputy treasurer,
under Rita Crundwell.
She made it easy to work here.
She would always say to me,
"If ever you make a mistake,
"don't worry, it can
always be corrected."
In October of 2011, Rita
was out of town and I needed
my bank statements to produce
my treasurer's report.
In the past, Rita
would say to me,
"Now be sure and give them
the list over the phone,
"of the statements
that you want."
I would just run down
the list, but that day
I was under the gun, I
had too much work to do,
and I just called and said,
I want all of the
bank statements.
That's when they came.
I saw this one account that
I had never heard of before.
And, what I noticed on it
was three large deposits.
And it was in care
of her, it was RSCDA,
City of Dixon, in care
of Rita Crundwell.
I didn't know who to go to.
I sat on it for
a couple of days.
I hid it in my car.
In three days' time, the
mayor came into my office,
Mayor Burke, so I
told him about it.
He said, "Go and get me a
copy of that, right now."
My initial reaction
was that there had to be
an explanation for it,
but Kathe kept looking
and she couldn't tie
it into anything.
And so, she asked me if I
was gonna go to the police
with it, and I said,
"No, absolutely not."
He said, "Kathe, I
will take care of this,
"I will go to the FBI, but we
cannot say anything because
"if we're not correct, we don't
wanna harm Rita in any way."
I called the FBI, I said,
I think there's a cancer
in city hall, but I need
to talk with somebody,
and I took the bank
statement along.
The mayor came into the
field office, sat down
and discussed with the case
agents what they'd discovered.
I told 'em, I said, I hope
I'm wrong about this thing.
And he said,
"I don't think you are."
So we were able to go to
the U.S. Attorney's Office
and get a grand jury opened,
and during that grand jury,
subpoenas issued for these
different bank accounts.
I was very scared
because I was told
you keep it quiet, you
say nothing to nobody,
we'll handle the investigation.
So I believe that
when the FBI tells you
to keep your mouth shut,
you keep your mouth shut.
We had it set up that
if the FBI needed
any kind of documentation from
here, I would come in early,
I would make the copies,
I would put them in
a sealed envelope,
put 'em on the Mayor's desk.
Kathe Swanson, she
was very instrumental
in determining what
accounts were real,
what accounts were
fake, how the money
should have flowed
through the city of Dixon.
From there, looking at
all the massive amounts
of paperwork that came in.
They wanted one of our
reports, so I just took it.
Well, two days later,
Rita went looking for it.
And I'm thinking, what
am I gonna tell her?
I have to come up
with an excuse.
And she came up with
the excuse for me.
She said, "Oh, wasn't that
the one that was incorrect
"and we sent it back to
the accountants to redo it?"
And I said, you know
what, you're right.
I had to do this for six months.
I had to keep that
status quo in the office.
I had to ask her how her
trips were, how her dogs were,
so as not to let on that
something was not right,
and I knew about it.
She came to me one
morning and she said,
"I don't know if I can
handle this any longer."
My boyfriend Tom would
say to me quite frequently,
"Are you sure you're okay,
"is there anything
wrong with your kids?
"You don't seem like yourself."
And I would just say, oh,
I have a lot of work to do.
There's a lot going on at work,
I need to get a
lot of things done.
You know, over the
next months, we'd look at
surveillance of the subject
to see what's involved,
the scope of her
and her lifestyle.
One of the things the
FBI wanted to find out
during the investigation
was, did she do this alone?
Was she hiding
for somebody else?
She had loved ones,
family members that worked
also for the city of Dixon,
they were in the area.
She helped support nephews,
she'd given loans out to family,
she had a boyfriend who was
also involved in a business.
Are they involved?
But once they got hold
of the RSCDA account,
it was pretty obvious
what she had done.
They could see where the
money went from there.
When we had discovered,
through the FBI,
what she was doing and
how she was going about
getting the money and
putting it into that account,
I felt betrayed.
You know, while
we're doing the investigation
she was able to take
$1.5 million from Dixon.
I would sit and I'd
watch her at lunch time
go and get the checkbook
to write her check out,
after she called the money up,
and then she would turn
around and deposit it
into her account
over at the bank.
So the minute we
got the money in,
it was gone in the afternoon.
I called the FBI agent
and I said, if we don't
put a stop to this
thing pretty quick,
there isn't gonna
be anything left.
The night before she
was arrested, we had a
budget hearing in
here and I thought,
boy are people gonna
be surprised tomorrow.
That morning, I went
into the mayor's office.
I said, Jim, I can't
do this anymore.
And he just looked
up at me and he said,
"Kathe, today's the day."
So, I just called
her on the intercom,
I said, Rita could
you stop up here,
and she said, "Sure."
She came down the hall,
I couldn't look at her
because I knew
right then and there
they were already in the
office waiting for her.
So, she come up to the
door, she said, "Yes, sir."
I said, Rita, these
gentlemen would like to
ask you a few questions,
and she said, "Sure."
And I was lookin'
right at her face,
and her continence
never changed at all.
So, with that,
I exited the office.
And then, just like
that, there's like about
15 of 'em, came into city hall.
Come right upstairs and
they shut city hall down.
We brought in
agents from downtown,
used the agents out of Rockford.
