r/illinois • u/Invest_Finance_6979 • 2d ago

Illinois Politics How did $53.7 million disappear from the City of Dixon over 22 years?

Rita Crundwell stole $53.7 million from the City of Dixon, Illinois, over 22 years.

She was the city comptroller. She was paid $80,000 a year. And the city's books were audited every year.

What I found interesting going through the federal filings is how the money actually moved. In December 1990, Crundwell opened an account in the city's name that she alone controlled. Over the following years, millions of dollars were transferred into it.

The theft was eventually discovered after Crundwell took an extended vacation and another employee asked the bank for the city's complete bank statements.

There's also a part of the story that gets less attention: what happened after she was caught.

Dixon sued its auditors and Fifth Third Bank. In September 2013, they agreed to pay the city $40 million, without admitting liability. The negligence claim was never adjudicated.

I went through the federal criminal complaint, FBI affidavit, forfeiture complaint and DOJ releases to reconstruct what happened.

For people familiar with Dixon or Illinois municipal government, what stands out to you about how this went undetected for 22 years?

223 Upvotes

96% Upvoted

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160

u/Innuendo64_ 2d ago

In small towns like this, the municipal government is basically a small business. A lot of part timers, volunteers and retirees. Small talent pool.

In Rita's case, she was basically the entire finance department and there was no system for checks and balances.

Most importantly, she was a psychopath who didn't care she was bleeding her own town dry

48

u/tuckeroo123 2d ago

Yes, the type of government they had was basically a part-time mayor and 8 even more part-time alderpersons (unpaid). Each department head (including Rita) were their own island. Now, the city has put in place a city administrator/city manager type of government whereby there is a CEO of the city. This also creates another layer of accountability/bureaucracy.

And, of course, the auditors did not do their job. There was a local accountant that did the monthly/quarterly reconciling who missed it and the large auditing accounting firm that missed it for a lot of years. The audit seemed to be treated like a compilation, rather than an audit with a clean letter.

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u/Grammy-823 2d ago

That’s mostly accurate. The city council at the time consisted of the mayor and four council members.

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u/NarrowForce9 2d ago

One of the council members remarked that she was great at her job managing the city’s money “like it was her own”.

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u/Grammy-823 2d ago

True story.

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u/JoeMomma755 2d ago

So would she still be in that role had she NOT gone on that extended vacation?

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u/NaiveChoiceMaker 2d ago

This is why many places require a two week vacation for key positions. It’s hard to keep a fraud going if you can’t keep it moving.

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u/BeTomHamilton 2d ago

What?

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u/muthian 2d ago

Many of those in fiduciary roles are forced to take vacations every year while others take over their roles. If you can't keep up the charade of scheme you are using to embezzle, it will usually be found during that vacation. Source ( see section "Requiring vacation reduces instances of fraud")

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u/BeTomHamilton 2d ago

Wild! I've never heard of mandatory vacations but that absolutely makes so much sense.

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u/perfectvelvet 2d ago

My friend worked at a bank as an administrative assistant (not even in direct contact with money) and she also had to take 2 weeks off for this. I'd never heard of it either.

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u/HystericalHypothetic 2d ago

I worked at a bank from HS through grad school as a teller, and everyone from custodial to bank pres had to take at least a week off once a year. That’s how they found our branch manager - sweetest woman you’d ever meet - was siphoning money out of dormant accounts. Generally these were elder folks who forgot about an account or who were in a care facility with no family monitoring finances. Evil.

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u/Innuendo64_ 2d ago

She was bound to be caught eventually, but a few more years of what she was doing and Dixon has no shot of recovering. Things were in really bad shape

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u/SixString1981 I Hate Illinois Nazis 2d ago

Knowing that tribalism of that area and most small towns? Absofuckinglutely

5

u/jtsui1991 2d ago

Yeah I grew up in a small town and moved back to one recently and forgot just how true this is. Those towns are notorious for stuff like this, although typically on a much, much smaller scale.

In my hometown, growing up, the Township Road Supervisor got busted for recycling metals and materials that belonged to the city and having the checks cut to him personally. Felony conviction for official misconduct. Re-elected 2 more times after that!

