Rita A. Crundwell
|Occupation||Accountant, horse breeder|
|Criminal status||Released early August 19, 2021- formerly imprisoned at Federal Correctional Institution, Pekin; projected release date was is Oct. 20, 2029|
|Conviction(s)||November 14, 2012 (pleaded guilty)|
|Criminal charge||Wire fraud (embezzlement)|
|Penalty||19 years 7 months imprisonment, forfeiture of $53.7 million|
Rita A. Crundwell (née Humphrey; born January 10, 1953) is the former Comptroller and Treasurer of Dixon, Illinois from 1983 to 2012, and the admitted operator of what is believed to be the largest municipal fraud in U.S. history. She was fired in April 2012 after the discovery that she had embezzled $53.7 million from the city of Dixon for over twenty-two years to support her championship American Quarter Horse breeding operation. Crundwell pleaded guilty to her crimes and was sentenced to 19 and a half years in prison.
Crundwell's Quarter Horse breeding operation, RC Quarter Horses, was one of the best-known in the country; her horses won 52 world championships and she was named the leading owner by the American Quarter Horse Association for eight consecutive years prior to her arrest.
Early life and career
Born Rita Humphrey, the daughter of Ray and Caroline Humphrey, Crundwell grew up on her family's farm near Dixon a smart and popular student. In 1970, a year before graduating from Dixon High School, she began working at the Dixon City Hall as a work-study student. She began showing American Quarter Horses in 1978.
She married engineering technician Jerry L. Crundwell in 1974, while working as a secretary for Dixon's mayor, but divorced Crundwell in 1986.
In 1983, Crundwell was appointed the treasurer and comptroller for Dixon, working in this capacity for almost three decades. Crundwell acquired a sterling reputation; in 2011, one of the city commissioners praised her stewardship of city finances, saying "she looks after every tax dollar as if it were her own."
On December 8, 1990, Crundwell opened a secret bank account named the Reserve Sewer Capital Development Account (RSCDA), making it appear to be a city account. She was the only signatory. Crundwell would have money deposited into another account called the Capital Development Fund, create false state invoices, and then write checks from the fund payable to "Treasurer," which she would deposit into the RSCDA account. According to federal investigators, this relatively uncomplicated scheme continued for 22 years.
On average, Crundwell stole nearly $2.5 million per year from the city. In 1991, she stole $181,000, while in 2008 alone she managed to embezzle $5.8 million from a city with an annual budget of $8–9 million. Crundwell used the money not only to finance her Quarter Horse operation, but also to support a lifestyle well beyond her $80,000 city salary, purchasing several cars, a second house and a million-dollar motorhome.
Crundwell covered up her embezzlement by claiming that the city's frequent budget shortfalls were due to the state being late in paying its share of tax revenue. She forced city departments to make drastic service cuts in order to keep the budget within reason. As a result, employees went two years or more without raises and the police department could not afford new radios. The most visible effect, however, was on street maintenance; the city was forced to lay off three of its nine street repair workers and cut the rate of maintenance. In the decade prior to Crundwell's arrest, only 65 blocks of road were repaired or replaced.
For most of Crundwell's tenure, residents assumed either that she inherited her wealth and/or that her horse breeding business was profitable in its own right. However, by the onset of the Great Recession, some grew suspicious that Crundwell was stealing money. But the city's outside auditors, Clifton Gunderson (now CliftonLarsonAllen after merging with LarsonAllen in 2012) and local accountant Samuel Card presumed that Crundwell was honest and signed off on her annual financial statements without concern. For small U.S. cities similar to Dixon, lack of sufficient outside audits was a recurring problem, as third-party auditors could give at best limited attention. For most of her tenure as comptroller, Crundwell had nearly complete control over the city's accounts, while few city employees had access to the city's financial statements.
Capture and arrest
In the fall of 2011, while Crundwell was on an extended vacation, city clerk and acting comptroller Kathe Swanson discovered the RSCDA account with 179 deposits and associated checking activity. Not recognizing the account as a legitimate city account, Swanson alerted Dixon mayor James Burke, who in turn contacted the Federal Bureau of Investigation (FBI). For the next six months, Burke and Swanson (whose payroll was controlled by Crundwell) remained silent while the FBI built their case.
Crundwell arrived for work on April 17, 2012 to find FBI agents waiting for her. She was arrested later that day and was indicted by a federal grand jury for embezzling $30 million from the city during the previous six years. Crundwell was charged with one count of wire fraud and released on $4,500 bail the next day. On May 2, 2012, a superseding indictment charged Crundwell with embezzling $53 million over the prior 22 years.
