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- Picture the small town of Dixon.
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The stereotypical white picket fences
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and red, white, and blue flags flying in front yards,
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it's the hometown of Ronald Reagan.
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- It's a community, it's about 16,000 population.
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Basically kind of a conservative county, in a way.
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- A month ago I was at Old St. Pat's in Chicago.
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And the usher says, "Where're you from?"
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I said, Dixon, and he goes, "Oh, you're the town
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that the woman stole the 54 million from."
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- It is the biggest case of municipal fraud in history.
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The tiny town of Dixon, Illinois, lost an astonishing
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$53 million to one government employee.
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- If fraud at this magnitude is happening
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in Dixon, it can happen anywhere.
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- Federal agents and local police carry out--
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- Man who evaded police for half a decade
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pleads guilty to wire fraud. - Nine top officials accused
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of taking $150 million. - James Hollis may be hiding--
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- Fraud is a local, national,
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and international problem.
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Over the past five years, we've seen a steady rise
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in fraud schemes, specifically embezzlement schemes
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committed by an employee within a finance position.
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- Allegedly embezzling thousands
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of dollars from her former-- - $6.4 million over 11 years.
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- Embezzlement is a $3.7 trillion problem.
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Government entities are the second most
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frequent victims of embezzlement.
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- A nationally renowned horse breeder,
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a city employee since the 1980s,
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and a world class thief.
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- The number one question people ask me
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is how does one person in a small town
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steal $53 million, and no one know,
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and get away with it for 20 years?
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- Rita and I worked together from 1991,
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up until the time she was arrested in 2012.
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When I first started, my capacity was deputy treasurer,
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under Rita Crundwell.
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She made it easy to work here.
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She would always say to me, "If ever you make a mistake,
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"don't worry, it can always be corrected."
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In October of 2011, Rita was out of town and I needed
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my bank statements to produce my treasurer's report.
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In the past, Rita would say to me,
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"Now be sure and give them the list over the phone,
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"of the statements that you want."
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I would just run down the list, but that day
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I was under the gun, I had too much work to do,
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and I just called and said,
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I want all of the bank statements.
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That's when they came.
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I saw this one account that I had never heard of before.
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And, what I noticed on it was three large deposits.
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And it was in care of her, it was RSCDA,
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City of Dixon, in care of Rita Crundwell.
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I didn't know who to go to.
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I sat on it for a couple of days.
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I hid it in my car.
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In three days' time, the mayor came into my office,
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Mayor Burke, so I told him about it.
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He said, "Go and get me a copy of that, right now."
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- My initial reaction was that there had to be
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an explanation for it, but Kathe kept looking
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and she couldn't tie it into anything.
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And so, she asked me if I was gonna go to the police
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with it, and I said, "No, absolutely not."
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- He said, "Kathe, I will take care of this,
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"I will go to the FBI, but we cannot say anything because
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"if we're not correct, we don't wanna harm Rita in any way."
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- I called the FBI, I said, I think there's a cancer
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in city hall, but I need to talk with somebody,
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and I took the bank statement along.
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- The mayor came into the field office, sat down
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and discussed with the case agents what they'd discovered.
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- I told 'em, I said, I hope I'm wrong about this thing.
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And he said, "I don't think you are."
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- So we were able to go to the U.S. Attorney's Office
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and get a grand jury opened, and during that grand jury,
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subpoenas issued for these different bank accounts.
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- I was very scared because I was told
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you keep it quiet, you say nothing to nobody,
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we'll handle the investigation.
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So I believe that when the FBI tells you
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to keep your mouth shut, you keep your mouth shut.
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We had it set up that
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if the FBI needed
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any kind of documentation from here, I would come in early,
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I would make the copies,
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I would put them in a sealed envelope,
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put 'em on the Mayor's desk.
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- Kathe Swanson, she was very instrumental
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in determining what accounts were real,
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what accounts were fake, how the money
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should have flowed through the city of Dixon.
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From there, looking at all the massive amounts
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of paperwork that came in.
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- They wanted one of our reports, so I just took it.
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Well, two days later, Rita went looking for it.
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And I'm thinking, what am I gonna tell her?
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I have to come up with an excuse.
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And she came up with the excuse for me.
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She said, "Oh, wasn't that the one that was incorrect
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"and we sent it back to the accountants to redo it?"
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And I said, you know what, you're right.
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I had to do this for six months.
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I had to keep that status quo in the office.
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I had to ask her how her trips were, how her dogs were,
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so as not to let on that something was not right,
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and I knew about it.
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- She came to me one morning and she said,
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"I don't know if I can handle this any longer."
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- My boyfriend Tom would say to me quite frequently,
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"Are you sure you're okay,
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"is there anything wrong with your kids?
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"You don't seem like yourself."
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And I would just say, oh, I have a lot of work to do.
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There's a lot going on at work,
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I need to get a lot of things done.
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- You know, over the next months, we'd look at
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surveillance of the subject to see what's involved,
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the scope of her and her lifestyle.
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One of the things the FBI wanted to find out
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during the investigation was, did she do this alone?
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Was she hiding for somebody else?
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She had loved ones, family members that worked
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also for the city of Dixon, they were in the area.
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She helped support nephews, she'd given loans out to family,
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she had a boyfriend who was also involved in a business.
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Are they involved?
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But once they got hold of the RSCDA account,
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it was pretty obvious what she had done.
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They could see where the money went from there.
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- When we had discovered, through the FBI,
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what she was doing and how she was going about
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getting the money and putting it into that account,
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I felt betrayed.
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- You know, while we're doing the investigation
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she was able to take $1.5 million from Dixon.
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- I would sit and I'd watch her at lunch time
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go and get the checkbook to write her check out,
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after she called the money up,
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and then she would turn around and deposit it
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into her account over at the bank.
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So the minute we got the money in,
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it was gone in the afternoon.
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- I called the FBI agent and I said, if we don't
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put a stop to this thing pretty quick,
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there isn't gonna be anything left.
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The night before she was arrested, we had a
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budget hearing in here and I thought,
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boy are people gonna be surprised tomorrow.
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- That morning, I went into the mayor's office.
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I said, Jim, I can't do this anymore.
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And he just looked up at me and he said,
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"Kathe, today's the day."
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- So, I just called her on the intercom,
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I said, Rita could you stop up here,
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and she said, "Sure."
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- She came down the hall, I couldn't look at her
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because I knew right then and there
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they were already in the office waiting for her.
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- So, she come up to the door, she said, "Yes, sir."
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I said, Rita, these gentlemen would like to
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ask you a few questions, and she said, "Sure."
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And I was lookin' right at her face,
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and her continence never changed at all.
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So, with that, I exited the office.
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And then, just like that, there's like about
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15 of 'em, came into city hall.
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Come right upstairs and they shut city hall down.
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- We brought in agents from downtown,
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used the agents out of Rockford.
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Of course the marshals were with us
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because of the amount of seizures that were going on.
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- They sealed off the stairs, it was quite intense.
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- And at that time she was approached.
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She was given her Miranda rights and asked
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if she would like to talk to us, which she did
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give an interview, that lasted about an hour and a half.
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During that interview, she was cooperative.
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She only thought she'd taken around $10 million.
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If somebody gives a partial confession or something,
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we want that, it locks their statement in.
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And that's what she did.
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I think she was a little overwhelmed, surprised.
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You know, 20 years of her life and basically
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everything she knew, that was all comin' down.
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And it hit her like a ton of bricks very quickly and,
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people get emotional and they probably later go,
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you know what, I maybe shouldn't have done that,
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maybe shouldn't have talked, but they do.
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- She was in here singin' like a canary.
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We never saw her, they took her right out
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through the council chambers, and then took her to Rockford.
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- And immediately it felt like
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this weight had been lifted off my shoulders.
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- This afternoon, in the central Illinois town of Dixon,
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authorities announced a 60 count indictment
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against a woman named Rita Crundwell.
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- During the search warrant of her multiple properties,
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the two homes in Dixon, the horse farm, also in Dixon
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that she owned, conducted on the day she was arrested
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and interviewed, we found located in the basement,
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in a crawl space of her home, boxes of every record.
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And she kept very good records of her fraud.
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It helped to see the scope of what she took,
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what did she do with the money?
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And in '91 was when she took her first money,
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which was about $181,000 that year.
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But we were able to figure that out
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because of the records she kept, and stored in her house.
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This case probably one of the most egregious cases
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the FBI has worked, considering the size of the victim
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and the amount of money taken.
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And we're not talking $10,000, a ream of paper,
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or some pencils, which you know,
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53 plus million dollars is just unbelievable.
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- So let's take a look
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at how Rita pulled off this scheme.
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There were six legitimate City of Dixon accounts
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at Fifth Third Bank.
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She routinely moved funds into the legitimate
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capital development fund. But Rita then set
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up an additional
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seventh account no one knew about.
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To get the process started, she created phony invoices
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to justify payments for imaginary capital projects,
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such as, fixing sidewalks and street repairs.
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These phony invoices trigger Rita's transferring money
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from the city's legitimate capital development fund
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into her secret account.
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It had a similar name to look like
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a legitimate city account.
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From her secret account, she wrote checks for her
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personal expenses, such as spa visits, jewelry,
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real estate, a motor coach, and of course, quarter horses.
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She did this process 179 times.
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- The fraud that took place in Dixon
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is very textbook classic.
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It is those where we set up a side account,
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we mask it in the name of a government,
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and that one individual has control of
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money going in and money going out.
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- It usually is simple.
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It doesn't have to be a complicated process.
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And I think that if she made it more complicated
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she might've gotten caught sooner.
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- I made up my mind that I was gonna go to the press.
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I'd never seen so many news media in my life.
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This is a traumatic, upsetting event
253
00:14:21,000 --> 00:14:25,000
that the citizens and council are experiencing.
254
00:14:25,041 --> 00:14:29,083
Rita Crundwell will be placed on administrative leave
255
00:14:29,125 --> 00:14:33,208
without pay until the issues are settled.
256
00:14:33,250 --> 00:14:36,000
Every effort will be made to acquire assets
257
00:14:36,041 --> 00:14:38,709
for the benefit of the city.
258
00:14:38,750 --> 00:14:42,625
- Crundwell is now free after posting a $4,500 bond,
259
00:14:42,667 --> 00:14:44,625
only fueling the outrage.
260
00:14:44,667 --> 00:14:47,417
- Excuse us.
261
00:14:47,458 --> 00:14:49,166
- Any idea why she wouldn't talk to us today
262
00:14:49,208 --> 00:14:50,583
and just apologize to the people of Dixon?
263
00:14:50,625 --> 00:14:52,083
- Can't answer any questions.
264
00:14:54,125 --> 00:14:56,125
- The public was pretty up in arms
265
00:14:56,166 --> 00:14:59,875
and people were picketing out in front of city hall and
266
00:14:59,917 --> 00:15:02,625
every day was a news media deal.
267
00:15:02,667 --> 00:15:06,250
- Rita, why did you steal $53 million
268
00:15:06,291 --> 00:15:08,125
from the people of Dixon? - Get your ass outta here.
269
00:15:08,166 --> 00:15:10,083
- How were you able to get away with this for two decades?