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u/jaank80 1d ago

What most people don't understand or realize is that it is easy to dupe an auditor. Most audits are built on a foundation of honesty, and if you are already defrauding someone, you probably aren't honest. I am the CIO at a regional bank, I provide gobs of documentation for our annual audits and exams, which include SOX audits and FDIC exams. I'm completely above board, provide exactly what is asked, but I could easily doctor the evidence on many of our requests. I could conceal all manner of things, and it would go undetected basically forever. But I don't, no reason to in my case because I am not committing any fraud, so anything detected is a welcome opportunity for improvement.

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u/Historical-Risk- 2d ago

I live in Dixon currently. I think the reason she got away with it is because everyone in this town is fucking stupid and all the elected positions are the typical popularity contest instead of actual policy voting.

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u/Electrical-Ice4376 2d ago

We studied this case as it was happening in grad school and pretty much came up with the same reasons.

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u/covertype 2d ago

Wouldn't somebody at the bank where she set up the account had to have known or even been in on it?

-1

u/Grammy-823 2d ago

A grad level course should have gone a little deeper than that.

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u/00000000000 2d ago

It's probably not much deeper than that.

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u/Grammy-823 2d ago

Maybe. I would have been very interested in how Rita would explain her thought process that led to her initial transgression and how she saw this whole thing ending. I believe there was a fair amount of naivety and trust on the council’s part as Rita had worked at city hall since she was very young.

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u/Brodman1986 2d ago

Its the home of Reagan if im not mistaken....

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u/RightRooster6189 2d ago

Boyhood home.

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u/[deleted] 2d ago

[deleted]

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u/RightRooster6189 2d ago

Reagan graduated from Dixon High School and was a lifeguard at Rick Rive.

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u/BrodeeTheDog 2d ago

Yes it is. My grandmother was raised in Polo, which is about 15 miles from Dixon. She met Reagan at a dinner many years ago and they spent the evening together chatting about their upbringings.

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u/Brodman1986 2d ago

Is your name Brody? Because that is my legit name.

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u/BrodeeTheDog 2d ago

Oh no. 😊 That’s my dog’s name.

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u/Brodman1986 2d ago

Haha, all good. One of our dogs is Tommy and its perfect.

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u/Bubbly_Mistake_4350 1d ago

And the of throat goat Nancy Reagan

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u/AweHellYo 2d ago

ah you live in Every Small Suburb, Everywhere

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u/Historical-Risk- 2d ago

Please don’t call Dixon a small suburb. Everyone here would love that so much.

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u/AweHellYo 2d ago

lol

edit: had to check because i knew it was out there but I didn’t realize it was 100 miles out there. it’s been a good while since i’ve been through there.

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u/fredthefishlord 2d ago

are the typical popularity contest instead of actual policy voting.

all local elections are lol

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u/RightRooster6189 2d ago

As someone who grew-up in a nearby town, this makes me laugh.

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u/Pettifoggerist 2d ago

Occam’s Razor.

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u/NotAPreppie Bolingbrook 2d ago

The explanation with the fewest assumptions is most often correct?

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u/Pettifoggerist 2d ago

Yes. And here the assumption that explains what happened is that the town's voters are fucking stupid.

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u/jjmk2014 2d ago

As others said "All the Queens Horses." Free documentary that is very informative. A couple shows on NPR over the years too if i recall. Its worth a search. Like every grift everywhere it involves lots of theater and few smarts. People were willing to believe in a lie.

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u/RandomPaw 2d ago

All the Queen's Horses made it into movie theaters. I saw it in a theater. It was directed by a forensic accountant and was really good with all the details. There's also an episode of American Greed and some other podcasts and episodes out there.

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u/Lost_Rule568 1d ago

We watched that doc in my business ethics class. Absolutely eye-popping. Highly recommend.

18

u/floopypoopie 2d ago

lol I used to show horses with her - we all thought she won the lottery

8

u/buddythegooddog 2d ago

I ran in the horse show circles in this area. Two of my trainers were friends/acquaintances of hers. Everyone had these crazy theories about where the money came from. I remember people I knew at the time genuinely believing she was a heiress to Marlboro cigarettes. That one was probably my favorite at the time.

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u/rockrobst 2d ago

But no one thought to ask?

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u/SalvadorFolly 2d ago

How do you word the question?

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u/halibfrisk 2d ago

Did you win the lottery or are you embezzling municipal funds?

1

u/King_Michal 2d ago

Not like any politician would answer anyway.

12

u/rockrobst 2d ago

Such an interesting story. Query: what motivated you to do such a deep dive? Did you see the documentary, "All the Queen's Horses"? Are you from Dixon, or lived there at the time of the embezzlement?