Of course the
marshals were with us
because of the amount of
seizures that were going on.
They sealed off the
stairs, it was quite intense.
And at that time
she was approached.
She was given her
Miranda rights and asked
if she would like to
talk to us, which she did
give an interview, that lasted
about an hour and a half.
During that interview,
she was cooperative.
She only thought she'd
taken around $10 million.
If somebody gives a partial
confession or something,
we want that, it locks
their statement in.
And that's what she did.
I think she was a little
overwhelmed, surprised.
You know, 20 years of
her life and basically
everything she knew,
that was all comin' down.
And it hit her like a ton
of bricks very quickly and,
people get emotional and
they probably later go,
you know what, I maybe
shouldn't have done that,
maybe shouldn't have
talked, but they do.
She was in here
singin' like a canary.
We never saw her, they
took her right out
through the council chambers,
and then took her to Rockford.
And immediately it felt like
this weight had been
lifted off my shoulders.
This afternoon, in the
central Illinois town of Dixon,
authorities announced
a 60 count indictment
against a woman
named Rita Crundwell.
During the search warrant
of her multiple properties,
the two homes in Dixon, the
horse farm, also in Dixon
that she owned, conducted
on the day she was arrested
and interviewed, we found
located in the basement,
in a crawl space of her
home, boxes of every record.
And she kept very good
records of her fraud.
It helped to see the
scope of what she took,
what did she do with the money?
And in '91 was when she
took her first money,
which was about
$181,000 that year.
But we were able
to figure that out
because of the records she
kept, and stored in her house.
This case probably one of
the most egregious cases
the FBI has worked, considering
the size of the victim
and the amount of money taken.
And we're not talking
$10,000, a ream of paper,
or some pencils, which you know,
53 plus million dollars
is just unbelievable.
So
Let's take a look
at how Rita pulled
off this scheme.
There were six legitimate
City of Dixon accounts
at Fifth Third Bank.
She routinely moved
funds into the legitimate
capital development fund.
But Rita then set
up an additional
seventh account
no one knew about.
To get the process started,
she created phony invoices
to justify payments for
imaginary capital projects,
such as, fixing sidewalks
and street repairs.
These phony invoices trigger
Rita's transferring money
from the city's legitimate
capital development fund
into her secret account.
It had a similar
name to look like
a legitimate city account.
From her secret account,
she wrote checks for her
personal expenses, such
as spa visits, jewelry,
real estate, a motor coach,
and of course, quarter horses.
She did this process 179 times.
The fraud that
took place in Dixon
is very textbook classic.
It is those where we
set up a side account,
we mask it in the
name of a government,
and that one individual
has control of
money going in and
money going out.
It usually is simple.
It doesn't have to be
a complicated process.
And I think that if she
made it more complicated
she might've gotten
caught sooner.
I made up my mind that I
was gonna go to the press.
I'd never seen so many
news media in my life.
This is a traumatic,
upsetting event
that the citizens and
council are experiencing.
Rita Crundwell will be placed
on administrative leave
without pay until the
issues are settled.
Every effort will be
made to acquire assets
for the benefit of the city.
Crundwell is now free
after posting a $4,500 bond,
only fueling the outrage.
Excuse us.
Any idea why
she wouldn't talk to us today
and just apologize to
the people of Dixon?
Can't answer any questions.
The public was
pretty up in arms
and people were picketing
out in front of city hall and
every day was a news media deal.
Rita, why did you
steal $53 million
- from the people of Dixon?
- Get your ass outta here.
How were you able to get
away with this for two decades?
My first thought was,
Dixon has that much money?
That you could embezzle
that much money
from a little tiny
place like this.
I think she's a very
smart lady and got by with
a lot of stuff because people
just trusted her so well.
More than anything.
Do you think you were just
smarter than
everybody else, Rita?
You know, you have
a trusted employee
and it's human
nature to trust 'em.
You know I hear a
lot of people that say,
Rita was a nice person.
She was a nice person because
she had to be a nice person.
Smaller communities
where we're electing
individuals that we know well,
we go to church with them,
we're much more on
an intimate basis
with our governing bodies, and
I think what you find is that
smaller governments to some
extent maybe lend themselves
more to the notion of a trust
an increased trust factor.
Before Rita,
the largest municipal fraud
in U.S. history was a
case in Washington, D.C.
In this particular fraud, a
network of friends and family
stole $48 million
over a 20 year period.
When you compare D.C. to
Dixon, the amount of money
that Rita was able to
steal from this small town
all by herself, makes this
case even more shocking.
One statement from
a town official,
he said, "Rita watches
over every penny
"as if it were her own," and
every penny almost was her own.
Now let's
congratulate your 2011
world champion, Good I
Will Be, owned and shown
by Rita Crundwell
of Dixon, Illinois.
She was leadin'
a big lifestyle.
I thought, and I think
everybody in town thought,
that it was all due to
these horses, you know,
there'd be stories in
the paper that she's got
another national champion,
and she'd have pictures.
And then were stories
that she'd sold horses
for two and $300,000,
so that was the image
that she was conveying, that
was the image that I had.