On November 14, 2012, Crundwell pleaded guilty before Judge Philip Reinhard to a single count of wire fraud. As part of the deal, she also admitted to money laundering by using the embezzled money to finance her horse operation. Crundwell was required to forfeit more than $53.7 million in cash, assets and possessions, equivalent to the amount she stole, which is being used to make full restitution to the city. She reportedly told FBI agents that some of the money was spent on her horses and their upkeep. Prosecutors sought the forfeiture of her horse farm and 300 horses, in addition to her three homes and a luxury motor vehicle. Prosecutors later discovered that Crundwell's crimes had begun as early as 1988, when she siphoned off $25,000 from the Dixon Sister City program over two years. Had she not pleaded guilty, she would have faced additional charges of bank fraud, wire fraud and money laundering that could have sent her to prison for the rest of her life.
The following month, Dixon's new finance director said that the city had seen an almost $3 million rebound since Crundwell's arrest, but that the operating budget was still off by $16.6 million. It was also reported that Dixon lost $30 million in operating funds over the prior decade. The city sued its outside auditors, as well as the city's banker, Fifth Third Bank, for ignoring numerous red flags in Crundwell's actions. In September 2013, the auditors and Fifth Third agreed to pay the city $40 million in a legal settlement, while the auction of Crundwell's assets brought in over $9 million.
At sentencing on February 14, 2013, prosecutors sought the maximum sentence of twenty years in federal prison. Their case was bolstered by testimony from Burke and city staffers that Crundwell used dramatic analogies to force spending cuts in order to cover up her theft, which left Dixon unable to provide the most basic services. The defense asked for thirteen years, saying that Crundwell had cooperated with authorities in recovering the money. Ultimately, Reinhard sentenced Crundwell to nineteen years and seven months in prison, close to what prosecutors had sought. Reinhard noted that she put her passion for raising horses ahead of the needs of the city residents who had entrusted her with their funds, and that a significant prison term was required to restore public confidence. Reinhard was so disgusted with Crundwell's behavior that he revoked her bail and remanded her to custody rather than allow her to self-report to prison. Crundwell appealed the sentence, but the Seventh Circuit Court of Appeals upheld it in November 2013.
The fraud scheme of Rita Crundwell has been the subject of academic and professional publications. Apostolou, Apostolou, and Thibadoux describe the mechanics of the fraud scheme and review the control deficiencies that allowed the fraud scheme to exist and to remain undetected. The authors also review the shortcomings of the external auditors that allowed the city’s financial statements to be materially misstated.
On September 20, 2012, Crundwell was also indicted on sixty state counts of theft, alleging that she stole $11.2 million from April 2010 until the day of her arrest. Burke and Lee County State's Attorney Henry Dixon said the state charges, which carried a minimum of six years per count, were a backup in case Crundwell was acquitted on the federal charges. The state charges were dropped in April 2013. Dixon's successor as state's attorney, Anna Sacco-Miller, said that it did not make sense to spend taxpayer money on prosecuting Crundwell, as there were virtually no assets left for the state to seize (though Dixon had initially said he had no plans to seize assets from her). Sacco-Miller also said that because Illinois sentencing guidelines require state and federal sentences to run concurrently, Crundwell would likely serve out any sentence imposed at the state level while she was still in federal prison.
Crundwell was incarcerated at Federal Correctional Institution, Pekin in Pekin, Illinois. She was originally scheduled for release on March 5, 2030. Under the First Step Act she is receiving good conduct time deductions of 54 days per year off her sentence. In February 2020 her release date was listed as October 20, 2029. On April 27, 2020 Rita Crundwell submitted a request for a compassionate release with the warden of the Federal Prison Camp in Pekin, Illinois. On that same date she filed a motion with the Illinois Northern District Court in Rockford, Illinois. Her motion requested home confinement under the First Step act. The motion also sought a transfer to home confinement based on a Response to the COVID-19 Pandemic memo dated March 26, 2020 from Attorney General William Barr to the Federal Bureau of Prisons. Crundwell cited, amongst other things, her health issues, and her good conduct while incarcerated. The motion was withdrawn by Crundwell on May 18, 2020 and the motion withdrawing the home confinement request was granted on May 21, 2020. As of May 31, 2020, her release date is still shown as October 20, 2029. Richard Humphrey Jr. purchased the property formerly owned by Crundwell (Crundwell was born Humphrey ) no investigation to date regarding this suspicious family purchase.
