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Fraud in Dixon Illinois: Who’s to Blame?
INTRODUCTION
Rita Crundwell was the type of person that everyone trusted. As the comptroller and
treasurer of the small town of Dixon, Illinois, she was well-versed in company finances.
Whenever anyone had a question, they were advised to “ask Rita.” In 2011, the city
commissioner praised Rita as someone who “looks after every tax dollar as if it were her
own.” What the commissioner and the rest of Dixon did not realize until the next year
was that Rita Crundwell took this view quite literally.
In addition to her trusted position with the city, Rita was also a champion horse breeder.
She had won 52 world thoroughbred championships and owned hundreds of horses.
The competitions often took Rita away from her city job, but she would dock her pay for
the extra time she took off. In 2011 during one of her trips, a city clerk took over Rita’s
job while she was away and came across a bank account in the city’s name that made
no sense to her. Money from the account was being used to purchase lavish items such
as jewelry and boats. The suspicious account was reported to the mayor and then the
FBI. After taking five months to build their case, the FBI arrested Rita Crundwell for
municipal fraud on April 17, 2012.
The extent of the fraud was staggering. Rita Crundwell had first opened the fictional
account in 1990, meaning that she had successfully stolen from the city for 22 years
before being arrested. In those two decades she stole over $53 million from a city of
less than 16,000 people. Dixon, Illinois—known for being the boyhood home of
President Ronald Reagan—has now gained the distinction of being the victim of the
largest municipal fraud to date.
BACKGROUND
Rita Crundwall was born in 1953 to Ray and Caroline Humphrey. Although a family of
modest means, Caroline loved showing quarter horses, a passion that Rita inherited as
she grew up on her family’s farm. While one family member has expressed the belief
that Rita was entitled as a child, nothing much about her situation growing up was
indicative of the massive fraud she would one day orchestrate.
At age 17, Rita was hired as an intern at City Hall as part of a work-study program for
high schoolers. In 1974, she married Jerry Crundwell and later divorced in 1986. Rita
continued her position at City Hall and proved to be a quick learner. Everyone was so
impressed with her skills that she assumed the position of city comptroller and treasurer
in 1983. In 1978, Rita began showing horses at shows. This started her long-time
passion with breeding and showing horses. At the time of her arrest, Rita Crundwell
owned 400 quarter horses at different farms in Illinois and Wisconsin.
The year 1990 was a landmark year for Rita Crundwell. She began expanding her horse
operations and her home. In December of that year, she also opened a secret bank
account under the city’s name called the Reserve Sewer Capital Development Account
(RSCDA). Crundwell used false invoices made out to “treasurer” to deposit city money
into this account, which she then used to finance the beginnings of a highly lavish
lifestyle.
At first, she started out stealing thousands of dollars from the city a year. However, as
time went on without her getting caught, she increased the amount of money she stole.
Before her arrest, she was stealing millions each year. To hide her fraud, Rita collected
all the city mail from a post office box and had a relative collect the mail for her when
she was out of the office.
During the two decades of the fraud, Rita purchased hundreds of horses, expanded her
home, bought a home in Florida, and purchased a number of vehicles and motor
homes. Among her purchases was a luxury motor home worth $2.1 million. Meanwhile,
Rita established a name for herself in the horse industry and won 52 competitions. Her
trophies took up an entire room at her house. Eight years before her arrest, Rita was
named the leading owner for the American Quarter Horse Association.
One of the clerks who worked with Rita Crundwell, Kathe Swanson, was the person
who discovered the fraud. Kathe was used to Rita telling her which bank accounts
she should request from the bank. But in 2011, Kathe was taking over Rita’s job while
Rita was out on vacation. In a hurry, Kathe called the city’s bank, Fifth Third Bank, and
requested all of the accounts under the city’s name. Among the accounts she received
was the RSCDA account, an account of which Kathe had never heard. Looking at the