270
00:15:10,125 --> 00:15:12,417
- My first thought was, Dixon has that much money?
271
00:15:12,458 --> 00:15:14,000
That you could embezzle that much money
272
00:15:14,041 --> 00:15:16,625
from a little tiny place like this.
273
00:15:16,667 --> 00:15:19,583
- I think she's a very smart lady and got by with
274
00:15:19,625 --> 00:15:23,208
a lot of stuff because people just trusted her so well.
275
00:15:23,250 --> 00:15:24,500
More than anything.
276
00:15:24,542 --> 00:15:26,083
- Do you think you were just
277
00:15:26,125 --> 00:15:28,375
smarter than everybody else, Rita?
278
00:15:28,417 --> 00:15:30,208
- You know, you have a trusted employee
279
00:15:30,250 --> 00:15:33,458
and it's human nature to trust 'em.
280
00:15:33,500 --> 00:15:36,000
- You know I hear a lot of people that say,
281
00:15:36,041 --> 00:15:37,542
Rita was a nice person.
282
00:15:39,709 --> 00:15:44,166
She was a nice person because she had to be a nice person.
283
00:15:47,875 --> 00:15:50,291
- Smaller communities where we're electing
284
00:15:50,333 --> 00:15:53,625
individuals that we know well, we go to church with them,
285
00:15:53,667 --> 00:15:56,125
we're much more on an intimate basis
286
00:15:56,166 --> 00:16:01,125
with our governing bodies, and I think what you find is that
287
00:16:01,166 --> 00:16:05,500
smaller governments to some extent maybe lend themselves
288
00:16:05,542 --> 00:16:11,250
more to the notion of a trust an increased trust factor.
289
00:16:13,875 --> 00:16:16,166
- Before Rita, the largest municipal fraud
290
00:16:16,208 --> 00:16:20,125
in U.S. history was a case in Washington, D.C.
291
00:16:20,166 --> 00:16:23,208
In this particular fraud, a network of friends and family
292
00:16:23,250 --> 00:16:26,792
stole $48 million over a 20 year period.
293
00:16:26,834 --> 00:16:29,625
When you compare D.C. to Dixon, the amount of money
294
00:16:29,667 --> 00:16:32,333
that Rita was able to steal from this small town
295
00:16:32,375 --> 00:16:36,333
all by herself, makes this case even more shocking.
296
00:16:46,041 --> 00:16:49,542
- One statement from a town official,
297
00:16:49,583 --> 00:16:51,709
he said, "Rita watches over every penny
298
00:16:51,750 --> 00:16:57,625
"as if it were her own," and every penny almost was her own.
299
00:16:57,667 --> 00:16:59,583
- Now let's congratulate your 2011
300
00:16:59,625 --> 00:17:03,166
world champion, Good I Will Be, owned and shown
301
00:17:03,208 --> 00:17:06,875
by Rita Crundwell of Dixon, Illinois.
302
00:17:06,917 --> 00:17:10,250
- She was leadin' a big lifestyle.
303
00:17:10,291 --> 00:17:13,333
I thought, and I think everybody in town thought,
304
00:17:13,375 --> 00:17:15,333
that it was all due to these horses, you know,
305
00:17:15,375 --> 00:17:17,667
there'd be stories in the paper that she's got
306
00:17:17,709 --> 00:17:20,583
another national champion, and she'd have pictures.
307
00:17:20,625 --> 00:17:23,500
And then were stories that she'd sold horses
308
00:17:23,542 --> 00:17:27,333
for two and $300,000, so that was the image
309
00:17:27,375 --> 00:17:30,542
that she was conveying, that was the image that I had.
310
00:17:33,917 --> 00:17:39,583
- I must've went by Rita's horse farm 15 times,
311
00:17:39,625 --> 00:17:41,417
you know, and I always asked my wife,
312
00:17:41,458 --> 00:17:43,542
who has that many quarter horses?
313
00:17:45,625 --> 00:17:48,417
- It was really kinda mind boggling and see the spread
314
00:17:48,458 --> 00:17:51,000
that she had, it's like, oh my gosh.
315
00:17:56,959 --> 00:18:01,875
- Nobody ever questioned the magnitude of that money.
316
00:18:04,333 --> 00:18:07,792
- She told people that her parents were
317
00:18:07,834 --> 00:18:10,291
investors in Campbell Soup Companies.
318
00:18:10,333 --> 00:18:12,834
I mean certainly her parents could've owned many acres
319
00:18:12,875 --> 00:18:15,500
of farmland, which is very high-revenue.
320
00:18:17,333 --> 00:18:19,583
I honestly didn't think too much about it.
321
00:18:19,625 --> 00:18:22,000
Curious, but like everyone else, you just kind of,
322
00:18:22,041 --> 00:18:23,750
oh, hm, interesting.
323
00:18:23,792 --> 00:18:28,875
- I do know for a fact, several people,
324
00:18:28,917 --> 00:18:33,583
many people, benefited from her money.
325
00:18:33,625 --> 00:18:36,542
And I suspect 85% of it was cash.
326
00:18:40,625 --> 00:18:42,667
- Co-workers at the city thought that she inherited
327
00:18:42,709 --> 00:18:44,625
a lot of money, and that she got involved in it,
328
00:18:44,667 --> 00:18:47,000
and was very successful.
329
00:18:47,041 --> 00:18:50,083
Of course the family knew that she didn't so,
330
00:18:50,125 --> 00:18:53,166
you know, was it ever clear exactly what their belief was?
331
00:18:53,208 --> 00:18:56,583
It was, if they're benefiting, it's
332
00:18:56,625 --> 00:18:58,542
don't look a gift horse in the mouth, right?
333
00:19:02,625 --> 00:19:07,083
- One of the things that really struck me about this story
334
00:19:07,125 --> 00:19:09,208
with the horses were the names that she gave them.
335
00:19:09,250 --> 00:19:11,250
- I Execute Class.
336
00:19:11,291 --> 00:19:14,583
- Subconsciously, or ironically to send a message
337
00:19:14,625 --> 00:19:18,458
to the town, the irony there is obvious.
338
00:19:20,625 --> 00:19:23,041
I'm Money Too
339
00:19:23,083 --> 00:19:25,125
She Scores
340
00:19:25,166 --> 00:19:26,917
Packin' Jewels
341
00:19:26,959 --> 00:19:28,500
Me Myself and I
342
00:19:30,542 --> 00:19:32,583
Jewelry by Tiffany
343
00:19:32,625 --> 00:19:34,208
Careful Who U Invite
344
00:19:34,250 --> 00:19:35,333
Ain't I a Natural
345
00:19:36,375 --> 00:19:37,792
I Found a Penny
346
00:19:39,792 --> 00:19:42,625
- She Scores, makes me cry because
347
00:19:42,667 --> 00:19:45,208
she's one of my favorite mares.
348
00:19:45,250 --> 00:19:47,583
And, by Execute, so--
349
00:19:47,625 --> 00:19:49,542
- Can you tell me a little bit why
350
00:19:49,583 --> 00:19:51,291
She Scores is so special to you?
351
00:19:53,667 --> 00:19:58,375
- She's just a great mare and she won seven world champions,
352
00:19:58,417 --> 00:20:01,875
and she just has a special place in my heart.
353
00:20:03,875 --> 00:20:07,917
- The idea of a small town, high school educated,
354
00:20:07,959 --> 00:20:12,417
municipal clerk who was able to both
355
00:20:12,458 --> 00:20:16,667
completely pull the wool over her town's eyes,
356
00:20:16,709 --> 00:20:20,583
but you know, the second half of her double life,
357
00:20:20,625 --> 00:20:26,625
which was this grand, high stakes horse empire.
358
00:20:26,667 --> 00:20:30,709
By day she's wearing meek, municipal clothes
359
00:20:30,750 --> 00:20:36,000
and by night she's dripping with jewels and furs.
360
00:20:36,041 --> 00:20:38,500
- Is that what she said?
361
00:20:38,542 --> 00:20:39,542
This is funny.
362
00:20:41,458 --> 00:20:44,583
- I met Rita in 2005 at the American Quarter Horse
363
00:20:44,625 --> 00:20:47,333
World Finals, in Oklahoma City, Oklahoma.
364
00:20:47,375 --> 00:20:49,125
- I love it.
365
00:20:49,166 --> 00:20:51,750
- We always stalled at the same area every year.
366
00:20:51,792 --> 00:20:54,583
She kept in a small little circle.
367
00:20:54,625 --> 00:20:56,583
You didn't see a lot of people walkin' up to her,
368
00:20:56,625 --> 00:20:59,834
or congratulatin' her, and I think, you know,
369
00:20:59,875 --> 00:21:02,792
I was in awe of her, I mean, Rita was a showman
370
00:21:02,834 --> 00:21:04,750
and she was very good at what she did.
371
00:21:04,792 --> 00:21:08,792
When she won, she deserved it, I mean she really did.
372
00:21:08,834 --> 00:21:10,834
- The Oklahoma City Leading Owner Award
373
00:21:10,875 --> 00:21:13,875
was no surprise, since Rita Crundwell of Dixon, Illinois
374
00:21:13,917 --> 00:21:18,000
has won the award now for eight consecutive years.
375
00:21:18,041 --> 00:21:19,166
Congratulations, Rita.
376
00:21:21,417 --> 00:21:24,667
- Rita was very polished all the time.
377
00:21:24,709 --> 00:21:28,166
She always had a fitted, short top on,
378
00:21:28,208 --> 00:21:31,834
and had beautiful jewelry on while she was showing.
379
00:21:31,875 --> 00:21:35,959
There'd be times she would go back to back in classes.
380
00:21:36,000 --> 00:21:38,583
She'd be out there for two hours, her horse trainer
381
00:21:38,625 --> 00:21:42,250
would bring her another horse, she'd change her jacket,
382
00:21:42,291 --> 00:21:44,792
and go back out there again.
383
00:21:44,834 --> 00:21:47,959
Everybody was like, how did Rita come across all this money?
384
00:21:48,000 --> 00:21:51,542
And we were told that Rita had a boyfriend that passed away
385
00:21:51,583 --> 00:21:54,542
and he was much older than her and left all her money
386
00:21:54,583 --> 00:21:56,834
to her, and it was believable.
387
00:21:56,875 --> 00:22:00,875
I saw her pull up one day with a brand new, custom made
388
00:22:00,917 --> 00:22:03,583
Sundowner trailer just to haul the horses in.
389
00:22:03,625 --> 00:22:06,542
And you know, the word was out, it was $250,000.
390
00:22:08,208 --> 00:22:10,417
Rita, how did you sleep at night?
391
00:22:10,458 --> 00:22:15,333
How did you go to bed and not think,
392
00:22:15,375 --> 00:22:17,083
whose lives I'm infecting here?
393
00:22:17,125 --> 00:22:20,375
I mean, it's crazy, how did you sleep at night?
394
00:22:30,500 --> 00:22:33,291
- She lived quite a life.
395
00:22:33,333 --> 00:22:38,083
A totally different life than what she portrayed here.
396
00:22:38,125 --> 00:22:41,542
- I had learned that she had a house in Florida.