I must've went by Rita's
horse farm 15 times,
you know, and I
always asked my wife,
who has that many
quarter horses?
It was really kinda mind
boggling and see the spread
that she had, it's
like, oh my gosh.
Nobody ever questioned
the magnitude of that money.
She told people
that her parents were
investors in Campbell
Soup Companies.
I mean certainly her parents
could've owned many acres
of farmland, which
is very high-revenue.
I honestly didn't think
too much about it.
Curious, but like everyone
else, you just kind of,
oh, hm, interesting.
I do know for a
fact, several people,
many people, benefited
from her money.
And I suspect 85%
of it was cash.
Co-workers at the city
thought that she inherited
a lot of money, and that
she got involved in it,
and was very successful.
Of course the family
knew that she didn't so,
you know, was it ever clear
exactly what their belief was?
It was, if they're
benefiting, it's
don't look a gift horse
in the mouth, right?
One of the things that really
struck me about this story
with the horses were the
names that she gave them.
I Execute Class.
Subconsciously, or
ironically to send a message
to the town, the irony
there is obvious.
I'm Money Too.
She Scores.
Packin' Jewels.
Me Myself and I.
Jewelry by Tiffany.
Careful Who U Invite.
Ain't I a Natural.
I Found a Penny.
She Scores, makes
me cry because
she's one of my favorite mares.
And, by Execute, so...
Can you
tell me a little bit why.
She Scores is so special to you?
She's just a great mare and
she won seven world champions,
and she just has a
special place in my heart.
The idea of a small
town, high school educated,
municipal clerk who
was able to both
completely pull the wool
over her town's eyes,
but you know, the second
half of her double life,
which was this grand,
high stakes horse empire.
By day she's wearing
meek, municipal clothes
and by night she's dripping
with jewels and furs.
Is that
what she said?
This is funny.
I met Rita in 2005 at
the American Quarter Horse.
World Finals, in
Oklahoma City, Oklahoma.
I love it.
We always stalled at
the same area every year.
She kept in a small
little circle.
You didn't see a lot of
people walkin' up to her,
or congratulatin' her,
and I think, you know,
I was in awe of her, I
mean, Rita was a showman
and she was very
good at what she did.
When she won, she deserved
it, I mean she really did.
The Oklahoma
City Leading Owner Award
was no surprise, since Rita
Crundwell of Dixon, Illinois
has won the award now for
eight consecutive years.
Congratulations, Rita.
Rita was very
polished all the time.
She always had a
fitted, short top on,
and had beautiful jewelry
on while she was showing.
There'd be times she would
go back to back in classes.
She'd be out there for two
hours, her horse trainer
would bring her another horse,
she'd change her jacket,
and go back out there again.
Everybody was like, how did
Rita come across all this money?
And we were told that Rita had
a boyfriend that passed away
and he was much older than
her and left all her money
to her, and it was believable.
I saw her pull up one day
with a brand new, custom made.
Sundowner trailer just
to haul the horses in.
And you know, the word
was out, it was $250,000.
Rita, how did you
sleep at night?
How did you go to
bed and not think,
whose lives I'm infecting here?
I mean, it's crazy, how
did you sleep at night?
She lived quite a life.
A totally different life
than what she portrayed here.
I had learned that
she had a house in Florida.
I always thought that
she just went down
and stayed at her
boyfriend's mother's house.
The other thing that
was shocking to me
from a mayoral standpoint,
she took off four months
out of the year, why
did you need her?
Rita
taking time off
was unusual because
most fraudsters
don't wanna take time off
because they're scared
that their fraud scheme
will be discovered.
But Rita was so confident that
she took tons of time off.
'Cause she was a friend,
after the council meeting
they all came to her house
and then she had cocktails.
Yes, she would have people
from the city go to her house,
she'd have a barbecue.
She had a pool in her yard.
They were not unlike
parties that other,
say doctors, lawyers, or anyone
with sustenance here had.
So, I mean again, that
was not really questioned.
- Thank you.
- - Could you tell us about your pretty pony.
I bred Skipper W. Mare that
belonged to Terry Stevers,
by Mr. Touchdown Kid, I
leased Terry's alt mares
for two years and I got
all the colts out of 'em.
Rita's wealth was
not necessarily a red flag,
but what should've
been a red flag was
looking at the neighboring
town right next door to Dixon,
and that town was Sterling.
Sterling has a similar
population size,
a similar annual
budget, but yet Sterling
had a surplus, when
Dixon had a huge deficit.
Now Dixon may not have felt
the impacts of Rita's fraud
because they were
borrowing a lot of money
during the time
Rita was embezzling
a lot of the city's money.
18 months before Rita was
arrested, the city manager
of Sterling, Illinois,
actually wrote a letter
to the city of Dixon,
and said, why do you all
have this huge deficit,
because we have a surplus.
He was trying to alert
the city of Dixon
that something seemed wrong.
Former Dixon
comptroller, Rita Crundwell,
made her second federal
court appearance.
The main topic of that hearing
was the care and concern
of the 300 plus
horses that Rita owns.
I was directed by
Magistrate Judge Mahoney,
of the U.S. District Court,
to seize and care for
horses belonging to
former city of Dixon
comptroller, Rita Crundwell.
