Burke saw a ‘cold angle’ to Crundwell

DIXON – Mayor Jim Burke had been in City Hall for about 13 years before former Comptroller Rita Crundwell was arrested. But in that time, he said, he never really got to know her.

“I didn’t have much of a relationship with her,” Burke said this week. “I know that she had a lot of entertainment out at her home. I was only out there one time.”

During an interview this week with Sauk Valley Media’s editorial board, Burke, Finance Director Paula Meyer, and City Administrator David Nord discussed Crundwell’s time in Dixon and the events after her arrest.

[ Click here to watch video from the interview. ]

Thursday will be the 2-year anniversary of Crundwell’s arrest. She is serving a sentence of 19 years, 7 months in a minimum-security federal prison for women in Minnesota after pleading guilty to stealing nearly $54 million from the city over two decades.

That one trip to Crundwell’s home, Burke said, was for a retirement party she threw for Police Chief Bob Short in 2003. He remembers the chef she hired to cook roast beef, the swimming pool and the bar.

The mayor said that was a brief, and surprising, glimpse at Crundwell’s life outside City Hall.

“I always felt there was kind of like an invisible shield up with her, at least between me and her,” Burke said. “I mean, there was just something. ... I thought it was maybe more her choice. Maybe it was an intuition or something. I don’t know.

“I mean, she [was] very friendly to everybody – always dressed great, looked great, everything else. But there’s, I don’t know, there’s some kind of a cold angle there that I always kind of sensed.”

That single visit to her home, Burke said, also was the only time she met Jim McKillips, her boyfriend.

“That was the only time I ever met the guy,” Burke said. “But everybody that was around him, just didn’t seem to have a lot of use for him. [The people that] knew him. That’s what they told me.”

Suspicions arise

Burke said he had had suspicions about Crundwell’s lifestyle, although he said he didn’t know about her home in Florida until after her arrest, or how she could afford her lifestyle and nationally renowned quarter horse business.

The suspicions started about 4 or 5 years after he was elected in 1999, Burke said, so he went to see the city’s auditor, which at the time was CliftonLarsonAllen.

He started the questions subtly, he said, about what might be going on with Crundwell. He spoke with CliftonLarsonAllen’s Megan Shank who, Burke said, knew what he was going to ask.

“She literally intimidated me,” the mayor said. “She said, ‘I’ll tell you, of all the municipalities and people that we deal with,’ she said, ‘There isn’t anybody that does a better job than Rita Crundwell.’

“She knew exactly what I was doing. She shut me down, intimidated me. And so, I thought, ‘Well, that’s right from the horse’s mouth here.’”

Now, 2 years later, after the FBI made its way through City Hall, Burke is confident that no one was helping, or knew of, what the comptroller was doing – despite a feeling among some people in Dixon who believe Crundwell wasn’t working alone.

“They had gone through everyting with a fine-toothed comb,” Burke said of the FBI. “And then when we were talking about maybe doing our own investigation, I talked to the FBI in Rockford and they said: ‘Well, you can do anything you want. Frankly, we’ve looked this thing over, and we don’t see the connection of anybody else.’”

Burke also admitted that there was, and maybe still is, common thought that she had other bank accounts or had “squirreled” more money away. Burke said he asked the FBI about that, and was told the federal investigators had tracked everything and that there was no diversion of funds.

Changes at City Hall

About 4 months after Crundwell was arrested, Paula Meyer was hired to fill the newly created position of finance director. Among the first things she did was close the city’s bank accounts at FifthThird Bank and start reorganizing the city’s finances.

“I’ve closed most of the checking accounts,” she said. “We only have a few left. But everything at FifthThird we closed out right after I started.”

The finance department has been restructured in an effort to achieve greater separation of duties, something that is a struggle for most municipalities and small businesses.

The department now has a payroll clerk, a billing clerk, an accounts payable clerk, a deputy clerk, and an accounting technician, in addition to the roles for Meyer, Nord and City Clerk Kathe Swanson.