397
00:22:41,583 --> 00:22:43,583
I always thought that she just went down
398
00:22:43,625 --> 00:22:48,000
and stayed at her boyfriend's mother's house.
399
00:22:48,041 --> 00:22:49,917
- The other thing that was shocking to me
400
00:22:49,959 --> 00:22:53,250
from a mayoral standpoint, she took off four months
401
00:22:53,291 --> 00:22:56,500
out of the year, why did you need her?
402
00:22:58,583 --> 00:23:00,083
- Rita taking time off
403
00:23:00,125 --> 00:23:02,333
was unusual because most fraudsters
404
00:23:02,375 --> 00:23:04,458
don't wanna take time off because they're scared
405
00:23:04,500 --> 00:23:06,542
that their fraud scheme will be discovered.
406
00:23:06,583 --> 00:23:11,542
But Rita was so confident that she took tons of time off.
407
00:23:11,583 --> 00:23:14,166
- 'Cause she was a friend, after the council meeting
408
00:23:14,208 --> 00:23:18,208
they all came to her house and then she had cocktails.
409
00:23:18,250 --> 00:23:21,542
- Yes, she would have people from the city go to her house,
410
00:23:21,583 --> 00:23:23,000
she'd have a barbecue.
411
00:23:23,041 --> 00:23:25,583
She had a pool in her yard.
412
00:23:25,625 --> 00:23:28,583
- They were not unlike parties that other,
413
00:23:28,625 --> 00:23:31,041
say doctors, lawyers, or anyone
414
00:23:31,083 --> 00:23:32,834
with sustenance here had.
415
00:23:32,875 --> 00:23:37,000
So, I mean again, that was not really questioned.
416
00:23:37,041 --> 00:23:40,291
- Thank you. - Could you tell
417
00:23:40,332 --> 00:23:40,373
us about your pretty pony.
418
00:23:40,414 --> 00:23:44,667
- I bred Skipper W. Mare that belonged to Terry Stevers,
419
00:23:44,709 --> 00:23:47,709
by Mr. Touchdown Kid, I leased Terry's alt mares
420
00:23:47,750 --> 00:23:51,542
for two years and I got all the colts out of 'em.
421
00:23:51,583 --> 00:23:55,041
- Rita's wealth was not necessarily a red flag,
422
00:23:55,083 --> 00:23:57,000
but what should've been a red flag was
423
00:23:57,041 --> 00:24:00,542
looking at the neighboring town right next door to Dixon,
424
00:24:00,583 --> 00:24:02,542
and that town was Sterling.
425
00:24:02,583 --> 00:24:05,000
Sterling has a similar population size,
426
00:24:05,041 --> 00:24:07,583
a similar annual budget, but yet Sterling
427
00:24:07,625 --> 00:24:10,875
had a surplus, when Dixon had a huge deficit.
428
00:24:10,917 --> 00:24:13,917
Now Dixon may not have felt the impacts of Rita's fraud
429
00:24:13,959 --> 00:24:16,500
because they were borrowing a lot of money
430
00:24:16,542 --> 00:24:18,375
during the time Rita was embezzling
431
00:24:18,417 --> 00:24:19,500
a lot of the city's money.
432
00:24:21,625 --> 00:24:24,750
18 months before Rita was arrested, the city manager
433
00:24:24,792 --> 00:24:27,542
of Sterling, Illinois, actually wrote a letter
434
00:24:27,583 --> 00:24:30,750
to the city of Dixon, and said, why do you all
435
00:24:30,792 --> 00:24:34,667
have this huge deficit, because we have a surplus.
436
00:24:34,709 --> 00:24:37,208
He was trying to alert the city of Dixon
437
00:24:37,250 --> 00:24:38,500
that something seemed wrong.
438
00:24:42,750 --> 00:24:44,625
- Former Dixon comptroller, Rita Crundwell,
439
00:24:44,667 --> 00:24:47,542
made her second federal court appearance.
440
00:24:47,583 --> 00:24:50,333
The main topic of that hearing was the care and concern
441
00:24:50,375 --> 00:24:53,458
of the 300 plus horses that Rita owns.
442
00:24:56,041 --> 00:24:57,917
- I was directed by Magistrate Judge Mahoney,
443
00:24:57,959 --> 00:25:00,625
of the U.S. District Court, to seize and care for
444
00:25:00,667 --> 00:25:03,083
horses belonging to former city of Dixon
445
00:25:03,125 --> 00:25:05,458
comptroller, Rita Crundwell.
446
00:25:08,583 --> 00:25:15,709
- We have 400 horses, and they are on 22 farms in 13 states
447
00:25:15,750 --> 00:25:19,542
that span 17 federal judicial districts.
448
00:25:19,583 --> 00:25:22,917
You know, this case is remarkable, and
449
00:25:22,958 --> 00:25:22,999
it's unprecedented.
450
00:25:26,542 --> 00:25:29,542
- In this particular case, there's been an agreement
451
00:25:29,583 --> 00:25:33,458
to sell the assets before a guilty plea is entered
452
00:25:33,500 --> 00:25:37,083
or a trial for which could, may or may not
453
00:25:37,125 --> 00:25:39,709
result in a conviction.
454
00:25:39,750 --> 00:25:43,500
The reason for that is because these are live animals.
455
00:25:43,542 --> 00:25:48,542
The horses eat, they breathe, they require daily care,
456
00:25:48,583 --> 00:25:50,542
and they're expensive.
457
00:25:50,583 --> 00:25:53,000
We're spending about $200,000 a month
458
00:25:53,041 --> 00:25:55,166
for the care of the horses.
459
00:25:55,208 --> 00:25:57,667
It's a lot that goes into an animal.
460
00:26:03,166 --> 00:26:05,500
This is the defendant's trophy room.
461
00:26:05,542 --> 00:26:09,542
Not many people have a herd of 400 show horses,
462
00:26:09,583 --> 00:26:11,542
many world champion horses.
463
00:26:11,583 --> 00:26:16,291
Our interest would be to try to get all $53 million.
464
00:26:16,333 --> 00:26:17,667
I don't know that the herd's ever gonna bring
465
00:26:17,709 --> 00:26:19,709
anything close to that.
466
00:26:19,750 --> 00:26:23,834
Our purpose today is to let the perspective buyers know
467
00:26:23,875 --> 00:26:27,041
that what we have here is a very valuable herd.
468
00:26:27,083 --> 00:26:28,458
- Out of the office we start with
469
00:26:28,500 --> 00:26:29,709
Good I Will Be--
470
00:26:29,750 --> 00:26:32,792
Preliminary estimates are that
471
00:26:32,834 --> 00:26:37,542
we should expect 1,500 people here on the farm.
472
00:26:37,583 --> 00:26:40,917
We're being told by the experts that we should anticipate
473
00:26:40,959 --> 00:26:42,917
what is sometimes been referred to as
474
00:26:42,959 --> 00:26:44,875
the Willy Nelson concert crowd.
475
00:26:48,542 --> 00:26:51,083
- $500 real now heard here, and another one of 1,500,
476
00:26:51,125 --> 00:26:55,083
another one on the half, now
477
00:26:55,125 --> 00:26:56,208
five, 600!
478
00:26:56,250 --> 00:26:58,083
600, 600, 700, 800--
479
00:26:58,125 --> 00:27:00,000
- It's amazing what millions of dollars can buy you,
480
00:27:00,041 --> 00:27:02,792
and how fast they can disappear in two days.
481
00:27:02,834 --> 00:27:05,583
- 25, 50
482
00:27:05,625 --> 00:27:09,333
80, double 80, and now 80
483
00:27:09,375 --> 00:27:11,000
- We're here to bid on some horses
484
00:27:11,041 --> 00:27:12,542
and hopefully we can bring back, some of the money
485
00:27:12,583 --> 00:27:15,166
back to Dixon, Illinois.
486
00:27:15,208 --> 00:27:17,417
- I've been in the horse business all my life,
487
00:27:17,458 --> 00:27:18,792
and I've never seen anything like this
488
00:27:18,834 --> 00:27:21,458
no place in the United States.
489
00:27:24,041 --> 00:27:25,667
- I think it's absolutely gorgeous
490
00:27:25,709 --> 00:27:27,583
and I've been doin' this for 30 years
491
00:27:27,625 --> 00:27:30,250
and I can tell ya, I've never started a horse sale
492
00:27:30,291 --> 00:27:31,792
with one as good as this one.
493
00:27:31,834 --> 00:27:36,000
and 200,000, yeah, 200.
494
00:27:36,041 --> 00:27:38,083
Yeah, 250, 250, yeah three.
495
00:27:38,125 --> 00:27:40,458
250, hear 300
496
00:27:40,500 --> 00:27:44,375
now 500,000, yeah 500
497
00:27:44,417 --> 00:27:48,542
500, even 600, and 25 and 625.
498
00:27:48,583 --> 00:27:50,792
Thank you, thank you, that's 750.
499
00:27:50,834 --> 00:27:53,625
750, now 775, 750, give me 775,000.
500
00:27:55,041 --> 00:27:57,500
Sold in $775,000.
501
00:28:03,166 --> 00:28:06,166
- I was glad to see what that horse went for, Willy.
502
00:28:06,208 --> 00:28:09,625
They had told me earlier that it would probably go for
503
00:28:09,667 --> 00:28:12,583
anywhere from 500,000 to a million dollars.
504
00:28:12,625 --> 00:28:16,500
So, it was really gratifying to see that.
505
00:28:25,500 --> 00:28:28,375
That's 11.875 grosses, if you--
506
00:28:28,417 --> 00:28:31,166
- 97,000 plus dollars of horse semen
507
00:28:31,208 --> 00:28:34,000
that she actually had stored and frozen
508
00:28:34,041 --> 00:28:35,917
for breeding purposes, that was sold.
509
00:28:37,709 --> 00:28:39,667
- 55, now 55, now 656, now 65, now 70--
510
00:28:39,709 --> 00:28:43,583
- Today we've recouped about 7.4 million.
511
00:28:43,625 --> 00:28:45,959
Our goal is to recoup several million more.
512
00:28:48,417 --> 00:28:51,500
Much of the money will not be recoverable,
513
00:28:51,542 --> 00:28:54,125
and that's not unusual in a fraud case.
514
00:29:18,750 --> 00:29:20,500
- I was able to track down some people
515
00:29:20,542 --> 00:29:24,500
who knew Rita as a child, and they described
516
00:29:24,542 --> 00:29:29,834
just a normal kid who was very smart, very pretty,
517
00:29:29,875 --> 00:29:33,375
very charming, and had a great love of horses.
518
00:29:36,083 --> 00:29:38,500
Her mother also showed horses.
519
00:29:40,417 --> 00:29:43,834
So you could see where Rita's interest developed.
520
00:29:43,875 --> 00:29:46,917
She always got the best horses to show.
521
00:29:46,959 --> 00:29:49,917
She was sort of the golden child.
522
00:29:49,959 --> 00:29:52,333
- Rita is a Dixon High School graduate.
523
00:29:52,375 --> 00:29:53,667
And when she was still in high school,
524
00:29:53,709 --> 00:29:55,333
she spent one of them days
525
00:29:55,375 --> 00:29:57,208
with the city government, you know.
