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Hometown of Reagan reels from scandal

- Associated Press - Sunday, April 29, 2012

DIXON, Ill. — The small-town bookkeeper dazzled friends and co-workers with invitations to her immaculate horse ranch and home, where she displayed trophies brought back from world championship exhibitions and offered for sale some of the best-bred horses in the nation.

"She has a trophy case that you wouldn't believe actually a room," said Stephanie Terranova, who worked with Rita Crundwell for 15 years at city hall and attended her parties and auctions. "You wouldn't believe the different people that came."

The gulf between Ms. Crundwell's two worlds was breathtaking, and her colleagues and neighbors never guessed how the two entwined: Ms. Crundwell is accused of using her modestly paid town hall job to steal tax dollars, support an extravagant lifestyle and win national fame as a breeder.

Federal prosecutors say Ms. Crundwell, 58, who handled all of the city's finances, embezzled a staggering $30 million in public funds from Dixon, the boyhood home of the late President Ronald Reagan.

In a criminal complaint, they say they've obtained bank records that document each step she took in shifting taxes and other public funds through four city bank accounts before hiding them in a fifth account no one else knew about. The six-year scheme unraveled only when a co-worker filling in for Ms. Crundwell while she was on an extended vacation stumbled upon the secret bank account.

Ms. Crundwell had an encyclopedic knowledge of city business down to which drawer contained a particular document, said Mayor James Burke, who recalled feeling uneasy about the city comptroller's growing wealth.

"There wasn't anything to hang my hat on," said Mr. Burke, who has known Ms. Crundwell since she was a teenager. "Rita, she is a very, very smart person. I mean she is almost brilliant ... which I think probably was one of the reasons that a lot of people got bamboozled with her."

On Monday, the city fired Ms. Crundwell, who was arrested by FBI agents April 17 on a charge of wire fraud and later freed on a $4,500 recognizance bond. She could enter a plea at a May 7 status hearing. Her lawyer, federal public defender Paul Gaziano, refused to comment on the case.

Her arrest stunned tiny Dixon, a small city along a picturesque vein of the Mississippi River about a two-hour drive west of Chicago. Its 16,000 people are largely lower-middle class, working at factories, grain farms, the local prison and a hospital, among other places. Many are grappling with the region's high unemployment, but they are proud of the city's modest prosperity and ties to Reagan.

Of the millions Ms. Crundwell is accused of funneling into the secret account, only six checks totaling less than $154,000 were ever spent on city business, made out to a sewage fund and a corporate fund, according to Assistant U.S. Attorney Joseph Pedersen.

While Ms. Crundwell had other indulgences she spent nearly $340,000 on jewelry, according to prosecutors court documents indicate most of the stolen money was lavished on her beloved horses. She bought trucks and trailers to haul them around, including a Featherlite Horse Trailer for about $259,000, according to the criminal complaint.

Her breeding program has produced 52 world champions in exhibitions run by the American Quarter Horse Association in Amarillo, Texas, the world's largest equine breed registry and membership organization.

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