Only one of those positions is filled by someone hired after Meyer stepped into City Hall, but all of the employees are doing different work than they were previously.

It was a difficult change at first, Meyer said, but the city is making progress.

The new department is set up so that no employee can complete any process alone, Meyer said. The city also has moved away from writing checks, and Meyer has limited what input or changes she can make.

“Rita had the ability to do anyting and everything,” Meyer said. “Because we did a lot of manual checks, and we don’t do manual checks anymore. Everything goes through the computer.”

But the reorganizing went beyond just the people and their duties.

“The water department worked as a separate company,” Meyer said. “And the rest of the city had its own bookkeeping, and the bookkeeping was actually done by CliftonLarsonAllen.

“So when I get there, in September [2012], by the first of January we brought up the accounting system that the water department was using and we just expanded it to incorporate the rest of the city.”

In that process, Meyer said, the city’s accounts and payroll were reorganized. The city had never done its own payroll, she said. That had been handled by CliftonLarsonAllen.

The mail

The collection of the city’s mail also is done far differently than 2 years ago.

When Crundwell was at City Hall, she picked up the city’s mail at a post office box, which is why the fraudulent invoices and bank statements for the account she had set up were kept secret.

But when Crundwell wasn’t around, the mail was picked up by a relative.

“Her nephew, not sure which one,” Burke said. “But it was her nephew that would pick up the mail.”

“I think everything went through to that post office box,” Meyer said. “And they closed that before I started, too. So all the mail has been coming directly to City Hall. It’s dropped off downstairs, where we collect the water bills.”

After the mail arrives at City Hall, it’s distributed to the appropriate person instead of landing on one person’s desk.

The loans

While the city has received nearly $40 million from the sale of Crundwell’s assets and a settlement with its former auditors and a bank, some assets remain unresolved, including personal loans the comptroller made to former City Engineer Shawn Ortgiesen and Fire Chief Tim Shipman.

Information about those loans – including the amount and the terms – hasn’t been released, not even to the city.

Burke said he has contacted the U.S. Marshals Service and Jason Wojdylo, chief inspector of the agency’s asset forfeiture division, and U.S. Attorney Joe Pederson, who is based in Rockford.

“They’ve said right from the start that they would not release those notes by themselves,” Burke said. “It would all have to be done in conjunction with closing up the whole deal with the assets that they’ve gone after, of hers, that were not obtained with city funds.”

Crundwell had a share in a family partnership that controls about 347 acres of farmland near Dixon. There also are two known Crundwell bank accounts with about $19,000 combined, Wojdylo told Sauk Valley Media in February.

The Marshals Service now has control of Crundwell’s share of the partnership – which has come to about $10,000 in the past 2 years – and the marshals are working to either sell that share or find another resolution, Wojdylo said in February.

“Until that’s all resolved, they won’t dispense anything – any of those assets – or any of the information about those notes,” Burke said. “To this day, I don’t know how much those notes are.”

While Ortgiesen was working for the city – he resigned in April 2013 after it was revealed that he had racked up $13,500 in personal expenses on a city credit card – Burke said he asked him about the loans but couldn’t get any information.

He hasn’t approached Shipman about his loans, Burke said.

“I never knew those guys had borrowed money from her,” he said. “I don’t think anybody hardly knew.”

Loans between city employees are now specifically not allowed by the city. It’s something Burke wanted to add to the city’s employee policies.

Dixon also is working to write an employee handbook and established new human resources policies, which Nord said could be completed in the next few months.

A Crundwell visit?

In September 2012, the U.S. Marshals Service auctioned some of Crundwell’s assets, including some of her horses. And Crundwell wanted to return to Dixon for the live auction, Burke said.

“Her attorney had contacted [Wojdylo], wanting to know if she could come down to the auction,” Burke said.

“Can you imagine that? I mean, you talk about a lack of conscience. I wouldn’t want to be seen in the state.”