526
00:29:57,250 --> 00:29:59,875
And, she caught on and everything worked well
527
00:29:59,917 --> 00:30:03,125
and she did her job very well, at least we thought.
528
00:30:03,166 --> 00:30:06,125
I guess the rest is history.
529
00:30:25,667 --> 00:30:29,333
- I want her to be prosecuted to the full extent of the law.
530
00:30:34,542 --> 00:30:36,333
- Boy, I guess I don't know.
531
00:30:40,166 --> 00:30:45,792
- If guilty, yeah, I, white collar crime is crime.
532
00:30:45,834 --> 00:30:48,792
I mean, because someone is
533
00:30:50,500 --> 00:30:52,083
blue collar and it's a violent crime,
534
00:30:52,125 --> 00:30:53,542
doesn't make it less of a crime.
535
00:30:57,458 --> 00:30:59,375
- In the face of overwhelming evidence,
536
00:30:59,417 --> 00:31:02,291
Rita pled guilty to wire fraud and money laundering,
537
00:31:02,333 --> 00:31:05,000
on November 14th, 2012.
538
00:31:08,959 --> 00:31:10,917
Three months after her guilty plea,
539
00:31:10,959 --> 00:31:15,625
Rita arrived at the federal courthouse for her sentencing.
540
00:31:15,667 --> 00:31:18,542
She faces a maximum of 20 years in prison.
541
00:31:19,875 --> 00:31:21,583
The hardship Rita caused Dixon
542
00:31:21,625 --> 00:31:24,917
would be the central focus of the hearing.
543
00:31:24,959 --> 00:31:29,542
- The prosecution put together a PowerPoint presentation.
544
00:31:34,583 --> 00:31:37,458
For each year of her crime spree,
545
00:31:37,500 --> 00:31:41,834
they had a couple of boxes outlined in black,
546
00:31:41,875 --> 00:31:45,834
where they would relay the budget committee's
547
00:31:45,875 --> 00:31:48,709
discussions of what needed to be cut.
548
00:31:55,000 --> 00:31:58,333
But then on every page, they had a box outlined in red.
549
00:31:58,375 --> 00:32:03,291
And during these drastic cuts to the Dixon budget,
550
00:32:03,333 --> 00:32:06,375
there were comments like, Rita spent $6000
551
00:32:06,417 --> 00:32:07,959
on a custom-made saddle.
552
00:32:11,458 --> 00:32:14,500
Miss Crundwell upgraded her motor coach.
553
00:32:14,542 --> 00:32:18,041
She upgraded that thing five times,
554
00:32:18,083 --> 00:32:20,542
until she finally bought one that was $2.1 million.
555
00:32:30,583 --> 00:32:35,208
But particularly, in year 2008, is when she
556
00:32:35,250 --> 00:32:37,834
crossed the $5 million threshold.
557
00:32:37,875 --> 00:32:40,750
And again in 2009, more than five million.
558
00:32:40,792 --> 00:32:44,542
And again in 2010, she stole more than $5 million.
559
00:32:44,583 --> 00:32:48,125
And I think she did that because beginning in 2008
560
00:32:48,166 --> 00:32:52,667
was the start of the recession, and she had the best excuse.
561
00:32:55,667 --> 00:32:59,709
- Showing all of her assets made everybody realize
562
00:32:59,750 --> 00:33:01,417
that she just kept buying
563
00:33:01,458 --> 00:33:04,417
and the people of Dixon were suffering.
564
00:33:13,333 --> 00:33:15,583
- The thing that bothers me is,
565
00:33:15,625 --> 00:33:20,250
how many projects, and/or services,
566
00:33:20,291 --> 00:33:23,500
have not come about in the city of Dixon
567
00:33:23,542 --> 00:33:28,375
because the tax dollars weren't there.
568
00:33:28,417 --> 00:33:31,625
If people ask, well who's suffered because of this?
569
00:33:31,667 --> 00:33:34,291
Everybody in this city suffered.
570
00:33:39,542 --> 00:33:41,166
- And of course it was a domino effect.
571
00:33:41,208 --> 00:33:43,458
Later on, we found out in the city.
572
00:33:43,500 --> 00:33:46,083
Repairs and raises and layoffs and,
573
00:33:47,542 --> 00:33:49,125
it was a big impact on Dixon.
574
00:33:51,125 --> 00:33:53,333
- I think a lot of people were talking about
575
00:33:53,375 --> 00:33:58,291
whether if anybody else was involved in this situation.
576
00:33:58,333 --> 00:34:00,709
Somebody else had to know about it.
577
00:34:03,834 --> 00:34:05,667
- She may have taken money away
578
00:34:05,709 --> 00:34:07,417
from people who really needed it.
579
00:34:07,458 --> 00:34:08,959
And that to me is a worse crime.
580
00:34:17,750 --> 00:34:18,750
- Yeah.
581
00:34:24,375 --> 00:34:27,959
- I was trying to recognize the pain she caused to the city.
582
00:34:31,542 --> 00:34:36,041
But, in spite of that, life is never over 'til it's over.
583
00:34:36,083 --> 00:34:38,500
And, I literally believe that anybody
584
00:34:38,542 --> 00:34:40,500
right up to their last breath has got
585
00:34:40,542 --> 00:34:42,542
the possibility to change their life around.
586
00:34:46,417 --> 00:34:49,208
- Rita was given close to the maximum sentence,
587
00:34:50,542 --> 00:34:52,583
19 years and seven months.
588
00:34:55,625 --> 00:34:59,000
- I was in a seat where I could look at her.
589
00:34:59,041 --> 00:35:01,291
She would not look at anybody.
590
00:35:01,333 --> 00:35:03,208
And all I could think about was, you know,
591
00:35:03,250 --> 00:35:06,375
for 20 years I worked side by side with this woman.
592
00:35:06,417 --> 00:35:09,625
And I never knew her, I never really knew her.
593
00:35:12,250 --> 00:35:13,500
- The judge ordered Rita to pay
594
00:35:13,542 --> 00:35:15,959
the city of Dixon restitution,
595
00:35:16,000 --> 00:35:18,333
and he imposed an agreed forfeiture judgment
596
00:35:18,375 --> 00:35:20,750
in the same amount.
597
00:35:20,792 --> 00:35:25,125
This means Rita's restitution is over $100 million.
598
00:35:27,208 --> 00:35:30,458
Based on her $65 per month prison salary,
599
00:35:30,500 --> 00:35:34,709
it would take her over 120,000 years to pay back the city.
600
00:35:38,041 --> 00:35:40,834
- I knew that when they were going to take her,
601
00:35:42,583 --> 00:35:45,875
right then and there, I closed my eyes
602
00:35:45,917 --> 00:35:48,333
so I could listen to the click of the handcuffs.
603
00:35:49,709 --> 00:35:50,959
I knew that justice was served.
604
00:35:55,083 --> 00:35:59,458
They took her so quickly, she didn't even have time
605
00:35:59,500 --> 00:36:01,500
to turn around and say goodbye to her family,
606
00:36:01,542 --> 00:36:04,291
because they were sitting behind her.
607
00:36:04,333 --> 00:36:05,417
She was gone.
608
00:36:08,291 --> 00:36:11,458
- At a time when the city of Dixon is suffering,
609
00:36:11,500 --> 00:36:15,208
and different department heads are having to make
610
00:36:15,250 --> 00:36:20,500
drastic cuts to their budget, the defendant sends out
611
00:36:20,542 --> 00:36:24,291
budget covers, and those covers have cartoon characters,
612
00:36:24,333 --> 00:36:27,625
one was of a cat that was scared, another one
613
00:36:27,667 --> 00:36:30,250
has a big dollar sign being cut in half,
614
00:36:30,291 --> 00:36:32,792
just prior to the defendant's arrest, showed an individual
615
00:36:32,834 --> 00:36:35,417
in the ocean with a life preserver.
616
00:36:35,458 --> 00:36:38,458
Well at the same time, she's stealing millions of dollars
617
00:36:38,500 --> 00:36:41,458
from the city of Dixon to fund her dream.
618
00:36:41,500 --> 00:36:43,875
So, that's what our argument was.
619
00:36:43,917 --> 00:36:44,959
- Thank you all.
620
00:36:46,709 --> 00:36:48,208
- I couldn't come to work the next day.
621
00:36:48,250 --> 00:36:51,458
I sat home crying, frantically.
622
00:36:51,500 --> 00:36:55,125
And all I could think about was, did she have a blanket
623
00:36:55,166 --> 00:36:58,917
last night, was she cold, you know, where did they take her?
624
00:37:01,500 --> 00:37:04,458
So, it's like, first you're angry, you're upset,
625
00:37:04,500 --> 00:37:07,125
you're betrayed, then,
626
00:37:08,625 --> 00:37:12,834
your emotions of, is she okay?
627
00:37:12,875 --> 00:37:18,583
And to me, it was so confusing for me and, I just,
628
00:37:18,625 --> 00:37:22,792
I couldn't understand why I was feeling like that.
629
00:37:26,500 --> 00:37:28,458
- Jim big day yesterday for you
630
00:37:28,500 --> 00:37:30,458
up in federal court.
631
00:37:30,500 --> 00:37:33,625
After thinkin' about it now for almost 24 hours,
632
00:37:33,667 --> 00:37:35,500
what do you think about went down?
633
00:37:49,291 --> 00:37:51,041
- Well you know, I've heard from people, Jim,
634
00:37:51,083 --> 00:37:53,208
that say, oh, she's gonna go to one of those
635
00:37:53,250 --> 00:37:56,375
country club prisons and it won't be so bad after all.
636
00:38:07,875 --> 00:38:12,208
- She did appeal her sentence, stating that the
637
00:38:12,250 --> 00:38:14,417
19 years was unduly harsh.
638
00:38:16,500 --> 00:38:19,458
She lost her appeal, and since then there hasn't been
639
00:38:19,500 --> 00:38:23,750
anything further, so at that point the FBI then
640
00:38:23,792 --> 00:38:26,041
works with the, we're at work with the U.S. Marshals
641
00:38:26,083 --> 00:38:30,208
along the way to work on forfeitures,
642
00:38:30,250 --> 00:38:33,041
determine what she has that was seized.
643
00:38:35,375 --> 00:38:38,458
Thousands of man hours were spent by the FBI alone
644
00:38:38,500 --> 00:38:41,458
when investigating, and then too seizing
645
00:38:41,500 --> 00:38:45,917
and documenting all the evidence.
646
00:38:45,959 --> 00:38:48,458
At this point we don't really spend any more time
647
00:38:48,500 --> 00:38:51,417
as the investigation led that we could not prove
648
00:38:51,458 --> 00:38:53,959
that anybody else was aware of the fraud scheme,
649
00:38:54,000 --> 00:38:55,750
and was part of it.
650
00:39:12,417 --> 00:39:15,417
- Dixon voters need to clean house if they are to
651
00:39:15,458 --> 00:39:19,417
rid themselves of this ongoing corruption and incompetence.
652
00:39:19,458 --> 00:39:23,458
Shameful scandal from the hometown of Ronald Reagan.