We have 400 horses, and they
are on 22 farms in 13 states
that span 17 federal
judicial districts.
You know, this case is
remarkable, and it's unprecedented.
In this particular case,
there's been an agreement
to sell the assets before
a guilty plea is entered
or a trial for which
could, may or may not
result in a conviction.
The reason for that is because
these are live animals.
The horses eat, they breathe,
they require daily care,
and they're expensive.
We're spending about
$200,000 a month
for the care of the horses.
It's a lot that
goes into an animal.
This is the defendant's
trophy room.
Not many people have a
herd of 400 show horses,
many world champion horses.
Our interest would be to
try to get all $53 million.
I don't know that the
herd's ever gonna bring
anything close to that.
Our purpose today is to let
the perspective buyers know
that what we have here
is a very valuable herd.
Out of
the office we start with.
Good I Will Be...
Preliminary estimates are that
we should expect 1,500
people here on the farm.
We're being told by the experts
that we should anticipate
what is sometimes
been referred to as
the Willy Nelson concert crowd.
$500 real now heard here,
and another one of 1,500,
another one on the half,
now
five, 600!
600, 600, 700, 800...
It's amazing what millions
of dollars can buy you,
and how fast they can
disappear in two days.
25,
80, double 80, and now
We're here
to bid on some horses
and hopefully we can bring
back, some of the money
back to Dixon, Illinois.
I've been in the
horse business all my life,
and I've never seen
anything like this
no place in the United States.
I think
it's absolutely gorgeous
and I've been doin'
this for 30 years
and I can tell ya, I've
never started a horse sale
with one as good as this one.
And
200,000, yeah, 200.
Yeah, 250, 250, yeah three.
250, hear 300
now 500,000, yeah 500
500, even 600, and 25
and 625.
Thank you, thank
you, that's 750.
750, now 775, 750,
give me 775,000.
Sold in $775,000.
I was glad to see what
that horse went for, Willy.
They had told me earlier
that it would probably go for
anywhere from 500,000
to a million dollars.
So, it was really
gratifying to see that.
That's 11.875 grosses, if you...
97,000 plus
dollars of horse semen
that she actually
had stored and frozen
for breeding purposes,
that was sold.
55, now 55, now
656, now 65, now 70...
Today we've
recouped about 7.4 million.
Our goal is to recoup
several million more.
Much of the money will
not be recoverable,
and that's not unusual
in a fraud case.
I was able to track
down some people
who knew Rita as a
child, and they described
just a normal kid who was
very smart, very pretty,
very charming, and had
a great love of horses.
Her mother also showed horses.
So you could see where
Rita's interest developed.
She always got the
best horses to show.
She was sort of
the golden child.
Rita is a Dixon
High School graduate.
And when she was
still in high school,
she spent one of them days
with the city
government, you know.
And, she caught on and
everything worked well
and she did her job very
well, at least we thought.
I guess the rest is
history.
I want her to be prosecuted
to the full extent of the law.
Boy, I guess I don't know.
If guilty, yeah, I, white
collar crime is crime.
I mean, because someone is
blue collar and it's
a violent crime,
doesn't make it less of a crime.
In the face
of overwhelming evidence,
Rita pled guilty to wire
fraud and money laundering,
on November 14th, 2012.
Three months after
her guilty plea,
Rita arrived at the federal
courthouse for her sentencing.
She faces a maximum
of 20 years in prison.
The hardship Rita caused Dixon
would be the central
focus of the hearing.
The prosecution put together
a PowerPoint presentation.
For each year of
her crime spree,
they had a couple of
boxes outlined in black,
where they would relay
the budget committee's
discussions of what
needed to be cut.
But then on every page, they
had a box outlined in red.
And during these drastic
cuts to the Dixon budget,
there were comments
like, Rita spent $6000
on a custom-made saddle.
Miss Crundwell upgraded
her motor coach.
She upgraded that
thing five times,
until she finally bought
one that was $2.1 million.
But particularly, in
year 2008, is when she
crossed the $5
million threshold.
And again in 2009,
more than five million.
And again in 2010, she
stole more than $5 million.
And I think she did that
because beginning in 2008
was the start of the recession,
and she had the best excuse.
Showing all of her assets
made everybody realize
that she just kept buying
and the people of
Dixon were suffering.
The thing that bothers me is,
how many projects,
and/or services,
have not come about
in the city of Dixon
because the tax
dollars weren't there.
If people ask, well who's
suffered because of this?
Everybody in this city suffered.
And of course it
was a domino effect.
Later on, we found
out in the city.
Repairs and raises
and layoffs and,
it was a big impact on Dixon.
I think a lot of
people were talking about
whether if anybody else was
involved in this situation.
Somebody else had
to know about it.
She may have taken money away
from people who
really needed it.
And that to me is a worse crime.
Yeah.
I was trying to recognize the
pain she caused to the city.
But, in spite of that, life
is never over 'til it's over.
And, I literally
believe that anybody
right up to their
last breath has got
the possibility to
change their life around.
Rita was given
close to the maximum sentence,
19 years and seven months.
I was in a seat where
I could look at her.
She would not look at anybody.
