Embezzlement Scandal Settles for $40 Million
A civil action arising out of the largest municipal embezzlement in the history of the United States was settled today.
In the Dixon, Illinois case involving accounting and banking malpractice, Devon C. Bruce, a partner at Power Rogers & Smith, L.L.P., successfully settled on behalf of the city for $40 million. The scandal involved what was reported to be the largest embezzlement of a municipality in the nation. Rita Crundwell, who served as the treasurer for Dixon, reportedly stole more than $53 million. This prompted action by the city targeting numerous accounting firms and accountants for negligence as well as other crimes. There were also irregularities in Rita Crundwell’s personal tax returns and the accounting firms and accountants failed to report these.
In the case, Fifth Third Bank was alleged to violate commercial accounting standards for their involvement. Mr. Bruce stated that these violations included the failure to disclose information regarding Rita Crundwell’s account that was opened in the name of the city of Dixon. The bank allowing Rita Crundwell to open the account was a violation in itself, but because the bank failed to monitor clients’ accounts, red flags that would have identified the embezzlement went unnoticed. The federal government has also decided to sell her assets, and the city would be reimbursed around $10 million.
Rita Crundwell was also sentenced to serve 20 years in a federal prison. Her crime lasted more than two decades and the money she stole was used to support her own lifestyle as well as own horses for breeding purposes. The assets seized by the government included vehicles, furniture, electronics, and hundreds of trophies that she won as part of horse competitions.
Janis Card & Associates and Clifton, Larsen, Allen, PC were also defendants in the case. Janis Card & Associates was accused by the plaintiff of acting in negligence by failing to identify the embezzlement, as well as for their involvement with Clifton, Larsen, Allen in 2005 when they performed audits for the city of Dixon.