ROCKFORD — In what authorities are calling the “most significant abuse of public trust” in Illinois history, former Dixon comptroller Rita A. Crundwell admitted to defrauding taxpayers out of $53.7 million to finance a lavish lifestyle.
Crundwell, 59, faces up to 20 years in federal prison after pleading guilty Wednesday to charges of wire fraud before U.S. District Court Judge Phillip G. Reinhard. She admitted in a plea agreement that she set up a complex scheme in which she opened a Dixon bank account that she alone controlled, abused her city position to transfer taxpayer money into the account, then spent it on personal and business items.
“The theft by fraud of more than $53 million belonging to the city of Dixon and its citizens for over a period of 21 years is certainly, as far as I know, the largest theft of public funds in Illinois history,” said Gary S. Shapiro, acting U.S. Attorney for the Northern District of Illinois.
Shapiro said thefts were preventable if only there had been proper oversight in place. Crundwell used the money to finance a premiere quarter horse farming business and a life of luxury. The FBI and U.S. Marshals Service have recovered $7.4 million from live online auctions of about 400 quarter horses, vehicles, trailers, tack equipment and a luxury motor home. Real estate in Florida and Illinois is still pending auction.
The proceeds are held in escrow as a request to use the money for repaying Dixon is processed through the Department of Justice.
In what is known as an open plea, Crundwell admitted in court documents that between Dec. 18, 1990, and April 17, 2012, she devised and executed the fraud scheme, but there was no agreement in place for her sentence.
She is free on recognizance bond until a sentencing hearing Feb. 14.
Prosecutors are expected to argue she be sentenced from 15 years and eight months to 19 years and seven months under federal sentencing guidelines. Public federal defenders argue the guidelines should actually mean she is sentenced to 12 years and seven months to 15 years and eight months, according to a news release from the U.S. Department of Justice.
EARLIER STORY: ROCKFORD, Ill. — The longtime bookkeeper accused of embezzling more than $50 million from a small city in Illinois to fund a lavish lifestyle that included a nationally known horse-breeding operation has pleaded guilty.
Rita Crundwell, the former comptroller of Dixon, pleaded guilty Wednesday to a charge of wire fraud in federal court in Rockford. She was accused of stealing public money while overseeing the northern Illinois town’s public finances and siphoning it into a secret bank account.
Residents in Dixon, the boyhood home of the late President Ronald Reagan, welcomed Crundwell’s plea. Its 16,000 residents are largely lower-middle class, working at factories and grain farms, and they had come to trust Crundwell to manage the town’s finances with little oversight.
“It is a pity and tragedy — for us and herself,” Mayor James Burke said. “But having said that, the people who care about the community are looking forward, not backward.”
Crundwell deserves a long prison sentence, Burke said.
“There is no indication that she has remorse over this whole thing,” he said.
He also hoped that the plea would help the town recoup more of its $53 million in losses. A guilty plea in the federal case enables the U.S. Marshals Service to start selling off millions of dollars of assets still in Crundwell’s name, including about $450,000 worth of diamonds and other jewels, ranch land and a house in Florida, he said. The marshals already have auctioned hundreds of Crundwell’s horses.
Crundwell, 59, had previously pleaded not guilty to the wire fraud count, which carries a maximum sentence of up to 20 years in prison.
She is accused of using her city hall job to steal tax dollars that supported an extravagant way of life and won her national fame as a horse breeder. Prosecutors say she began stealing the money in 1990. She had been working for the town since she was 17 and started to oversee public finances in the 1980s in the small city about 100 miles west of Chicago.
Authorities say Crundwell bought luxury homes and vehicles and spent millions on her horse-breeding operation, RC Quarter Horses LLC, which produced 52 world champions in exhibitions run by the American Quarter Horse Association.
Her scheme unraveled when a co-worker filling in during Crundwell’s vacation stumbled upon her secret bank account, prosecutors said.
