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Did small town treasurer commit big-time fraud to fund horse hobby?

 

By Harry Smith, Glen Dacy and Michelle Kessel
Rock Center

In the small Illinois town of Dixon, authorities today announced a 60-count felony indictment against a former city worker. Lee County prosecutors say Rita Crundwell has been stealing money from the city for years.

In addition to the 60 new state charges, Crundwell faces one count of federal wire fraud. All total there are 61 counts and allegations that she stole or misappropriated more than $53 million from city funds. If convicted on all charges the former city official could face a sentence of hundreds of years. It is huge story that has rocked a small town.  

Rita Crundwell

Dixon is a proud community that lies along the banks of the Rock River in the western part of Illinois. It is perhaps best known as the boyhood home of President Ronald Reagan. Folks in this hamlet of 16,000 like to say it was here that young Reagan learned his values of trust and service.

There are a lot of good things about living in this town. On a summer's night you can sit at the river walk by the statue of young Reagan on a horse and hear music coming from the community band playing a concert. Dixon still has a vibrant downtown. Walk along First Street and stop in at the bookstore or Treins Jewelers to hear all about Dixon. Linda Brantley owns Treins, which has been serving Dixon for generations. She told Rock Center that Dixon is a throwback town, a place where a handshake is as good as a contract and everyone trusts each other.

"That is this place exactly and even still today on big sales... there's no signature because pretty much everyone knows everyone and if we don't, we know of them, so yes there is a lot of trust," Brantley said. 


"It's really a wonderful community," Dixon's part-time mayor and lifelong resident Jim Burke said. "At one time I was thinking about moving to Florida. But I was on the way home and, as I went down the street, I heard a voice yell 'Hey Grandpa.' It was one of my grandsons up on a porch playing with some kids,and I thought 'That's why I'm not leaving Dixon.'"

In recent years, the people of Dixon depended on neighborly trust to get them through the Great Recession. City finances are tight. No one who works for Dixon has had a raise in three years. Infrastructure is in bad shape. The roads under Dixon's famous arch need repair. The police department is using outdated equipment and open jobs in just about every department have gone unfilled.

By 2011, Dixon was millions of dollars in debt and every department was making cuts. According to Police Chief Dan Langloss, "There was no cash flow. We didn't know how we were going to make payroll. Those were the day-to-days."

Public Works Director Shawn Ortgiesen knew things were getting bad. There was even talk of layoffs. "In order for us to survive there were not going to be any raises and not new hires and those things, just so we could get by."

For over 2 decades Dixon's finances had been in the capable and hardworking hands of one person. Rita Crundwell was a woman everyone admired and trusted, according to Mayor Burke.

"Rita Crundwell is a very likable person. Everybody around city hall liked her. She was very friendly always had a big hello," Burke said.

Fifty-nine-year-old Crundwell grew up in Dixon, attended Dixon High School where she was on the Homecoming Court, belonged to The National Honor Society and was president of the Business Occupations Club. She started working in city hall part-time as a student and worked her way up to the position of treasurer/comptroller. Everyone leaned on Crundwell.

"If you need something, go to Rita. Any time you have an expenditure of any significance you check through Rita. You know everybody always looked at her that she could fix any problem or just take care of anything that needed to be done," said Chief Langloss. 

Photo credit: American Quarter Horse Association

In her spare time, Crundwell developed a glamorous avocation. She built up a nationally famous quarter horse farm on the edge of town. She owned more than 400 horses and was known from coast to coast for her 54 world championships. Walking around the farm it is obvious that Crundwell was running a top-notch operation. From the stone marker out front with her monogram to the state-of-the-art stalls for her horses.

It was as if Rita Crundwell was leading two lives. 

People in Dixon assumed the horse business was making Crundwell rich. They were flattered that she kept working so hard for her neighbors to help them through the bad times.

Director Ortgiesen sat just feet away from Crundwell in city hall. "What I thought was she cared about the city and she wants to see this through, obviously we are in financial issues and she wants to make sure that everything goes well for the city. And that's what I believed."

But one day in October of 2011, when Crundwell was away from Dixon attending one of her many horse shows, another city worker discovered something suspicious in the mail.

"Our city clerk brought a bank statement to me," explained the mayor. "And she said 'I can not connect this to anything.' And I took one look at it and I thought 'This can't be.'"