And all I could think
about was, you know,
for 20 years I worked side
by side with this woman.
And I never knew her,
I never really knew her.
The judge
ordered Rita to pay
the city of Dixon restitution,
and he imposed an agreed
forfeiture judgment
in the same amount.
This means Rita's restitution
is over $100 million.
Based on her $65 per
month prison salary,
it would take her over 120,000
years to pay back the city.
I knew that when they
were going to take her,
right then and there,
I closed my eyes
so I could listen to the
click of the handcuffs.
I knew that justice was served.
They took her so quickly,
she didn't even have time
to turn around and say
goodbye to her family,
because they were
sitting behind her.
She was gone.
At a time when the city
of Dixon is suffering,
and different department
heads are having to make
drastic cuts to their budget,
the defendant sends out
a bunch of covers, and those
covers have cartoon characters,
one was of a cat that
was scared, another one
has a big dollar sign
being cut in half,
just prior to the defendant's
arrest, showed an individual
in the ocean with
a life preserver.
Well at the same time, she's
stealing millions of dollars
from the city of Dixon
to fund her dream.
So, that's what
our argument was.
Thank you all.
I couldn't come to
work the next day.
I sat home crying, frantically.
And all I could think about
was, did she have a blanket
last night, was she cold, you
know, where did they take her?
So, it's like, first
you're angry, you're upset,
you're betrayed, then,
your emotions of, is she okay?
And to me, it was so
confusing for me and, I just,
I couldn't understand why
I was feeling like that.
Jim big
day yesterday for you
up in federal court.
After thinkin' about it
now for almost 24 hours,
what do you think
about went down?
Well you know,
I've heard from people, Jim,
that say, oh, she's
gonna go to one of those
country club prisons and it
won't be so bad after all.
She did appeal her
sentence, stating that the
19 years was unduly harsh.
She lost her appeal, and
since then there hasn't been
anything further, so at
that point the FBI then
works with the, we're at
work with the U.S. Marshals
along the way to
work on forfeitures,
determine what she
has that was seized.
Thousands of man hours
were spent by the FBI alone
when investigating,
and then too seizing
and documenting
all the evidence.
At this point we don't
really spend any more time
as the investigation led
that we could not prove
that anybody else was
aware of the fraud scheme,
and was part of it.
Dixon voters need to
clean house if they are to
rid themselves of this ongoing
corruption and incompetence.
Shameful scandal from the
hometown of Ronald Reagan.
As citizens we look at it
like, you guys dropped the ball
and you're still here
like nothin' happened,
and we keep having to
have cameras in our city
for stuff that's no good for
our city, and we're sick of it.
So, thank you.
You have not been
doin' your job,
you've been doin'
what's good for you,
not for the people of Dixon.
As far as I'm concerned,
you're all fired,
thank you very much.
This is what goes
on in the town,
it's nothin' but greed, abuse
of power, and corruption.
That's right.
And until we get rid
of some of these people,
it'll always be there.
When did I create the sign?
Just about a week before
they was even havin'
the first meeting
after Mrs. Crundwell.
And I thought it'd
be appropriate.
And that's the way
a lot of people think
in Dixon right now, and I do.
I changed my complete,
what I thought of that man.
The city council and the mayor
all should have known
what was going on.
They should've known
about the fraud,
they should've been
looking for it.
They were all complacent
in their duties
to just let her do everything.
One person, or one event,
does not define Dixon.
People are very angry
and rightfully so.
Lot of it's directed at
probably people that governed.
And that's kind of unfortunate,
because those people,
they did the best they
could with what they had.
Officials in
Sterling figured out
there was something wrong.
How in god's name
did another city
see the red flags
and this city didn't?
We have to change
our form of government
to something that is gonna
work, that's more professional,
that's more modern day,
and that's at least capable
of handling the problems
we have before us.
I think we need to...
So, I was vilified.
We would have the same
people comin' up here,
meeting after meeting,
and suggesting that,
and asking for my resignation.
I mean there was
nothing that ever
prepared me for this
kind of an experience.
It hurt him, shocked him,
the way that the anger was,
you know especially against
him and the city council.
You know, he felt
responsibility for it,
it was just the fact that
because he was the mayor
and it went down on his watch.
My question today
is to the auditors.
Why did you never tell
the mayor and the council
that our internal auditing
were completely lacking
and needed to be changed?
People would often
ask questions about,
why are these revenues so small?
How come we haven't
gotten this money?
So on and so on.
But no one ever
followed up on that.
Whatever Miss
Crundwell told them,
they swallowed it,
hook, line, and sinker.
So who really is
responsible for finding fraud?
Is it the auditors who did
the annual audit for the town?
Is it the bank where the city
held their bank accounts?
Is it the city council,
who ran the town?
Or is it the residents?
The local media
felt all along that
the commission
form of government
was the sole reason for
this whole embezzlement.
I mean, we are the outstanding
community around here.
And it got here with this form
of government that we've got.
I mean essentially you have
a handful of city leaders,
who have their own
little fiefdoms,
don't really communicate
a lot with each other.
But more importantly,
they're part time jobs
that pay a pittance.
All of them actually,
they have other jobs.