653
00:39:23,500 --> 00:39:26,250
- As citizens we look at it like, you guys dropped the ball
654
00:39:26,291 --> 00:39:28,083
and you're still here like nothin' happened,
655
00:39:28,125 --> 00:39:31,458
and we keep having to have cameras in our city
656
00:39:31,500 --> 00:39:34,667
for stuff that's no good for our city, and we're sick of it.
657
00:39:34,709 --> 00:39:36,542
So, thank you.
658
00:39:36,583 --> 00:39:38,375
- You have not been doin' your job,
659
00:39:38,417 --> 00:39:40,875
you've been doin' what's good for you,
660
00:39:40,917 --> 00:39:42,959
not for the people of Dixon.
661
00:39:43,000 --> 00:39:45,250
As far as I'm concerned, you're all fired,
662
00:39:45,291 --> 00:39:46,792
thank you very much.
663
00:39:46,834 --> 00:39:48,834
- This is what goes on in the town,
664
00:39:48,875 --> 00:39:54,542
it's nothin' but greed, abuse of power, and corruption.
665
00:39:54,583 --> 00:39:56,583
- That's right.
666
00:39:56,625 --> 00:39:58,375
- And until we get rid of some of these people,
667
00:39:58,417 --> 00:40:00,417
it'll always be there.
668
00:40:05,709 --> 00:40:07,458
When did I create the sign?
669
00:40:07,500 --> 00:40:09,166
Just about a week before they was even havin'
670
00:40:09,208 --> 00:40:11,709
the first meeting after Mrs. Crundwell.
671
00:40:11,750 --> 00:40:13,417
And I thought it'd be appropriate.
672
00:40:15,875 --> 00:40:17,333
- And that's the way a lot of people think
673
00:40:17,375 --> 00:40:19,625
in Dixon right now, and I do.
674
00:40:19,667 --> 00:40:23,208
I changed my complete,
675
00:40:23,250 --> 00:40:26,333
what I thought of that man.
676
00:40:26,375 --> 00:40:28,583
- The city council and the mayor
677
00:40:28,625 --> 00:40:31,250
all should have known what was going on.
678
00:40:31,291 --> 00:40:33,375
They should've known about the fraud,
679
00:40:33,417 --> 00:40:35,333
they should've been looking for it.
680
00:40:35,375 --> 00:40:38,792
They were all complacent in their duties
681
00:40:38,834 --> 00:40:41,500
to just let her do everything.
682
00:40:41,542 --> 00:40:43,875
- One person, or one event, does not define Dixon.
683
00:40:43,917 --> 00:40:46,667
- People are very angry and rightfully so.
684
00:40:46,709 --> 00:40:49,834
Lot of it's directed at probably people that governed.
685
00:40:49,875 --> 00:40:53,166
And that's kind of unfortunate, because those people,
686
00:40:53,208 --> 00:40:55,375
they did the best they could with what they had.
687
00:40:56,959 --> 00:40:59,583
- Officials in Sterling figured out
688
00:40:59,625 --> 00:41:01,917
there was something wrong.
689
00:41:01,959 --> 00:41:05,667
How in god's name did another city
690
00:41:05,709 --> 00:41:08,375
see the red flags and this city didn't?
691
00:41:10,458 --> 00:41:12,875
- We have to change our form of government
692
00:41:12,917 --> 00:41:15,083
to something that is gonna work, that's more professional,
693
00:41:15,125 --> 00:41:18,041
that's more modern day, and that's at least capable
694
00:41:18,083 --> 00:41:20,083
of handling the problems we have before us.
695
00:41:20,125 --> 00:41:21,250
I think we need to--
696
00:41:21,291 --> 00:41:23,041
- So, I was vilified.
697
00:41:23,083 --> 00:41:26,625
We would have the same people comin' up here,
698
00:41:26,667 --> 00:41:30,250
meeting after meeting, and suggesting that,
699
00:41:30,291 --> 00:41:33,083
and asking for my resignation.
700
00:41:33,125 --> 00:41:35,000
I mean there was nothing that ever
701
00:41:35,041 --> 00:41:39,542
prepared me for this kind of an experience.
702
00:41:41,667 --> 00:41:46,000
- It hurt him, shocked him, the way that the anger was,
703
00:41:46,041 --> 00:41:48,917
you know especially against him and the city council.
704
00:41:48,959 --> 00:41:51,917
You know, he felt responsibility for it,
705
00:41:51,959 --> 00:41:54,083
it was just the fact that because he was the mayor
706
00:41:54,125 --> 00:41:56,917
and it went down on his watch.
707
00:41:56,959 --> 00:41:59,417
- My question today is to the auditors.
708
00:41:59,458 --> 00:42:03,083
Why did you never tell the mayor and the council
709
00:42:03,125 --> 00:42:06,417
that our internal auditing were completely lacking
710
00:42:06,458 --> 00:42:08,750
and needed to be changed?
711
00:42:08,792 --> 00:42:10,625
- People would often ask questions about,
712
00:42:10,667 --> 00:42:13,333
why are these revenues so small?
713
00:42:13,375 --> 00:42:15,000
How come we haven't gotten this money?
714
00:42:15,041 --> 00:42:16,583
So on and so on.
715
00:42:16,625 --> 00:42:18,333
But no one ever followed up on that.
716
00:42:18,375 --> 00:42:21,041
Whatever Miss Crundwell told them,
717
00:42:21,083 --> 00:42:23,125
they swallowed it, hook, line, and sinker.
718
00:42:37,750 --> 00:42:41,083
- So who really is responsible for finding fraud?
719
00:42:41,125 --> 00:42:43,834
Is it the auditors who did the annual audit for the town?
720
00:42:43,875 --> 00:42:47,000
Is it the bank where the city held their bank accounts?
721
00:42:47,041 --> 00:42:50,333
Is it the city council, who ran the town?
722
00:42:50,375 --> 00:42:52,208
Or is it the residents?
723
00:43:00,500 --> 00:43:03,417
- The local media felt all along that
724
00:43:03,458 --> 00:43:05,417
the commission form of government
725
00:43:05,458 --> 00:43:07,917
was the sole reason for this whole embezzlement.
726
00:43:09,792 --> 00:43:12,417
I mean, we are the outstanding community around here.
727
00:43:12,458 --> 00:43:15,375
And it got here with this form of government that we've got.
728
00:43:18,083 --> 00:43:22,375
- I mean essentially you have a handful of city leaders,
729
00:43:22,417 --> 00:43:25,375
who have their own little fiefdoms,
730
00:43:25,417 --> 00:43:27,375
don't really communicate a lot with each other.
731
00:43:27,417 --> 00:43:30,250
But more importantly, they're part time jobs
732
00:43:30,291 --> 00:43:32,083
that pay a pittance.
733
00:43:32,125 --> 00:43:34,792
All of them actually, they have other jobs.
734
00:43:34,834 --> 00:43:38,083
For instance, one of the city officials owned a
735
00:43:38,125 --> 00:43:42,583
carpet store, another was a high school business teacher.
736
00:43:42,625 --> 00:43:45,417
I mean these are the people who are responsible for
737
00:43:45,458 --> 00:43:47,542
keeping track of what's going on.
738
00:43:49,583 --> 00:43:52,375
- There was not the oversight from a governing board
739
00:43:52,417 --> 00:43:57,083
perspective, really diving down and diving deep into
740
00:43:57,125 --> 00:43:59,208
what the operating budget looked like,
741
00:43:59,250 --> 00:44:01,083
how the dollars were being allocated,
742
00:44:01,125 --> 00:44:04,750
be it to public safety, capital projects,
743
00:44:04,792 --> 00:44:07,375
or any of the other public services.
744
00:44:21,458 --> 00:44:23,417
- In reporting this story I found that
745
00:44:23,458 --> 00:44:27,875
she had made the books and the numbers so complex
746
00:44:27,917 --> 00:44:32,417
and convoluted that, I mean, none of the town officials
747
00:44:32,458 --> 00:44:35,000
knew what these numbers meant.
748
00:44:35,041 --> 00:44:38,083
So, when they had a question, and maybe sometimes
749
00:44:38,125 --> 00:44:41,041
they would think, this looks a little odd,
750
00:44:41,083 --> 00:44:42,667
someone else would say, well go to Rita,
751
00:44:42,709 --> 00:44:45,417
she'll explain it to you.
752
00:44:45,458 --> 00:44:49,834
- To trust a single person for any financial function
753
00:44:49,875 --> 00:44:53,917
is a mistake, so you don't trust one person
754
00:44:53,959 --> 00:44:58,000
to be in charge of the credit card, and its payments.
755
00:44:58,041 --> 00:45:00,417
You don't trust one person to be in charge
756
00:45:00,458 --> 00:45:03,417
of the water billing, collecting the money, billing
757
00:45:03,458 --> 00:45:07,333
the money, you have to separate out these functions.
758
00:45:10,417 --> 00:45:13,917
Dixon's case was an extreme example of this because,
759
00:45:13,959 --> 00:45:16,250
they had, not only did they not separate
760
00:45:16,291 --> 00:45:18,542
individual functions among multiple people,
761
00:45:18,583 --> 00:45:23,250
they didn't separate any functions among any people.
762
00:45:27,083 --> 00:45:30,041
- Rita picked up the mail, made deposits,
763
00:45:30,083 --> 00:45:32,041
updated the journals and ledgers,
764
00:45:32,083 --> 00:45:35,333
prepared and signed checks, moved investment monies,
765
00:45:35,375 --> 00:45:37,458
and reconciled the bank accounts.
766
00:45:37,500 --> 00:45:41,208
There was very little segregation of duties
767
00:45:41,250 --> 00:45:43,083
Rita literally did it all.
768
00:45:48,125 --> 00:45:51,375
- While Rita was out of town, she would have
769
00:45:51,417 --> 00:45:54,208
an employee pick up the mail for her,
770
00:45:54,250 --> 00:45:56,375
to keep for her when she got back.
771
00:45:56,417 --> 00:45:59,333
And I know that statement was one of them.
772
00:45:59,375 --> 00:46:02,375
- There's been no policies in place all these years.
773
00:46:02,417 --> 00:46:06,083
Maybe Rita was smarter than all of us because she knew
774
00:46:06,125 --> 00:46:08,375
there were no policies in place.
775
00:46:26,083 --> 00:46:28,375
- It was clear to me that the city of Dixon was a victim,
776
00:46:28,417 --> 00:46:30,083
and I thought I could make a difference
777
00:46:30,125 --> 00:46:32,333
and help the city and the taxpayers out.
778
00:46:42,333 --> 00:46:44,166
- Do I believe the city of Dixon
779
00:46:44,208 --> 00:46:47,583
had any responsibility themselves to identify the fraud
780
00:46:47,625 --> 00:46:49,375
that was committed by Rita Crundwell,
781
00:46:49,417 --> 00:46:51,333
and I think unequivocally the answer is no.
782
00:46:53,500 --> 00:46:56,208
- I did not meet Rita Crundwell when I was
783
00:46:56,250 --> 00:46:59,417
prosecuting this case, and nor have I ever met her.
784
00:46:59,458 --> 00:47:01,417
For purposes of my prosecuting this case
785
00:47:01,458 --> 00:47:03,417
for the city of Dixon she was for all
786
00:47:03,458 --> 00:47:06,000
intents and purposes, irrelevant.
