How A Dixon, Illinois Official Stole $53M From Her Struggling Town | WBEZ
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Morning Shift

Documentary Chronicles How Rita Crundwell Stole $53M From Dixon, Illinois

Rita Crundwell put her struggling small town of Dixon, Illinois, in the spotlight when the FBI arrested the former comptroller and treasurer for embezzling $53 million.

Crundwell, who was known for building a horse-breeding empire and throwing lavish parties, made headlines in 2012 as the mastermind behind the largest municipal fraud in American history, catching the attention of Kelly Richmond Pope, a CPA and accounting professor at DePaul University.

“I was amazed at how one person could really do this,” Pope said Wednesday on Morning Shift. “As the story played out in the media, there’s so much focus on how this person steals this money, and buys horses, and lives this lavish lifestyle. But how it happened and why it happened wasn’t really discussed a lot. I wanted to start digging.”

Pope, director of the documentary All the Queen’s Horses that chronicles the story, joined Morning Shift to discuss how Crundwell did it, how she got away with it for so long, and how fraud easily happens.

On Crundwell’s fascination with show horses

Kelly Richmond Pope: Her family showed horses, and she had this hobby, but the operative word is hobby. It’s very expensive. You don’t make a lot from it, but you put a lot of money into it.

What this is is lifestyle fraud: She lived right out in the open. There were no questions about if she exuded wealth, because she definitely did. She was just bold about it. I mean, horse names like I Found A Penny and Careful Who U Invite? Those are some pretty interesting names.

Horses graze at the ranch owned by Rita Crundwell outside of Dixon, Ill., on April 20, 2012. (AP Photo/Charles Rex Arbogast, File)

On the most-asked questions

Pope: Well, there are several main questions. One, Dixon has this much money? It’s a really small town, and $53 million, even in a large city, is a lot. A lot of people also ask now: Did she do it alone? How could one person do this?

On how Crundwell did it

Pope: I think it happened because everyone trusted Rita. And like we say when I teach my forensic accounting class: Trust is not an internal control. But, we all have a Rita in our organization — someone who we unconditionally trust — and when they tell us something, we don’t check up on it because we know them well. Especially when you don’t have a lot of internal controls around a process, it can easily happen.

This is a simple scheme. It’s not an Enron-type scheme or extremely complicated. She literally set up a bank account and moved money from one legitimate account into this secret account. And just did that 179 times with phony invoices. It just amounted to a lot of money.

On how the scheme unraveled

Pope: Kathe Swanson was the city clerk that reported to Rita. One day, when Rita was out at a horse show, and Kathe was busy doing work and needed to do her treasurer’s report, she requested information from the bank. The fax came in, and she saw this secret account with money coming in and money going out.

She was shocked and stunned. The film centers so much around Kathe’s experience because how many people turn in their boss? That’s tough.

On how easily fraud can happen

Pope: You would think there’d be more checks and balances, but many organizations operate like this. I think we stress moving quickly, innovation, and efficiency. Often times, the rules may be written on paper, but we may not follow them just so a process can be done faster.

When you start getting familiar with people working on a team, you often don’t feel comfortable asking a person, “Well, let me follow up on what you just said.” Sometimes, that familiarity makes it tough to enforce all the internal controls that are often put in place to protect us.

This interview has been edited for brevity and clarity. Click the “play” button to listen to the entire conversation, which was adapted for the web by producer Arionne Nettles.

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