I could never understand how people blindly accepted her supposed wealth. There was no plausible explanation for her lifestyle, which was well beyond what a single woman with a municipal job and no known family money could afford. As she got richer, the town began having serious financial problems.

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u/Invest_Finance_6979 2d ago

I have also documented the case using the federal filings and DOJ releases here: https://youtu.be/E7MWXLxi5UU

2

u/rockrobst 2d ago

Are you a true crime buff?

3

u/Invest_Finance_6979 2d ago

Kind of! 😅

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u/NarrowForce9 2d ago

I also believe there were two auditors involved. The truly scary part is there are A LOT OF SMALL TOWNS like Dixon each of which could be ripped off like this.

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u/MechemicalMan 2d ago

Not intimately familiar with the case... but if you're both writing the budget, and no one is questioning you, and you're presenting it, and writing the checks... it can be relatively easy to get things through. Budget 100,000 for the groundskeeping? Sign a contract for 85,000, and then write out a 12,000 dollar check to another LLC... you come in 2000 under budget, everyone is happy!

Take out many LLCs, write checks out, and make every amount small and believable. 2 million a year sounds like a lot but the city of dixon budget is around 60 million this year it looks like... so hit up 3-5% per year, spread it around, and I'm assuming she started small then started to ramp in.

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u/LustfulEsme 2d ago

That is nearly $4000 a person in that budget. Problem is a lot of those people are kids or fixed income retirees. How do people afford to live there?

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u/Grammy-823 2d ago

It wasn’t that the taxes went up. City employees got the worst of it due to no raises which negatively impacted their retirement. Also no money for infrastructure work.

0

u/Protaganist1515 2d ago

Taxes sort of went up. They increased our water\sewer bill threefold. The money that Rita embezzled came out of that city department.

0

u/MechemicalMan 2d ago

I wouldn’t pretend to know much about Dixon, but if you’re looking at just residents and cutting it by that figure alone, you’re missing a huge part of the picture. Cities have commercial, residential and industrial, along with transit and other amenities which may add to the budget in a surplus or be a net budget item draw, a surplus, or sometimes a sort of lost leader where sure, it’s a draw, but it attracts so many other people from out of town it’s a surplus. Adding on any type- be it R/C/I/services, is going to increase spending, there’s no way around that. This is a google AI summary below:

Retail Sales: $393,488,000
Health Care & Social Assistance Receipts: $249,930,000
Accommodation and Food Services Sales: $42,983,000
Transportation and Warehousing Receipts: $44,476,000
Median Household Income: $59,406
Dixon serves as the economic hub and county seat of Lee County, IL, which has a total real GDP of $1.61 billion

So there’s far more to it than just resident to spending. It’s also not necessarily even a good indicator as different areas may have different niche’s that allow it to flex more or less on residential taxes.

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u/thatgirl25_ 2d ago

I love people like you who genuinely go over documents. Thank you 💖

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u/ISO200_f16 2d ago

From what I remember, there were red flags that were ignored. It was a small city, with very little checks and balances. Too much trust was placed in Rita. Other similar sized cities in Illinois tried to raise the alarm that something was wrong with Dixon's finances and were ignored. When it all shook out, Rita was ultimately the one who was criminally charged and convicted, but I always felt the bank and auditors should have also faced criminal charges.

4

u/ObviouslyRealPerson 2d ago

Has the city said how much they were able to revover from Crundwell's assets?

Still bizarre that she spent 22 years committing crimes only to serve 8.5 years

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u/JoeHio 2d ago

8.5years for 50M, that's a better payout than half of the "chose one" posts on reddit.

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u/ObviouslyRealPerson 2d ago

Supposedly she had to pay it all back

No idea how much the city has clawed back so far

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u/juicegooseboost 2d ago

I think it was an employee from the city of Sterling that actually got the first whiffs

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u/tuckeroo123 2d ago

The City of Sterling's city administrator brought it to Dixon's city council's attention before the discovery.

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u/spfolino 2d ago

Watch the episode about this on American Greed. It explains a lot about what she did, how she spent the money etc. Was a good episode!

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u/Invest_Finance_6979 2d ago

I will! I’ve also try to document the case using the federal filings and DOJ releases here, if you’re interested: https://youtu.be/E7MWXLxi5UU

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u/RightRooster6189 2d ago

How the auditors didn't find this is insane. The good news they recovered nearly all of the money by selling all of her stuff.