In popular culture
- CNBC's American Greed (episode 83, The Cunning Cowgirl Crook)
- CBC's The Fifth Estate: on YouTube
- All the Queen's Horses, a 2017 documentary by Kartemquin Films, focused on Crundwell
- Illinois Channel: on YouTube
- The Talented Miss Farwell by Emily Gray Tedrowe, published September 2020, is a novel inspired by the Crundwell case
- Swindled podcast, Season 1, Episode 2, The Horse Queen 
- Jenco, Melissa (February 15, 2013). "Ex-Dixon comptroller gets 19.5 years for theft". Chicago Tribune.
- "UPDATE: AQHA Breeder Rita Crundwell Charged by FBI [DOCS]". Horse Authority. April 17, 2012.
- Coleman, Emily K (May 2, 2012). "Column: Frequently asked questions on the Crundwell case". Sauk Valley Media.
- Pavlo, Walter (February 13, 2013). "Fmr Dixon, IL Comptroller, Rita Crundwell, Sentenced to 19 1/2 Years In Prison". Forbes.
- Jenco, Melissa; Grimm, Andy (May 2, 2012). "Authorities increase amount allegedly embezzled by Dixon, Ill., comptroller to $53 million". Chicago Tribune.
- Keyser, Jason (April 27, 2012). "Feds: Ill. suspect spent stolen millions on horses". Associated Press.
- Giuliana, David (April 28, 2012). "Piecing Crundwell together". Sauk Valley Newspapers.
- DAVID GIULIANI (May 1, 2012). "Piecing Crundwell together, An honor roll student, a horse enthusiast, a longtime official". saukvalley.com.
- "Hall-of-Infamy corruption in Dixon, Ill.?". tribunedigital-chicagotribune. Retrieved 2017-04-16.
- Smith, Bryan (September 24, 2012). "Rita Crundwell and the Dixon Embezzlement". Chicago. Retrieved January 22, 2021.
- American Greed: The Cunning Cowgirl Crook (Television Production). United States: CNBC. 2013.
- Grimm, Andy; Jenco, Melissa (2012-04-08). "Small town rocked by $30 million theft case". Chicago Tribune
- Guerrero, Lisa. She Lived Like a Queen By Scamming An Entire City. Inside Edition, 2013-02-13.
- "Plea agreement" (PDF).
- "HuffPost is now a part of Verizon Media".
- "Appeals court ruling in Crundwell case" (PDF).
- "Dixon city ex-comptroller, Rita Crundwell, stole $53 million in public funds: Feds". Associated Press. May 1, 2012.
- "Woman accused of bilking $53 million from this town, which was Reagan's boyhood home". Reuters. May 1, 2012.
- Becker, Tara (April 18, 2012). "Crundwell free on $4,500 bond: Judge OKs bond, with restrictions". Sauk Valley Media.
- Keyser, Jason (November 14, 2012). "Prosecutor: Embezzlement plea a warning to others". Associated Press.
- "Dixon budget rebounding after comptroller arrest". Peoria Journal Star via Associated Press. December 4, 2012.
- Barichello, Derek. Dixon to recoup $40 million. Sauk Valley Media, 2013-09-25.
- Babwin, Don (February 14, 2013). "Former Dixon bookkeeper who stole $53M gets nearly 20 years". Journal Star (Peoria).
- Apostolou, Barbara; Apostolou, Nicholas; Thibadoux, Greg (2015). "Horseplay in Dixon: Lessons Learned from the Rita Crundwell Fraud". Journal of Forensic and Investigative Accounting. 7 (1): 275–291. Retrieved 1 June 2020.
- "Crundwell faces 60 additional counts".
- Jeffreys, Samantha. State charges against Rita Crundwell dropped. WREX-TV, 2013-04-30.
- "Charges dropped against Rita Crundwell".
- Rita A. Crundwell, inmate # 44540-424, Federal Bureau of Prisons, U.S. Dep't of Justice, at .
- "Public Access to Court Electronic Records | PACER: Federal Court Records". pacer.uscourts.gov.
- "Inmate Locator". www.bop.gov.
- Dudek, Mitch (Aug 5, 2021). "Rita Crundwell, who embezzled nearly $54 million from Dixon, released from federal prison". Chicago Sun Times. Retrieved Aug 8, 2021.
- ‘All The Queen’s Horses’ Tells the Story of Rita Crundwell WTTW
- The Horse Queen Swindled