For instance, one of the
city officials owned a
carpet store, another was a
high school business teacher.
I mean these are the people
who are responsible for
keeping track of
what's going on.
There was not the oversight
from a governing board
perspective, really diving
down and diving deep into
what the operating
budget looked like,
how the dollars were
being allocated,
be it to public safety,
capital projects,
or any of the other
public services.
In reporting this
story I found that
she had made the books
and the numbers so complex
and convoluted that, I mean,
none of the town officials
knew what these numbers meant.
So, when they had a
question, and maybe sometimes
they would think, this
looks a little odd,
someone else would
say, well go to Rita,
she'll explain it to you.
To trust a single person
for any financial function
is a mistake, so you
don't trust one person
to be in charge of the credit
card, and its payments.
You don't trust one
person to be in charge
of the water billing,
collecting the money, billing
the money, you have to
separate out these functions.
Dixon's case was an extreme
example of this because,
they had, not only
did they not separate
individual functions
among multiple people,
they didn't separate any
functions among any people.
Rita picked
up the mail, made deposits,
updated the journals
and ledgers,
prepared and signed checks,
moved investment monies,
and reconciled
the bank accounts.
There was very little
segregation of duties
Rita literally did it all.
While Rita was out
of town, she would have
an employee pick up
the mail for her,
to keep for her
when she got back.
And I know that statement
was one of them.
There's been no policies
in place all these years.
Maybe Rita was smarter than
all of us because she knew
there were no policies in place.
It was clear to me that the
city of Dixon was a victim,
and I thought I could
make a difference
and help the city and
the taxpayers out.
Do I believe
the city of Dixon
had any responsibility
themselves to identify the fraud
that was committed
by Rita Crundwell,
and I think unequivocally
the answer is no.
I did not meet Rita
Crundwell when I was
prosecuting this case, and
nor have I ever met her.
For purposes of my
prosecuting this case
for the city of
Dixon she was for all
intents and purposes,
irrelevant.
The issue was, who was
responsible for identifying
the fact that she was
stealing the money.
Rita developed too
cozy of a relationship
with so many people that
were involved in this thing.
She directed the audit, I mean,
she was the one that really,
in my mind, selected
Clifton to continue
to do the auditing and so forth.
Clifton is a
top 10 public accounting firm
in the United States.
The city of Dixon was a client
of Clifton's local office.
They were hired by the city
to do the annual audit.
And in addition,
they were involved
in the city's
day-to-day operations.
They made a conscious
intentional decision to get all
of the money for every
financial aspect of that city.
They made that decision,
they were there.
Either Clifton was
at the city hall,
or the city hall
people were dropping
financial documents off
there at least once a day.
What has come to
light in the depositions
of one of the
partners at Clifton,
he testified that they did
all the accounts payable,
they actually cut
checks, they did payroll,
they did other
consulting services.
Aside from the fact that
they will have to defend
against the accusation that
they should've discovered
this fraud, I think they have
a bigger issue to defend,
and that is, an
independence issue.
An auditor
provides an opinion
on a company's
financial statements,
similar to how a food
critic provides a review
of the dining experience
at a restaurant.
An auditor reviews the accuracy
of the financial statements,
similar to the way in
which a food critic
provides a thoughtful,
unbiased review
about the food at a restaurant.
Auditors are not
responsible for developing
the financial statements
on the company's behalf,
just like a food critic
is not responsible
for preparing the
restaurant's meal.
People rely on the
opinion of auditors
to make business decisions,
just like people rely on
the food critics review
to decide whether to
eat at a restaurant.
Now imagine if the
food critic was the one
who prepared the food,
then ate the food,
and then published a review
of that same restaurant
based on that meal.
Seems like a huge
conflict, right?
Well, it is.
Exactly, but in this
case, because of Clifton,
Larson's, Allen's
own intentional
they themselves chose
to formulate and create
the financial statements,
which they themselves chose
to charge again to audit.
They were looking
at their own work.
It's asking someone
to prepare a document,
and then asking the same
individual, and getting paid
to do so, and then asking
the same individual
to say, is your document right?
The city argued
that the auditors knew,
or should have known, that
the invoices were phony.
Here's a proper
invoice from the
Illinois Department
of Transportation.
This is the way they're
suppose to look.
And that's the invoice
from Rita Crundwell.
And a nine year
old could identify
the difference between those.
The field audit team looked
at these false invoices
and failed to do anything at all
that they were taught in
accounting school to follow up.
Whether it be, talk
to the city engineer,
make a phone call
to Springfield,
go out and look at these
clearly fictitious projects,
any of which would
have resulted in
a discovery of the theft.
I deposed a number
of the individuals
that were responsible
for the field audit work,
and the actual generation of
the work papers for Clifton
when they did the work
for the city of Dixon.
If
At any point in time
Clifton was doing the audit,
and they would've
walked down the hallway
to ask a simple question
of the city engineer,
excuse me, can you tell
me about this project?
Do you agree the
subsequent events
would have identified
Rita's theft?
Yes.
Do you agree with me
had that been done, the fraud
would have been identified
and Rita would've been arrested?
Yes.
There was 179, as we counted,
of those false invoices
and they failed to react
to any one of them.
