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updated: 10/11/2013 7:36 AM

Dixon residents discuss how to use $40M settlement

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Associated Press

DIXON -- Residents of a northern Illinois town whose former bookkeeper stole tens of millions of dollars offered plenty of ideas Thursday for how the city should spend a $40 million legal settlement, including lowering taxes, cutting sewer rates and fixing the city swimming pool.

But Dixon officials' options probably will be limited by a sizable debt and overdue maintenance projects, Finance Director Paula Meyer said during a town hall meeting that drew about 200 residents.

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Longtime Comptroller Rita Crundwell, who stole almost $54 million over two decades, admitted spending the money on a lavish lifestyle and horse-breeding operation even as the city struggled, with streets and equipment falling into disrepair and city employees going without raises. There wasn't even enough money to mow the grass at the cemetery.

She was sentenced earlier this year to nearly 20 years in prison after pleading guilty to wire fraud.

The city, best known for being the site of Ronald Reagan's boyhood home, expects to receive $40 million from an out-of-court settlement with a bank and auditor that officials claimed did not do enough to uncover the scheme and from the sale of Crundwell's estate.

Thursday's meeting was billed as a chance for residents to give their input on how the money should be spent. They suggested everything from paying off the city's debts, to tax abatements and recreational projects.

But Meyer said paying down debts totaling more than $23 million is a must, Sauk Valley Media reported. She also said that some of the settlement money could be used for street, sewer and building projects and economic development projects, as well as setting up a $5 million general fund reserve.

The city will determine how to spend the money after it hires a city administrator.

Mayor Jim Burke said all suggestions will be considered.

"The bottom line for the council is to do what is in the best interest of the taxpayers and the community at large," Burke said. "That is our guiding principle."

Crundwell's thievery ranks as one of the worst abuses of public trust in the state's corruption-rich history. The money went toward everything from expensive horse trailers and luxury homes and cars to jewelry and birthday bashes in Venice Beach, Fla. She also spent millions on a quarter horse-breeding operation that produced 52 world champions in exhibitions run by the American Quarter Horse Association.

Because Crundwell had sole control of the city's bookkeeping, the theft went unnoticed for years.

Prosecutors say Crundwell began depositing Dixon's money in a secret bank account in January 1991 and continued doing so until her arrest in April 2012, months after the FBI began monitoring her transactions. Her scheme began to unravel when she went on an extended vacation in 2011 and the person filling in for her stumbled upon her secret account, prompting the mayor to call the FBI.

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