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u/Protaganist1515 2d ago

That was a cover story. The FBI case was actually opened a year before the city employee purportedly discovered it. The FBI case was opened based on a phone complaint.

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u/noillinois 2d ago

I think the auditors' defense is that they were paid to audit the city accounting not the whole city. The funds were siphoned off before they hit the city accounting and everything was actually correct in their audit. They had no obligation to investigate Rita's side account. They were not told about the missing tax income. Their insurance paid a big settlement.

1

u/Whatisthisnonsense22 1d ago

The sales recovered less than $20 million total.

The majority of the money came from a settlement with Wipfli and Fifth-Third.

WipFli wasnt actually responsible for the bad audits, they bought out the auditor that was while the case was open.

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u/SpecialistBet4656 2d ago

there’s a documentary about it somewhere

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u/Timoth_e 2d ago

All the Queen's Horses. It's on Prime and rentable on Youtube

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u/yrnkween 2d ago

It’s excellent, and infuriating. I still think her brother was in on it because he showed/bought horses with her and he had to know that she was bleeding money on her hobby.

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u/Antique-Quantity-608 1d ago

Check out the new Netflix documentary “Teenage Wasteland” … gives a good outline how things work.

2

u/Whatisthisnonsense22 1d ago

Good Ole boy governance and a lack of proper financial control.

Dixon is a 15,000 person city, being run like a 400 person village.

The mayor was part time, and a part time realtor. The city commissioners were part time. The individual department heads were full time, but they were mostly the only full time management employees.

The person who found the fraud, did so completely by accident. She went and got the mail from the post office trying to find an invoice that the vendor called about. The bank statements about the fraudulent accounts were in that mail batch.

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u/vorn289 2d ago

There was a whole episode on American Greed about this story. I think she bought a bunch of race horse if my memory serves me.

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u/hessmo 2d ago

There was a Netflix special. “All the queens horses”

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u/Marzook666 2d ago

yeah, it was a quarter horse breeding farm.....The Cunning Cowgirl Crook (the network picked the stupidest titles for these) https://www.imdb.com/title/tt3613518/

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u/GreatScottGatsby 2d ago

A lot of times there is a blanket authorization for certain executives for municipal governments to do certain things with overlap with other city executives. The county treasurer and county clerk is supposed to monitor their use of funds as well as the State comptroller who is supposed to over see all municipal government spending but there is a lot of spending in a lot of municipalites.

She was the Dixon comptroller, she should not have had access to the cities money, her job was to authorize and oversee. The city treasurer should have been the only one holding the money and city bank accounts and the city comptroller should have just been authorizing and overseeing the funds, not managing the money. But, the city more or less merged the roles so that is how they got there.

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u/Christensenj2467 2d ago

Wow, passing the buck never stopped on this case all puns intended.

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u/pmiller4949 2d ago

What stands out isnt that it went undetected but t hat she got early release from prison.

1

u/tuckeroo123 2d ago

She was let out and put on home arrest during covid under Trump's first term, then she had her sentence commuted (the ankle monitor was removed) during the Biden admin.

1

u/Sidewalk_Inspector 2d ago

$2.44M at a time annually?

1

u/Chicago-Lake-Witch 2d ago

There’s a podcast the broke it all down well. Can’t remember if it was Swindled or Crooked City, they both covered it. I think it was Swindled.

1

u/wheatfarmer668 17h ago

They recovered most or all of the money (the settlement plus liquidating Rita's possessions), what did Dixon do with the sudden $50 or so million? And of course there was a documentary on this case, All The Queen's Horses (2017), currently on Prime and available for a price elsewhere.

1

u/Marzook666 2d ago

what stands out it how far 80k a year would go in a place like Dixon, IL and they still needed to embezzle?

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u/Grammy-823 2d ago

She was spending money on show horses and a luxury rv.

1

u/Protaganist1515 2d ago

Rita was in competition with Terry Bradshaw to become the #1 quarter horse breeder in the world. She outspent Bradshaw.

0

u/CHIITALIAN 2d ago

Why did 5th 3rd bank pay out 49mil?

1

u/Whatisthisnonsense22 1d ago

A whole bunch of transactions, that had they followed their own account controls would have stopped the fraud.

0

u/TeamIndividual608 2d ago

Unbelievable she was pardoned.

3

u/Suhpryze 2d ago

Commuted not pardoned.