They missed it, over and over
and over again, they missed it.
The issue is, you
know, should someone
have known about
that RSCDA account.
Do we have any
proof that Clifton
had knowledge of
the RSCDA account?
And according to them,
in their own depositions,
the answer to that
question is yes.
They were given bank
confirmations on
disclosing the RSCDA account,
and they did nothing.
I deposed both of the
current, as well as the former
head of the Clifton
office in Dixon.
Both of those individuals were
also the key people involved
every year in
performing the work for
Rita Crundwell's personal
income tax returns.
Is it unusual
that somebody would have
over $300,000 cash flow out,
without being explained
by their tax returns?
Well,
it would be unusual.
In 2005, there's over
$300,000 that Clifton,
in preparing Rita
Crundwell's tax returns
identifies as money coming
in to Rita Crundwell
for which there's
no documentation.
All a city employee who makes
80 some thousand dollars a year.
Other
than just writing it down
and claiming it, that's
the most that she had
in terms of
documentation, correct?
Correct.
You never asked her
for anything further, true?
True.
How do you explain
that at times
they were preparing a
financial statement,
which within the financial
statement that Clifton prepared,
demonstrated that
the city was losing
millions and
millions of dollars?
When the person, who
is at the epicenter,
which they know because
they're doing the annual audit,
the epicenter of
the city of Dixon
is the treasurer/comptroller.
Unexplained income on a tax
return is always a problem.
And had the tax preparer asked
a couple of more questions,
it would have led
that preparer to know
that the unexplained income
was coming from the
embezzled money.
If the auditors are not
to be held responsible for
identifying the theft
of millions and millions
of dollars every year, why
have 'em in the first place?
I think most people
are under the impression
that these audits
are going to uncover
graft and corruption
and embezzlement,
Auditors are not
responsible for finding fraud,
nor should they be.
They became reporting
and disclosing police,
making sure that
the corporations,
in particular, were following
the appropriate regulations.
Am I defending these
particular auditors, no.
I just did not
see, in light of the
overwhelming negligence of
CliftonLarsonAllen's employees,
which came out in
these depositions on
I just did not see how
they could win the case
in front of a Lee County jury.
Most frauds
are discovered by a tip
from a whistle blower,
and not from an audit.
So had Kathe Swanson not
discovered this fraud,
and then reported
it to Mayor Burke,
there's a chance that this
would've never been discovered,
and Rita would've
gotten away with it.
Yes, um-hm.
Being a whistle blower
is, it's very stressful but,
you know, it's all in
how you're brought up.
My parents taught me,
you don't take something
that doesn't belong to you.
And if you see something
wrong, say something, so.
My only regret is, is that
I didn't find out sooner.
Fifth Third
Bank was also named
in the civil complaint.
Remember, the city of
Dixon held six legitimate
city accounts, along
with her secret account,
which she used to funnel
money out of the city.
I think from the banking side,
I think it was shocking
that they opened
the account the
way that they did.
According to them it was
a city of Dixon account,
and for them to see,
on a regular basis,
so many personal transactions,
from jewelry to spas to
equestrian activities.
Many of the checks
that she was depositing
into this bogus account
were made out to Treasurer.
That type of ambiguity is known
within the banking industry
as something that you
should not allow to occur.
Especially in the
amounts of the money
that she was negotiating.
I took the deposition of
one of the Fifth Third Bank
former employees, who
happened also to be
the bank branch manager
when a lot of the most
serious transactions
that Rita had
with Fifth Third
Bank, transpired.
If you were a teller
at a bank branch here in Dixon
and somebody walked
up to you and said,
I'm going to negotiate a check
for hundreds of
thousands of dollars,
and it just says,
payee treasurer,
do you feel comfortable
that the check
can be negotiated as written?
Based on my experience,
it would raise caution.
And what's
the basis of that opinion?
The
dollar amount, number one.
Typically higher dollar
amounts are reviewed closer.
I was able to obtain
a lot of admissions
on behalf of Fifth Third
Bank that I thought
would be very damaging
for Fifth Third Bank
should we go to trial.
The case
never went to trial.
No, I wasn't surprised
by the settlement amount
because I in my
heart truly believe
that the fault
lied with Clifton,
the Fifth Third Bank,
and one way or another
we were gonna get that
money for the city,
whether it be by
trial or settlement.
And we have to become
ACA compliant right now
if we go to that 2 1/2%, if
we don't wait until January.
Correct.
Right.
No, actually taking the
job after she was here,
my first thought was, well,
really, how could
I do any worse?
You know, I
mean it was like, wow.
My plan was, in
addition to this,
was to write up those raises
for the non-union people.
And send something...
The idea of coming
in and creating
a whole new system
of accounting,
and restructuring it all,
just seemed really interesting
and a challenge
that I wanted to do.
I actually changed about
everybody's job duty
and I physically relocated them
in a lot of times into
different locations,
just so that we would
all have a view that
things are gonna be
done differently here.
Our office dynamics
have definitely changed.
My duties have lessened.
I'm just the city clerk
now, I don't do the payroll.
I think it's more of
a professional place.
I still harbor a lot of
bad feelings towards Rita.
