“You have much better passion for your horses than the people of Dixon who you were supposed to represent,” said District Judge Philip Reinhard before he sentenced former AQHA breeder Rita Crundwell to 19 years and 7 months in prison. When the hearing was over she was taken into custody to immediately begin her sentence.
Crundwell pleaded guilty in November 2012 to wire fraud, and engaging in money laundering, in connection with stealing more than $53 million from the Illinois city. She used the proceeds to finance her nationally recognized quarter horse breeding business and luxury lifestyle. It is believed to be the largest theft of public funds in state history.
“While the city was suffering, the defendant was living her dreams,” Assistant U.S. Attorney Joseph Pedersen told the judge during a sentencing hearing that lasted more than two hours today. Crundwell’s “conduct in continuing to take millions of dollars from the City of Dixon to support her lavish lifestyle while she knew that Dixon was in dire financial straits was especially egregious,” prosecutors argued.
Crundwell will serve at least 85 percent of her 235-month sentence since there is no parole in the federal prison system.
The court heard from city officials, including the police chief who was told there wasn’t money in the coffers to upgrade his officers’ radio systems. The mayor asked the judge to impose the maximum penalty possible, which would have been 20 years.
Judge Reinhard granted the request for an upward variance in the federal sentencing guidelines. In addition to the financial loss, he found that Crundwell caused a significant non-monetary loss, which involved a loss of public confidence in local government and a significant disruption of government function that struck “at the very heart of Dixon’s abilities to provide essentials for its citizenry.”
According to court documents, Crundwell began the fraud scheme in December 1990, when she opened a secret bank account in the name of the City of Dixon. The name of the account was “RSCDA – Reserve Fund,” known as the RSCDA account. The initials stood for “Reserve Sewer Capital Development Account,” although no such account actually existed for the city, and Crundwell did not disclose the existence of the secret account.
At today’s hearing, the government also presented evidence that Crundwell stole at least $25,000 from a separate Dixon bank account for its Sister City program – a charity – between 1988 and 1990 before the charged fraud scheme began.
Crundwell began transferring money from city accounts to the RSCDA account in January 1991. Subsequently, she used her position as comptroller to transfer funds from Dixon’s Money Market account and various other city accounts to its Capital Development Fund account. She then repeatedly transferred city funds from the Capital Development Account into the RSCDA account and used the money to pay for her personal and private business expenses, including horse farming operations, personal credit card payments, real estate and vehicles.
Crundwell tearfully said, “I’m truly sorry to the City of Dixon, my family and friends.”
The judge ordered Crundwell pay $53 million in restitution. Marshals have recovered more than $12.38 million from sales, including online and live auctions, of approximately 400 quarter horses, vehicles, trailers, tack, a luxury motor home, jewelry and personal belongings, while sales of real property in Illinois and Florida remain pending. The net proceeds from the forfeited property – nearly $9.5 million so far – are being held in escrow pending further proceedings on restitution to the City of Dixon.
The federal case may be over, but Crundwell still faces state charges in Lee County Court. She is charged with 60 counts of theft for allegedly stealing more than $11 million from the city since January 2010. If convicted, that sentence will run concurrent to the federal sentence. Her public defender is considering filing a motion to dismiss that case.