Crundwell recovery fund: How Dixon spent the money and what’s left

DIXON — Former city comptroller and convicted embezzler Rita Crundwell stole $53.7 million from Dixon across two decades, a debt she’ll never be able to pay back to the city.

Crundwell used the money to finance her quarter horse breeding empire and luxurious lifestyle, and she was arrested April 17, 2012, for her crimes. She was sentenced to 19 years and 7 months, just shy of the 20-year maximum, but she was recently released from federal medium-security prison in Pekin to the supervision of a federal halfway house in Downers Grove. Earlier, she had pursued compassionate release for her deteriorating health.

The city was able to recoup some funds through selling off her assets and suing the auditing firm that failed to catch the fraud year after year. Those dollars were put into the recovery fund.

Here’s a breakdown of how much has been recovered, spent and earmarked for the future.

The city reached a $40 million settlement with its former auditors and bank, CliftonLarsonAllen, which failed to spot the long-term siphoning, and a quarter of that – about $10 million – went to lawyer fees.

That total was brought back up to about $40 million after the city received $10.3 million from the federal government’s sale of Crundwell’s seized assets that included her roughly 400 award-winning quarter horses, her Dixon ranch and home, and her Florida vacation home. The checks came in by the end of 2013.

The city also received about $150,000 after the U.S. Marshals Service sold her remaining possessions through online auctions that wrapped up in 2016, and also gets a small sum from horse breeding royalties.

The city hired a finance director, now-Lee County Treasurer Paula Meyer, to wade through the financial muck left behind and develop a system with order and oversight. Several checks and balances were implemented.

The first thing she insisted on doing with the money was repay the debt.

That consisted of $12,572,318 in general obligation debt, largely for capital projects, and $8,678,083 borrowed from mostly restricted city funds that needed to be paid back, totaling $21,250,401.

Crundwell didn’t leave many city funds untouched, with pensions being the main exception likely because they are overseen by boards – she had taken about $100,000 but returned it after a few weeks.

After paying the debt, Meyer set up two reserve pools with $5 million as a rainy day fund – enough to operate the city for 6 months without revenue – and $3 million as an emergency capital fund.

Most cities carry about 6 months of operating expenses, but Dixon had no reserves to speak of.

The former City Council started spending the recovery dollars in spring 2014, putting nearly $4,073,980 into the River Street revitalization project.

About $1.1 million went toward repairs and renovations at the Dixon Public Library, and in June 2015, $856,538 was used to make emergency repairs to a portion of West Seventh Street that collapsed following a heavy rain.

Another $25,000 was put toward tearing down derelict property, and $15,000 was given to the Dixon Sister Cities Association.

In more recent years, the city devoted $1.5 million to the fire pension fund, about $1.2 million to the future bike path extension program, as well as earmarking $250,000 for future development.

The council also gave the Dixon Park District a $100,000 donation for the Water Wonderland splash pad and $700,000 to build a new building next to the splash pad in Meadows Park.

There’s $1,301,729 left in available-to-spend money, not counting the reserves.

Crundwell’s tab sits at roughly $43 million owed to the city.

BY THE NUMBERS

Dixon Recovery Fund: The following is a breakdown of the $40 million the city has received in Rita Crundwell recovery dollars.

Debt repayment: $21,250,401

Available to spend: $1,301,729

Emergency reserve: $3 million

Rainy day reserve: $5 million

River Street improvements: $4,073,980

Dixon Public Library repairs: $1,096,499

Emergency repairs to West Seventh Street: $856,538

Park building: $700,000

Future development: $250,000

Bike path: $1,210,215

Splash pad donation: $100,000

Nuisance property: $25,000

Dixon Sister Cities Association: $15,000