I can't help but feel that way.
I don't think I feel
any more sorry for her.
I think she's where she belongs.
I look back at it
sometimes and I think,
how did it all come about?
Why was she caught?
And that I can't
wrap my mind around,
you know, why that day?
I'm sure, you know,
to save the city.
I don't believe that how
Dixon's finances were structured
is probably very
different from many,
maybe even a majority,
of other small towns
all across the United States.
I would also guess that there's
a tremendous amount
of theft out there.
What Rita did isn't
particularly unique.
The only thing that
makes her unique
is the dollar amount
that she took.
What she did is very, very
common, and could be done by
almost anybody in any
size organization.
- Councilman Tucker.
- Aye.
- Councilman Venier.
- Yes.
- Councilman Bishop.
- Aye.
- Councilman Barnes.
- Yes.
The citizens have voted
in a new form of government.
We'll become a managerial form.
The role of the commissioners
from being kind of
an everyday executive authority
over different departments,
now the city manager will
have the executive authority
over the different departments,
and the council will
just be doing policy
as opposed to being involved
on a more of day-to-day basis.
Baskets are held on
by brackets on the...
The city needed some fresh
blood, some fresh ideas,
and we got five new councilmen
that were elected back in April.
I recognize that
when you guys come in,
you had a lot of
extra work to do.
But, your ears have
always been open to us,
Paul's door's always
been open to us,
I appreciate the fair
treatment, I thank all of you.
And the rest of the people...
We now have put in
multiple forms of
fraud protection.
Multiple people
have to sign checks.
Multiple people have to approve
the payments in the first place.
I think other small
towns should consider,
not necessarily going out
and hiring a lot more people,
but the people that
you have involved,
your council members,
your elected officials,
even other people who
are employed there,
I think it would behoove them
to really actually understand
accounting, understand
financial statements,
so that they can look at them
and read the story
that they tell.
Financial statements are really
out there to tell a story.
And if you can learn
to read that story,
you might be able to avoid
anybody walking away from this.
Hey, were you
able to get anything
as far as any cost estimate or...
Dixon
Mayor Jim Burke makes
last minute phone
calls on Monday.
If it's possible
to get a requisition
before I leave the office today.
Okay.
5:30 I'll be all finished.
I really, I'm disappointed
I'm not running again.
I think the foundation was
there to get reelected.
This marks
his final day at city hall.
He's completing
16 years as mayor.
I'm gonna
miss it, I hate to go,
but I know it's time to do this.
Here we have
intermediate storage,
so for all of the paperwork
that isn't necessarily
from my administration,
but we still want close by.
Old filings and stuff,
that's kept right here.
Since electronic records
are relatively newer,
that's one of the things
that was interesting
about the Crundwell situation,
'cause it took place
over 20 years and
she was essentially
the master financial bookkeeper.
So you're trying to
put together her work
during that whole situation,
that's one of the challenges
our new finance director faced.
She did keep some
pretty good details,
which helped with
a lot of things,
both in terms of figuring
out what happened
from the FBI side, and in
our case, putting together
the finances and figuring out
which funds she took from.
So whatever those funds were
originally supposed to be
spent on, they could
get their money back.
I was interested in
running for election
basically because of the
Rita Crundwell situation.
Because I saw what was
happening in my own back yard.
So, congratulations, Scott.
People needed to trust
their government again.
'Cause that trust was
shattered by this incident,
absolutely shattered.
We have recovered a
net of about $40 million
from the civil lawsuit
and from Rita's assets.
10 million of it right away
disappeared for lawyer fees.
A good roughly half of that
immediately went
to debt payment.
As Rita was stealing
more and more money,
we were borrowing
more and more money.
And one of the things I
looked at is by the end,
the numbers were eerily close.
You know, she stole close to
somewhere like five million
in the final year,
and the city borrowed
close to about five million.
And then the rest has been
focused mostly on infrastructure.
We redid River Street,
which was a major eyesore
on a major state
highway that was going
right along the river.
Seventh Street washed away,
there was a big gaping hole.
So our focus is,
whatever's been left,
we're trying to use on
what got hurt by the theft.
And by and large that
has been infrastructure.
Anyone who interacts
with the city of Dixon,
under this council
and my administration,
whether you're an auditor,
whether you're contracting
with the city, whether you're
an employee of the city,
we're gonna be watchin'
the money really closely.
The past three years I
think the town is physically,
financially in better
shape than it's been
in many, many years,
since I've lived here.
And basically because they
recouped all that money
from the bank and
the accounting firm.
The people of Dixon are
really, really good people.
I don't want people to think
we're a bunch of boobs.
I don't want people to
think we aren't interested
in what happens in our town.
It's tough when that's the
image we have out there.
So our job has to be now
not only to change things,
but to show people
how we changed,
and what a good
community we are.
I love this city.
My wife and I chose to
retire here, 20 years ago.
Ask anybody that
comes here from any,
from miles around,
we're envied by all the
surrounding towns around
here for what Dixon has.
We're trying to put
the fraud behind us.
You never dream it's
gonna happen to you.
But obviously it can.
I think our hometown boy,
our President Ronald Reagan
said it best,
"We trust, but verify."