787
00:47:06,041 --> 00:47:09,208
The issue was, who was responsible for identifying
788
00:47:09,250 --> 00:47:11,375
the fact that she was stealing the money.
789
00:47:16,417 --> 00:47:20,417
- Rita developed too cozy of a relationship
790
00:47:20,458 --> 00:47:24,250
with so many people that were involved in this thing.
791
00:47:24,291 --> 00:47:27,458
She directed the audit, I mean, she was the one that really,
792
00:47:27,500 --> 00:47:31,375
in my mind, selected Clifton to continue
793
00:47:31,417 --> 00:47:33,333
to do the auditing and so forth.
794
00:47:35,458 --> 00:47:37,375
- Clifton is a top 10 public accounting firm
795
00:47:37,417 --> 00:47:39,375
in the United States.
796
00:47:39,417 --> 00:47:42,959
The city of Dixon was a client of Clifton's local office.
797
00:47:43,000 --> 00:47:45,375
They were hired by the city to do the annual audit.
798
00:47:45,417 --> 00:47:46,959
And in addition, they were involved
799
00:47:47,000 --> 00:47:49,417
in the city's day-to-day operations.
800
00:47:51,375 --> 00:47:54,291
- They made a conscious intentional decision to get all
801
00:47:54,333 --> 00:47:57,750
of the money for every financial aspect of that city.
802
00:47:57,792 --> 00:48:00,417
They made that decision, they were there.
803
00:48:00,458 --> 00:48:02,667
Either Clifton was at the city hall,
804
00:48:02,709 --> 00:48:04,709
or the city hall people were dropping
805
00:48:04,750 --> 00:48:07,333
financial documents off there at least once a day.
806
00:48:09,166 --> 00:48:11,667
- What has come to light in the depositions
807
00:48:11,709 --> 00:48:15,208
of one of the partners at Clifton,
808
00:48:15,250 --> 00:48:18,500
he testified that they did all the accounts payable,
809
00:48:18,542 --> 00:48:21,333
they actually cut checks, they did payroll,
810
00:48:21,375 --> 00:48:24,125
they did other consulting services.
811
00:48:24,166 --> 00:48:27,291
Aside from the fact that they will have to defend
812
00:48:27,333 --> 00:48:29,333
against the accusation that they should've discovered
813
00:48:29,375 --> 00:48:32,625
this fraud, I think they have a bigger issue to defend,
814
00:48:32,667 --> 00:48:35,917
and that is, an independence issue.
815
00:48:39,417 --> 00:48:40,917
- An auditor provides an opinion
816
00:48:40,959 --> 00:48:42,792
on a company's financial statements,
817
00:48:42,834 --> 00:48:45,875
similar to how a food critic provides a review
818
00:48:45,917 --> 00:48:48,625
of the dining experience at a restaurant.
819
00:48:48,667 --> 00:48:51,625
An auditor reviews the accuracy of the financial statements,
820
00:48:51,667 --> 00:48:54,500
similar to the way in which a food critic
821
00:48:54,542 --> 00:48:57,083
provides a thoughtful, unbiased review
822
00:48:57,125 --> 00:49:00,000
about the food at a restaurant.
823
00:49:00,041 --> 00:49:01,875
Auditors are not responsible for developing
824
00:49:01,917 --> 00:49:04,750
the financial statements on the company's behalf,
825
00:49:04,792 --> 00:49:07,166
just like a food critic is not responsible
826
00:49:07,208 --> 00:49:09,583
for preparing the restaurant's meal.
827
00:49:09,625 --> 00:49:11,542
People rely on the opinion of auditors
828
00:49:11,583 --> 00:49:13,375
to make business decisions,
829
00:49:13,417 --> 00:49:15,834
just like people rely on the food critics review
830
00:49:15,875 --> 00:49:19,125
to decide whether to eat at a restaurant.
831
00:49:19,166 --> 00:49:21,417
Now imagine if the food critic was the one
832
00:49:21,458 --> 00:49:24,750
who prepared the food, then ate the food,
833
00:49:24,792 --> 00:49:27,625
and then published a review of that same restaurant
834
00:49:27,667 --> 00:49:29,375
based on that meal.
835
00:49:29,417 --> 00:49:31,792
Seems like a huge conflict, right?
836
00:49:31,834 --> 00:49:33,250
Well, it is.
837
00:49:35,166 --> 00:49:37,834
- Exactly, but in this case, because of Clifton,
838
00:49:37,875 --> 00:49:41,166
Larson's, Allen's own intentional
839
00:49:41,208 --> 00:49:44,291
they themselves chose to formulate and create
840
00:49:44,333 --> 00:49:47,250
the financial statements, which they themselves chose
841
00:49:47,291 --> 00:49:49,625
to charge again to audit.
842
00:49:49,667 --> 00:49:51,959
They were looking at their own work.
843
00:49:52,000 --> 00:49:55,750
It's asking someone to prepare a document,
844
00:49:55,792 --> 00:49:58,166
and then asking the same individual, and getting paid
845
00:49:58,208 --> 00:50:00,375
to do so, and then asking the same individual
846
00:50:00,417 --> 00:50:01,750
to say, is your document right?
847
00:50:06,709 --> 00:50:08,709
- The city argued that the auditors knew,
848
00:50:08,750 --> 00:50:11,458
or should have known, that the invoices were phony.
849
00:50:13,125 --> 00:50:15,583
- Here's a proper invoice from the
850
00:50:15,625 --> 00:50:17,583
Illinois Department of Transportation.
851
00:50:17,625 --> 00:50:20,542
This is the way they're suppose to look.
852
00:50:22,458 --> 00:50:26,250
And that's the invoice from Rita Crundwell.
853
00:50:26,291 --> 00:50:28,959
And a nine year old could identify
854
00:50:29,000 --> 00:50:31,500
the difference between those.
855
00:50:31,542 --> 00:50:36,542
The field audit team looked at these false invoices
856
00:50:36,583 --> 00:50:39,375
and failed to do anything at all
857
00:50:39,417 --> 00:50:41,458
that they were taught in accounting school to follow up.
858
00:50:41,500 --> 00:50:44,333
Whether it be, talk to the city engineer,
859
00:50:44,375 --> 00:50:46,625
make a phone call to Springfield,
860
00:50:46,667 --> 00:50:49,917
go out and look at these clearly fictitious projects,
861
00:50:49,959 --> 00:50:52,417
any of which would have resulted in
862
00:50:52,458 --> 00:50:55,041
a discovery of the theft.
863
00:50:55,083 --> 00:50:56,959
I deposed a number of the individuals
864
00:50:57,000 --> 00:50:59,417
that were responsible for the field audit work,
865
00:50:59,458 --> 00:51:01,834
and the actual generation of the work papers for Clifton
866
00:51:01,875 --> 00:51:03,875
when they did the work for the city of Dixon.
867
00:51:05,542 --> 00:51:06,917
- If at any point in time
868
00:51:06,959 --> 00:51:08,583
Clifton was doing the audit,
869
00:51:08,625 --> 00:51:10,458
and they would've walked down the hallway
870
00:51:10,500 --> 00:51:12,834
to ask a simple question of the city engineer,
871
00:51:14,583 --> 00:51:17,250
excuse me, can you tell me about this project?
872
00:51:17,291 --> 00:51:19,250
Do you agree the subsequent events
873
00:51:19,291 --> 00:51:22,208
would have identified Rita's theft?
874
00:51:22,250 --> 00:51:24,417
- Yes.
875
00:51:24,458 --> 00:51:26,500
- Do you agree with me
876
00:51:26,542 --> 00:51:29,125
had that been done, the fraud would have been identified
877
00:51:29,166 --> 00:51:30,583
and Rita would've been arrested?
878
00:51:32,125 --> 00:51:33,208
- Yes.
879
00:51:35,709 --> 00:51:39,208
- There was 179, as we counted, of those false invoices
880
00:51:39,250 --> 00:51:42,417
and they failed to react to any one of them.
881
00:51:42,458 --> 00:51:44,166
They missed it, over and over
882
00:51:44,208 --> 00:51:45,583
and over again, they missed it.
883
00:51:50,917 --> 00:51:53,625
The issue is, you know, should someone
884
00:51:53,667 --> 00:51:56,500
have known about that RSCDA account.
885
00:51:58,041 --> 00:51:59,625
Do we have any proof that Clifton
886
00:51:59,667 --> 00:52:02,417
had knowledge of the RSCDA account?
887
00:52:02,458 --> 00:52:04,875
And according to them, in their own depositions,
888
00:52:04,917 --> 00:52:06,709
the answer to that question is yes.
889
00:52:08,875 --> 00:52:11,583
They were given bank confirmations on
890
00:52:11,625 --> 00:52:15,583
disclosing the RSCDA account, and they did nothing.
891
00:52:24,625 --> 00:52:29,041
I deposed both of the current, as well as the former
892
00:52:29,083 --> 00:52:31,875
head of the Clifton office in Dixon.
893
00:52:31,917 --> 00:52:34,875
Both of those individuals were also the key people involved
894
00:52:34,917 --> 00:52:38,625
every year in performing the work for
895
00:52:38,667 --> 00:52:42,166
Rita Crundwell's personal income tax returns.
896
00:52:45,750 --> 00:52:48,417
- Is it unusual that somebody would have
897
00:52:48,458 --> 00:52:52,500
over $300,000 cash flow out,
898
00:52:52,542 --> 00:52:55,834
without being explained by their tax returns?
899
00:52:55,875 --> 00:52:59,166
- Well, it would be unusual.
900
00:52:59,208 --> 00:53:05,375
- In 2005, there's over $300,000 that Clifton,
901
00:53:05,417 --> 00:53:08,083
in preparing Rita Crundwell's tax returns
902
00:53:08,125 --> 00:53:11,375
identifies as money coming in to Rita Crundwell
903
00:53:11,417 --> 00:53:13,500
for which there's no documentation.
904
00:53:13,542 --> 00:53:16,083
All a city employee who makes
905
00:53:16,125 --> 00:53:17,834
80 some thousand dollars a year.
906
00:53:19,917 --> 00:53:21,625
- Other than just writing it down
907
00:53:21,667 --> 00:53:23,875
and claiming it, that's the most that she had
908
00:53:23,917 --> 00:53:26,834
in terms of documentation, correct?
909
00:53:26,875 --> 00:53:28,583
- Correct.
910
00:53:28,625 --> 00:53:29,917
- You never asked her
911
00:53:29,959 --> 00:53:32,250
for anything further, true?
912
00:53:32,291 --> 00:53:33,208
- True.
913
00:53:35,834 --> 00:53:39,917
- How do you explain that at times
914
00:53:39,959 --> 00:53:42,709
they were preparing a financial statement,
915
00:53:42,750 --> 00:53:46,709
which within the financial statement that Clifton prepared,
916
00:53:46,750 --> 00:53:49,583
demonstrated that the city was losing
917
00:53:49,625 --> 00:53:51,709
millions and millions of dollars?
