Dixon mayor, clerk endured 6 months of silence as investigation took its course

DIXON – Standing in the doorway of Mayor Jim Burke’s office, City Clerk Kathe Swanson showed him a bank statement for an account neither of them said they knew existed.

Five months and one arrest later, Burke sat down on the couch in his City Hall office and remembered that day – and the days and weeks of forced silence that followed.

The September statement from Fifth Third Bank had been requested as part of a mass of requests Swanson had made so she could put together the monthly treasurer’s report while the city’s comptroller, Rita Crundwell, was on vacation.

At the second Dixon City Council meeting of each month, commissioners receive the treasurer’s report, one of a handful of reports submitted regularly.

But this statement was not something Swanson had seen before, Burke said, even though she had done the treasurer’s report several times.

“I asked Kathe, ‘Is it possible that this is for some particular account that we’re not aware of or you’re not aware of? Or some account paying for some project or something?’’ Burke said.

“And she said, ‘No, I’ve looked at everything. I can’t tie this bank statement into anything that we’re doing.’”

Sure that something wasn’t right, but hoping that he was wrong, Burke decided to go to the FBI. He told Swanson not to say anything to anyone.

“I didn’t want an investigation to be started here and it turns out that [Crundwell’s] done nothing wrong,” he said. “Also, I realized that it was probably going to take some technological resources that maybe nobody around here would have.”

Burke met with FBI Special Agent Patrick Garry in Rockford. He remembers the exact date and time of the appointment: 2:30 p.m. Nov. 18.

“I gave him some background, and then I laid the bank statement down in front of him,” Burke said. “We started discussing it. At that point, I literally got sick to my stomach.”

Over the next 5 months, Garry and other FBI agents investigated the account, finally concluding that Crundwell, who had been the city’s top financial officer for almost three decades, had transferred millions of dollars in city funds into the secret account, then used the money to pay her personal bills.

All during that initial investigation, Swanson and Burke watched as, prosecutors say, Crundwell transferred more than $3 million into the account to pay about $450,000 in expenses related to her horse ranches, to make about $600,000 in credit card payments, and buy a 2012 Chevrolet Silverado pickup, to the tune of about $67,000.

“Kathe was nervous about the whole thing and concerned and pretty uptight about the whole deal, which was understandable, but we had no choice,” Burke said. “We couldn’t blow the whistle on that and ruin the FBI’s case.”

In the last few weeks, the City Council began its annual budgeting process, holding workshops to discuss finances.

City commissioners, department heads and the mayor all gathered around the table in the council chambers, hashing out what needed to be cut and, in the latest meeting, proposing possible fee increases, trying to find a way to break even.

“I thought, this is almost surreal,” Burke said of the meetings. “I was also thinking, ‘Boy, are there going to be a bunch of people around this table surprised when this story breaks.’”

Five days before Crundwell was arrested, Burke got the phone call.

“They wanted to make sure that she was here, so I set up a phony meeting with Rita [for April 17],” Burke said. “She verified verbally and by email that she would be here for a 9:15 meeting about the Reagan CDs and DVDs, because they absolutely didn’t want to put this all together, come swooping in here, and she’s gone for the day.”

That Tuesday morning, Burke sat in his office – surrounded by mementos from the city: a portrait of Ronald and Nancy Reagan, a miniature of the arch, photos from the Veterans Memorial Bridge dedication – with three FBI agents.

“I got on the intercom and I called Rita,” Burke said. “She said, ‘Yes, sir,’ just like she always does when I call her on the intercom.”

When she came in, Garry introduced himself, saying he was with the FBI and had a few questions for her.

“I was looking at her face, and there was absolutely no change of emotion on her face or anything,” Burke said. “I thought, ‘Boy, pretty cool customer.’”

Two hours later, Crundwell was handcuffed and led out the door that connects his office with the council chambers.

Crundwell is charged with a single count of federal wire fraud; she is free on a $4,500 recognizance bond. Except for submitting a letter of resignation – which was rejected in favor of firing her – she has had no contact with her city colleagues.

Swanson has declined to comment on her role in uncovering what may be one of the largest cases of municipal fraud in Illinois’ history. She says she wants to wait at least until Crundwell’s pretrial hearing on May 7.