But in that statement was something unusual. A previously unknown account with hundreds of thousands of dollars that apparently came from the city coffers. Could it be that Crundwell was robbing her home town?

Mayor Burke was unable to ignore the evidence before him and grew sick to his stomach. "I could see there was $775,000 that had gone in and out of this account in just one month," he said.

Weighed down by his suspicions, the mayor took the statement to the FBI. For the next five-and-a-half months the FBI secretly combed over Dixon's financial records. All the while the mayor and the city clerk who tipped him off had to act as if it were business as usual.

"The night before the FBI pulled the trigger we had a budget workshop here in the council chambers," recalled Mayor Burke. "And Rita is sitting there and talking about the finances and how we could not get the budget balanced and so forth." 

The next morning the FBI came calling at Dixon City Hall. According to the mayor, "She comes walking right in this door here and I said, 'These three gentlemen would like to talk to talk with you.'"

Mayor Burke looked on as one of the men identified himself as an FBI agent. "He said, 'We've got some questions for you.' She said, 'Sure,' and her face never changed."

The agents questioned Crundwell for two hours before leading her out of City Hall in handcuffs. News spread through town about the arrest of the trusted comptroller. The story of the Dixon embezzlement ballooned from $175,000 to perhaps $10 million to the staggering charges that, for more than 20 years, Crundwell had misappropriated more than $53 million dollars from the City of Dixon.

It is hard to imagine how someone could have carried out the crimes Rita Crundwell is accused of without being noticed. Was there no oversight? Didn't city officials suspect anything? "Absolutely. They'll ask that," Mayor Burke said. "This took place over roughly a 22-year period. We had 5 city councils, three financial commissioners, three mayors and 21 annual audits." But, the mayor said, no red flags were ever raised. 

The federal charge against Rita Crundwell was filed in April when she was first arrested. She has pleaded not guilty to that charge. The accusations against Crundwell allege she created false invoices for work that was never done and moved money between various city bank accounts before finally landing it in a secret account where she could use the funds to support her horse business and a "lavish Lifestyle."

The indictment says Crundwell bought a $2 million motor home to travel to horse shows and spent over $300,000 on jewelry. She owned horses with names like "Good I Will Be." Through her attorney, Rita Crundwell has declined to comment on any of the charges she faces.  

From Dixon, Rock Center traveled to one of the American Quarter Horse Association's biggest events to talk with  people who knew Rita Crundwell as a horse owner and champion breeder.

In Oklahoma City at the Redbud Spectacular, horse owners recalled Crundwell as the woman who would arrive in a huge motor home and elaborately decorate her horse stalls during competition. They were surprised to hear that Rita Crundwell, an icon in their industry, was accused of building her horse business with stolen money.

"I was shocked. You just never know. You never know," said Luke Castle, a horse owner from Oklahoma.

It was at AQHA events like this one where Crundwell earned her reputation and won many World Championships.

"Rita was a tough competitor. Rita had good horses. Rita had her horses prepped and when she went into the arena she looked the part. She was ready to compete," said Tom Persechino, Head of Competition for the AQHA. "I would wager to say that she's got a room in her home somewhere or in her office that is lined with world show trophies."

At Crundwell's farm there is just such a trophy room. The United States Marshals Service has been tending to Crundwell's horses since her arrest and gave Rock Center a tour of the room. It was stunning. A large wooden addition to her stables is literally filled from floor to rafters with hundreds of ribbons, statues, trophies and pictures – all accolades for an extremely successful horse owner where money seemed to be no object. 

Around Dixon, people feel that the sense of trust that has long defined the town has been violated. At Treins Jewelers, Linda Brantley seems sad.

"I think about the cemetery that isn't being kept up and the streets that need to be repaired. And certainly the people that work for the city who should be making more money," she said.

"It makes me furious to think about what she has done," said Chief Langloss. "How could you Rita? How could you hurt so many people? How could you put people's jobs, people's families at risk over your greed? For what? A horse?"

Perhaps the music from the Dixon Municipal Band will help people move on from what has happened here in Ronald Reagan's home town. But they would do well to remember what President Reagan once famously said, "Trust but verify."

Editor's Note: Since Rita Crundwell's, arrest the U.S. Marshall's service has been caring for the hundreds of horses on her Dixon ranch and others spread across the country. An auction was held to sell off the animals and other assets of Rita Crundwell's. If convicted, the proceeds from the sale will go toward repaying the City of Dixon.