918
00:53:51,750 --> 00:53:55,333
When the person, who is at the epicenter,
919
00:53:55,375 --> 00:53:58,583
which they know because they're doing the annual audit,
920
00:53:58,625 --> 00:54:00,083
the epicenter of the city of Dixon
921
00:54:00,125 --> 00:54:02,375
is the treasurer/comptroller.
922
00:54:09,625 --> 00:54:14,250
- Unexplained income on a tax return is always a problem.
923
00:54:14,291 --> 00:54:18,542
And had the tax preparer asked a couple of more questions,
924
00:54:18,583 --> 00:54:20,792
it would have led that preparer to know
925
00:54:20,834 --> 00:54:22,583
that the unexplained income
926
00:54:22,625 --> 00:54:25,583
was coming from the embezzled money.
927
00:54:25,625 --> 00:54:29,875
- If the auditors are not to be held responsible for
928
00:54:29,917 --> 00:54:33,542
identifying the theft of millions and millions
929
00:54:33,583 --> 00:54:36,542
of dollars every year, why have 'em in the first place?
930
00:54:36,583 --> 00:54:39,583
- I think most people are under the impression
931
00:54:39,625 --> 00:54:43,417
that these audits are going to uncover
932
00:54:43,458 --> 00:54:46,583
graft and corruption and embezzlement, apparently
933
00:54:46,624 --> 00:54:46,665
not.
934
00:54:51,291 --> 00:54:54,125
- Auditors are not responsible for finding fraud,
935
00:54:54,166 --> 00:54:55,834
nor should they be.
936
00:54:55,875 --> 00:54:59,959
They became reporting and disclosing police,
937
00:55:00,000 --> 00:55:03,125
making sure that the corporations,
938
00:55:03,166 --> 00:55:07,041
in particular, were following the appropriate regulations.
939
00:55:07,083 --> 00:55:09,542
Am I defending these particular auditors, no.
940
00:55:11,875 --> 00:55:14,208
- I just did not see, in light of the
941
00:55:14,250 --> 00:55:18,208
overwhelming negligence of CliftonLarsonAllen's employees,
942
00:55:18,250 --> 00:55:20,750
which came out in these depositions on
943
00:55:20,792 --> 00:55:23,333
I just did not see how they could win the case
944
00:55:23,375 --> 00:55:25,333
in front of a Lee County jury.
945
00:55:37,375 --> 00:55:39,000
- Most frauds are discovered by a tip
946
00:55:39,041 --> 00:55:41,542
from a whistle blower, and not from an audit.
947
00:55:43,375 --> 00:55:45,542
So had Kathe Swanson not discovered this fraud,
948
00:55:45,583 --> 00:55:47,542
and then reported it to Mayor Burke,
949
00:55:47,583 --> 00:55:50,083
there's a chance that this would've never been discovered,
950
00:55:50,125 --> 00:55:51,917
and Rita would've gotten away with it.
951
00:55:55,750 --> 00:55:57,125
- Yes, um-hm.
952
00:56:01,125 --> 00:56:04,583
- Being a whistle blower is, it's very stressful but,
953
00:56:04,625 --> 00:56:06,542
you know, it's all in how you're brought up.
954
00:56:06,583 --> 00:56:09,125
My parents taught me, you don't take something
955
00:56:09,166 --> 00:56:11,166
that doesn't belong to you.
956
00:56:11,208 --> 00:56:15,125
And if you see something wrong, say something, so.
957
00:56:21,041 --> 00:56:25,125
- My only regret is, is that I didn't find out sooner.
958
00:56:35,125 --> 00:56:36,750
- Fifth Third Bank was also named
959
00:56:36,792 --> 00:56:39,166
in the civil complaint.
960
00:56:39,208 --> 00:56:41,542
Remember, the city of Dixon held six legitimate
961
00:56:41,583 --> 00:56:45,583
city accounts, along with her secret account,
962
00:56:45,625 --> 00:56:48,041
which she used to funnel money out of the city.
963
00:56:50,667 --> 00:56:53,458
- I think from the banking side,
964
00:56:53,500 --> 00:56:54,959
I think it was shocking that they opened
965
00:56:55,000 --> 00:56:57,291
the account the way that they did.
966
00:57:00,542 --> 00:57:03,959
According to them it was a city of Dixon account,
967
00:57:04,000 --> 00:57:07,667
and for them to see, on a regular basis,
968
00:57:07,709 --> 00:57:10,125
so many personal transactions,
969
00:57:10,166 --> 00:57:14,291
from jewelry to spas to equestrian activities.
970
00:57:14,333 --> 00:57:16,542
Many of the checks that she was depositing
971
00:57:16,583 --> 00:57:20,625
into this bogus account were made out to Treasurer.
972
00:57:20,667 --> 00:57:23,208
That type of ambiguity is known within the banking industry
973
00:57:23,250 --> 00:57:26,625
as something that you should not allow to occur.
974
00:57:26,667 --> 00:57:28,208
Especially in the amounts of the money
975
00:57:28,250 --> 00:57:29,500
that she was negotiating.
976
00:57:33,500 --> 00:57:36,959
I took the deposition of one of the Fifth Third Bank
977
00:57:37,000 --> 00:57:40,375
former employees, who happened also to be
978
00:57:40,417 --> 00:57:43,709
the bank branch manager when a lot of the most
979
00:57:43,750 --> 00:57:47,542
serious transactions that Rita had
980
00:57:47,583 --> 00:57:50,083
with Fifth Third Bank, transpired.
981
00:57:53,583 --> 00:57:54,875
- If you were a teller
982
00:57:54,917 --> 00:57:56,709
at a bank branch here in Dixon
983
00:57:56,750 --> 00:57:58,834
and somebody walked up to you and said,
984
00:57:58,875 --> 00:58:00,542
I'm going to negotiate a check
985
00:58:00,583 --> 00:58:03,083
for hundreds of thousands of dollars,
986
00:58:03,125 --> 00:58:05,792
and it just says, payee treasurer,
987
00:58:05,834 --> 00:58:07,792
do you feel comfortable that the check
988
00:58:07,834 --> 00:58:10,500
can be negotiated as written?
989
00:58:10,542 --> 00:58:11,625
- Based on my experience,
990
00:58:11,667 --> 00:58:13,625
it would raise caution.
991
00:58:13,667 --> 00:58:15,834
- And what's the basis of that opinion?
992
00:58:15,875 --> 00:58:17,709
- The dollar amount, number one.
993
00:58:17,750 --> 00:58:20,041
Typically higher dollar amounts are reviewed closer.
994
00:58:22,917 --> 00:58:24,667
- I was able to obtain a lot of admissions
995
00:58:24,709 --> 00:58:26,959
on behalf of Fifth Third Bank that I thought
996
00:58:27,000 --> 00:58:29,375
would be very damaging for Fifth Third Bank
997
00:58:29,417 --> 00:58:31,709
should we go to trial.
998
00:58:31,750 --> 00:58:33,792
- The case never went to trial.
999
00:58:37,583 --> 00:58:41,333
- No, I wasn't surprised by the settlement amount
1000
00:58:41,375 --> 00:58:43,875
because I in my heart truly believe
1001
00:58:43,917 --> 00:58:47,542
that the fault lied with Clifton,
1002
00:58:47,583 --> 00:58:50,583
the Fifth Third Bank, and one way or another
1003
00:58:50,625 --> 00:58:52,542
we were gonna get that money for the city,
1004
00:58:52,583 --> 00:58:54,333
whether it be by trial or settlement.
1005
00:59:03,583 --> 00:59:05,583
- And we have to become ACA compliant right now
1006
00:59:05,625 --> 00:59:09,333
if we go to that 2 1/2%, if we don't wait until January.
1007
00:59:09,375 --> 00:59:10,500
- Correct.
1008
00:59:15,750 --> 00:59:16,750
- Right.
1009
00:59:19,625 --> 00:59:23,542
- No, actually taking the job after she was here,
1010
00:59:23,583 --> 00:59:26,792
my first thought was, well,
1011
00:59:26,834 --> 00:59:28,750
really, how could I do any worse?
1012
00:59:28,792 --> 00:59:32,667
You know, I mean it was like, wow.
1013
00:59:32,709 --> 00:59:35,542
My plan was, in addition to this,
1014
00:59:35,583 --> 00:59:39,750
was to write up those raises for the non-union people.
1015
00:59:39,792 --> 00:59:41,250
And send something--
1016
00:59:41,291 --> 00:59:43,250
The idea of coming in and creating
1017
00:59:43,291 --> 00:59:45,208
a whole new system of accounting,
1018
00:59:45,250 --> 00:59:48,542
and restructuring it all, just seemed really interesting
1019
00:59:48,583 --> 00:59:51,542
and a challenge that I wanted to do.
1020
00:59:51,583 --> 00:59:53,750
I actually changed about everybody's job duty
1021
00:59:53,792 --> 00:59:55,542
and I physically relocated them
1022
00:59:55,583 --> 00:59:57,583
in a lot of times into different locations,
1023
00:59:57,625 --> 01:00:00,625
just so that we would all have a view that
1024
01:00:00,667 --> 01:00:02,625
things are gonna be done differently here.
1025
01:00:12,417 --> 01:00:15,583
- Our office dynamics have definitely changed.
1026
01:00:15,625 --> 01:00:18,166
My duties have lessened.
1027
01:00:18,208 --> 01:00:22,083
I'm just the city clerk now, I don't do the payroll.
1028
01:00:22,125 --> 01:00:24,500
I think it's more of a professional place.
1029
01:00:26,583 --> 01:00:30,500
I still harbor a lot of bad feelings towards Rita.
1030
01:00:32,500 --> 01:00:35,542
I can't help but feel that way.
1031
01:00:35,583 --> 01:00:40,542
I don't think I feel any more sorry for her.
1032
01:00:40,583 --> 01:00:42,417
I think she's where she belongs.
1033
01:00:44,583 --> 01:00:47,375
I look back at it sometimes and I think,
1034
01:00:47,417 --> 01:00:48,750
how did it all come about?
1035
01:00:51,417 --> 01:00:52,667
Why was she caught?
1036
01:00:56,166 --> 01:00:58,542
And that I can't wrap my mind around,
1037
01:00:58,583 --> 01:01:00,500
you know, why that day?
1038
01:01:03,208 --> 01:01:05,333
I'm sure, you know, to save the city.
1039
01:01:08,625 --> 01:01:13,166
- I don't believe that how Dixon's finances were structured
1040
01:01:13,208 --> 01:01:16,542
is probably very different from many,
1041
01:01:16,583 --> 01:01:19,417
maybe even a majority, of other small towns
1042
01:01:19,458 --> 01:01:20,792
all across the United States.
1043
01:01:23,041 --> 01:01:25,500
I would also guess that there's
1044
01:01:25,542 --> 01:01:28,500
a tremendous amount of theft out there.
1045
01:01:28,542 --> 01:01:31,834
What Rita did isn't particularly unique.
1046
01:01:31,875 --> 01:01:33,333
The only thing that makes her unique
1047
01:01:33,375 --> 01:01:35,375
is the dollar amount that she took.
1048
01:01:35,417 --> 01:01:38,917
What she did is very, very common, and could be done by
1049
01:01:38,959 --> 01:01:42,458
almost anybody in any size organization.
1050
01:01:45,750 --> 01:01:47,041
- Councilman Tucker. - Aye.
