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updated: 9/25/2013 4:58 PM

City of Dixon to recoup $40 million

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  • Former Dixon comptroller Rita Crundwell was sentenced in February 2013 to nearly 20 years in prison.

    Former Dixon comptroller Rita Crundwell was sentenced in February 2013 to nearly 20 years in prison.
    Associated Press/Oct. 22, 2012

Associated Press

A small northern Illinois city that lost more than $53 million over two decades to its thieving former bookkeeper will recoup about $40 million, the mayor said Wednesday when announcing a legal settlement in the case.

Dixon will receive $40 million as part of a settlement with a bank and auditor it had accused of not doing enough to expose former Comptroller Rita Crundwell's scheme, Mayor Jim Burke said. The city also recouped about $10 million by selling off Crundwell's belongings, but it incurred $10 million in legal and other costs, he said.

"This is huge for the city," Burke said. "I've got to be honest about this. I didn't think we'd see this much."

A judge still needs to approve the settlement.

Crundwell pleaded guilty to wire fraud and was sentenced in February to nearly 20 years in prison. Prosecutors say she stole the money over 22 years as the Dixon's bookkeeper, even while the city was having trouble paying its bills. She used the money to live lavishly and to build a nationally-renowned horse-breeding operation.

In its lawsuit, the city accused Fifth Third Bank and auditors Clifton, Larson, Allen, Samuel Card of not doing enough to expose Crundwell's theft. It cited a deposition by a former bank branch manager who said the bank failed to follow reasonable commercial banking standards while handling a Crundwell account. Specifically, the manager said the bank cashed unendorsed checks from Crundwell, cashed checks made payable to "treasurer" without further inquiry and allowed Crundwell's secret personal account to be opened as a city account without proper verification.

Burke said the settlement was reached Saturday after 17 hours of negotiations that began Friday morning in Chicago.

"The only suggestion I gave our attorney, I said, was `don't leave any money on the table,"' Burke said.

Burke said he will hold a public meeting next week to explain the settlement to Dixon residents and the financial impact it will have on the city. The money is due in a lump sum before the end of the year, Burke said. After the October meeting the city can start to talk about what to do with the funds, he said.

"My guess is they're going to be pretty pleased with it," Burke said, adding that he thinks most residents doubted whether the city would get much out of its lawsuit.

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