Crundwell has pleaded not guilty to 60 separate but related felony theft counts in Lee County.
EARLIER STORY: The mayor of Dixon, Ill., thinks the people of his town will react the same way he did to news that Rita Crundwell is pleading guilty — with great relief.
The 59-year-old former city comptroller is accused of stealing $53 million from the city during a 20-year period that ended with her arrest in April. She pleaded not guilty to a federal charge of wire fraud in connection with the case but is expected to change the plea Wednesday in federal court in Rockford.
She also faces 60 state charges of theft, all felonies. She has pleaded not guilty to those charges.
“I knew about this (plea change) in advance, and I’m glad it will eliminate (the chance of) this thing dragging on for three or four more years,” Mayor Jim Burke said Tuesday. “It hasn’t filtered out, yet, but it absolutely is good news. It means we can proceed with the sale of more (of Crundwell’s) property.”
He said federal officials have assured him the fact she is pleading guilty to only one charge should not suggest a short prison sentence.
“The main determining factor will be the amount of money,” he said. “A pre-sentence report has to be concluded first. It’ll take into consideration everything she’s done.
“The other interesting thing is: Will she be led right to the slammer? It’ll be up to the judge is what I understand.”
Authorities from the FBI, U.S. Marshals Service and U.S. Attorney’s Office have said they will publicly comment on the case, following the plea hearing, which is scheduled for 9 a.m.
Burke said he has been told to expect Crundwell to be sentenced after the first of the year.
Another development that could affect the case is the unseating of Lee County State’s Attorney Henry S. Dixon, who filed the state charges after a grand jury’s September indictment. He lost the Nov. 6 election to opponent Anna Sacco-Miller.
Asked whether Sacco-Miller has expressed the same enthusiasm for prosecuting Crundwell as Dixon, the mayor said, “Well, I hope so. I haven’t had any conversation with her. She claims she’s going to be a real hands-on attorney.”
Meanwhile, more of Crundwell’s property is on the auction block.
Several pieces of equipment from her horse-breeding operation are being sold in an online “short-notice auction,” which ends at 7 p.m. Wednesday.
Included in the short list of inventory is a 2012 40-foot Featherlite enclosed horse trailer and equipment related to the breeding laboratory Crundwell maintained at her Dixon ranch.
To bid, go to professionalauction.com.
The U.S. Marshals Service, which took control of Crundwell’s 400-plus horse herd and other seized assets, put the animals up for auction in September. At the two-day sale at her ranch on Red Brick Road, 319 horses were sold, along with horse semen, tack and equipment.
Proceeds from the live auction totaled $4.78 million. Another $1.64 million was generated by an online auction of the remaining horses in her herd.
Also in online bidding, Crundwell’s luxury motor home, previously valued at $2.2 million, sold for $800,000.
So far, the U.S. Marshals Service has brought in $7.3 million in cash for the seized assets that have been approved for liquidation by a federal judge. Crundwell has not objected to the sales.
The U.S. Marshals Service is completing details for the sale of the ranch, Crundwell’s homes in Dixon and Englewood, Fla. and the contents of all the properties. Her personal property includes a considerable collection of expensive jewelry, court records show.
A portion of the money generated by the sale of her assets will be used to repay the Marshals Service for several months of caring for the horses, and the remainder is to be given as restitution to the city of Dixon.
Crundwell to plead guilty
Rita Crundwell, accused of stealing $53 million in her former role as comptroller for the city of Dixon, is scheduled to plead guilty Wednesday in federal court.
The 59-year-old previously pleaded not guilty in federal court to a single count of wire fraud. She also faces 60 state theft charges, all felonies.
A spokesman for the acting U.S. Attorney for the Northern District of Illinois, Gary S. Shapiro, announced the plans Tuesday. He said Crundwell is scheduled to change her plea at 9 a.m. Wednesday in federal court in Rockford, Ill.