1051
01:01:47,083 --> 01:01:48,583
- Councilman Venier. - Yes.
1052
01:01:48,625 --> 01:01:49,917
- Councilman Bishop. - Aye.
1053
01:01:49,959 --> 01:01:53,542
- Councilman Barnes. - Yes.
1054
01:01:53,583 --> 01:01:57,000
- The citizens have voted in a new form of government.
1055
01:01:58,583 --> 01:02:01,417
We'll become a managerial form.
1056
01:02:01,458 --> 01:02:03,500
The role of the commissioners from being kind of
1057
01:02:03,542 --> 01:02:08,000
an everyday executive authority over different departments,
1058
01:02:08,041 --> 01:02:10,917
now the city manager will have the executive authority
1059
01:02:10,959 --> 01:02:12,625
over the different departments,
1060
01:02:12,667 --> 01:02:15,417
and the council will just be doing policy
1061
01:02:15,458 --> 01:02:18,583
as opposed to being involved on a more of day-to-day basis.
1062
01:02:18,625 --> 01:02:20,709
- Baskets are held on by brackets on the--
1063
01:02:20,750 --> 01:02:23,917
The city needed some fresh blood, some fresh ideas,
1064
01:02:23,959 --> 01:02:26,542
and we got five new councilmen
1065
01:02:26,583 --> 01:02:29,542
that were elected back in April.
1066
01:02:29,583 --> 01:02:31,542
- I recognize that when you guys come in,
1067
01:02:31,583 --> 01:02:33,750
you had a lot of extra work to do.
1068
01:02:33,792 --> 01:02:36,041
But, your ears have always been open to us,
1069
01:02:36,083 --> 01:02:38,083
Paul's door's always been open to us,
1070
01:02:38,125 --> 01:02:41,166
I appreciate the fair treatment, I thank all of you.
1071
01:02:41,208 --> 01:02:42,500
And the rest of the people--
1072
01:02:42,542 --> 01:02:44,125
- We now have put in
1073
01:02:44,166 --> 01:02:47,500
multiple forms of fraud protection.
1074
01:02:47,542 --> 01:02:49,500
Multiple people have to sign checks.
1075
01:02:49,542 --> 01:02:50,959
Multiple people have to approve
1076
01:02:51,000 --> 01:02:53,333
the payments in the first place.
1077
01:02:55,375 --> 01:02:58,834
- I think other small towns should consider,
1078
01:02:58,875 --> 01:03:03,083
not necessarily going out and hiring a lot more people,
1079
01:03:03,125 --> 01:03:06,458
but the people that you have involved,
1080
01:03:06,500 --> 01:03:08,625
your council members, your elected officials,
1081
01:03:08,667 --> 01:03:12,709
even other people who are employed there,
1082
01:03:12,750 --> 01:03:16,083
I think it would behoove them to really actually understand
1083
01:03:16,125 --> 01:03:19,000
accounting, understand financial statements,
1084
01:03:19,041 --> 01:03:20,834
so that they can look at them
1085
01:03:20,875 --> 01:03:22,834
and read the story that they tell.
1086
01:03:22,875 --> 01:03:27,166
Financial statements are really out there to tell a story.
1087
01:03:27,208 --> 01:03:29,875
And if you can learn to read that story,
1088
01:03:29,917 --> 01:03:34,625
you might be able to avoid anybody walking away from this.
1089
01:03:36,250 --> 01:03:37,667
- Hey, were you able to get anything
1090
01:03:37,709 --> 01:03:40,083
as far as any cost estimate or--
1091
01:03:40,125 --> 01:03:42,041
- Dixon Mayor Jim Burke makes
1092
01:03:42,083 --> 01:03:44,250
last minute phone calls on Monday.
1093
01:03:44,291 --> 01:03:46,250
- If it's possible to get a requisition
1094
01:03:46,291 --> 01:03:48,458
before I leave the office today.
1095
01:03:48,500 --> 01:03:49,750
- Okay.
1096
01:03:49,792 --> 01:03:52,000
- 5:30 I'll be all finished.
1097
01:03:52,041 --> 01:03:55,667
I really, I'm disappointed I'm not running again.
1098
01:03:55,709 --> 01:04:00,041
I think the foundation was there to get reelected.
1099
01:04:00,083 --> 01:04:02,709
- This marks his final day at city hall.
1100
01:04:02,750 --> 01:04:05,375
He's completing 16 years as mayor.
1101
01:04:07,458 --> 01:04:09,041
- I'm gonna miss it, I hate to go,
1102
01:04:09,083 --> 01:04:10,875
but I know it's time to do this.
1103
01:04:25,750 --> 01:04:28,667
- Here we have intermediate storage,
1104
01:04:28,709 --> 01:04:30,709
so for all of the paperwork that isn't necessarily
1105
01:04:30,750 --> 01:04:34,083
from my administration, but we still want close by.
1106
01:04:34,125 --> 01:04:37,417
Old filings and stuff, that's kept right here.
1107
01:04:37,458 --> 01:04:40,125
Since electronic records are relatively newer,
1108
01:04:40,166 --> 01:04:41,959
that's one of the things that was interesting
1109
01:04:42,000 --> 01:04:43,625
about the Crundwell situation, 'cause it took place
1110
01:04:43,667 --> 01:04:45,625
over 20 years and she was essentially
1111
01:04:45,667 --> 01:04:47,792
the master financial bookkeeper.
1112
01:04:47,834 --> 01:04:50,291
So you're trying to put together her work
1113
01:04:50,333 --> 01:04:51,875
during that whole situation, that's one of the challenges
1114
01:04:51,917 --> 01:04:53,709
our new finance director faced.
1115
01:04:55,583 --> 01:04:57,500
- She did keep some pretty good details,
1116
01:04:57,542 --> 01:04:59,375
which helped with a lot of things,
1117
01:04:59,417 --> 01:05:01,667
both in terms of figuring out what happened
1118
01:05:01,709 --> 01:05:04,583
from the FBI side, and in our case, putting together
1119
01:05:04,625 --> 01:05:07,166
the finances and figuring out which funds she took from.
1120
01:05:07,208 --> 01:05:09,375
So whatever those funds were originally supposed to be
1121
01:05:09,417 --> 01:05:11,625
spent on, they could get their money back.
1122
01:05:13,542 --> 01:05:15,959
I was interested in running for election
1123
01:05:16,000 --> 01:05:20,667
basically because of the Rita Crundwell situation.
1124
01:05:20,709 --> 01:05:23,792
Because I saw what was happening in my own back yard.
1125
01:05:23,834 --> 01:05:25,667
So, congratulations, Scott.
1126
01:05:25,709 --> 01:05:27,709
People needed to trust their government again.
1127
01:05:27,750 --> 01:05:30,291
'Cause that trust was shattered by this incident,
1128
01:05:30,333 --> 01:05:31,375
absolutely shattered.
1129
01:05:35,291 --> 01:05:38,834
- We have recovered a net of about $40 million
1130
01:05:38,875 --> 01:05:44,041
from the civil lawsuit and from Rita's assets.
1131
01:05:54,333 --> 01:05:57,333
- 10 million of it right away disappeared for lawyer fees.
1132
01:05:57,375 --> 01:05:58,875
A good roughly half of that
1133
01:05:58,917 --> 01:06:01,583
immediately went to debt payment.
1134
01:06:01,625 --> 01:06:03,875
As Rita was stealing more and more money,
1135
01:06:03,917 --> 01:06:05,667
we were borrowing more and more money.
1136
01:06:05,709 --> 01:06:08,041
And one of the things I looked at is by the end,
1137
01:06:08,083 --> 01:06:11,083
the numbers were eerily close.
1138
01:06:11,125 --> 01:06:13,166
You know, she stole close to somewhere like five million
1139
01:06:13,208 --> 01:06:14,750
in the final year, and the city borrowed
1140
01:06:14,792 --> 01:06:17,041
close to about five million.
1141
01:06:17,083 --> 01:06:21,583
And then the rest has been focused mostly
1142
01:06:21,624 --> 01:06:21,665
on infrastructure.
1143
01:06:21,706 --> 01:06:24,041
We redid River Street, which was a major eyesore
1144
01:06:24,083 --> 01:06:25,875
on a major state highway that was going
1145
01:06:25,917 --> 01:06:26,959
right along the river.
1146
01:06:29,792 --> 01:06:33,959
Seventh Street washed away, there was a big gaping hole.
1147
01:06:34,000 --> 01:06:35,792
So our focus is, whatever's been left,
1148
01:06:35,834 --> 01:06:38,709
we're trying to use on what got hurt by the theft.
1149
01:06:38,750 --> 01:06:41,125
And by and large that has been infrastructure.
1150
01:06:43,709 --> 01:06:45,500
Anyone who interacts with the city of Dixon,
1151
01:06:45,542 --> 01:06:47,834
under this council and my administration,
1152
01:06:47,875 --> 01:06:49,834
whether you're an auditor, whether you're contracting
1153
01:06:49,875 --> 01:06:52,709
with the city, whether you're an employee of the city,
1154
01:06:52,750 --> 01:06:56,250
we're gonna be watchin' the money really closely.
1155
01:07:04,667 --> 01:07:08,208
- The past three years I think the town is physically,
1156
01:07:08,250 --> 01:07:10,375
financially in better shape than it's been
1157
01:07:10,417 --> 01:07:13,291
in many, many years, since I've lived here.
1158
01:07:13,333 --> 01:07:16,667
And basically because they recouped all that money
1159
01:07:16,709 --> 01:07:18,792
from the bank and the accounting firm.
1160
01:07:25,875 --> 01:07:28,792
- The people of Dixon are really, really good people.
1161
01:07:28,834 --> 01:07:31,709
I don't want people to think we're a bunch of boobs.
1162
01:07:31,750 --> 01:07:33,750
I don't want people to think we aren't interested
1163
01:07:33,792 --> 01:07:36,458
in what happens in our town.
1164
01:07:36,500 --> 01:07:40,583
It's tough when that's the image we have out there.
1165
01:07:40,625 --> 01:07:43,625
So our job has to be now not only to change things,
1166
01:07:43,667 --> 01:07:45,625
but to show people how we changed,
1167
01:07:45,667 --> 01:07:47,291
and what a good community we are.
1168
01:07:56,709 --> 01:07:58,458
- I love this city.
1169
01:07:58,500 --> 01:08:01,625
My wife and I chose to retire here, 20 years ago.
1170
01:08:05,709 --> 01:08:07,333
Ask anybody that comes here from any,
1171
01:08:07,375 --> 01:08:10,542
from miles around, we're envied by all the
1172
01:08:10,583 --> 01:08:13,250
surrounding towns around here for what Dixon has.
1173
01:08:19,250 --> 01:08:21,625
- We're trying to put the fraud behind us.
1174
01:08:23,417 --> 01:08:26,291
You never dream it's gonna happen to you.
1175
01:08:26,333 --> 01:08:27,417
But obviously it can.
1176
01:08:30,208 --> 01:08:34,625
I think our hometown boy, our President Ronald Reagan
1177
01:08:34,667 --> 01:08:37,792
said it best, "We trust, but verify."
94769
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