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Official who bilked Illinois town gets almost 20 years in prison

By James B. Kelleher

CHICAGO (Reuters) - The former top finance official of President Ronald Reagan's boyhood hometown was sentenced to nearly 20 years in prison on Thursday for embezzling $54 million to buy horses, luxury cars and several properties even as the town faced a budget crisis.

Rita Crundwell, 60, who served as comptroller of Dixon, Illinois from 1983 until her arrest last year, pleaded guilty to one count of wire fraud after admitting she secretly siphoned the money out of city coffers over a 22-year period.

Crundwell used the proceeds to buy hundreds of horses, several homes and more than a dozen cars, trucks and other vehicles even as the cash-strapped city was cutting the budget of its police department.

On Thursday, District Judge Philip Reinhard sentenced Crundwell to 19-1/2 years in federal prison, the maximum sought by prosecutors, at the federal courthouse in Rockford, Illinois, about 80 miles west of Chicago.

"This has been a massive stealing of public money - monies entrusted to you as a public guardian of Dixon, Illinois," Reinhard said as he imposed the sentence.

He said Crundwell showed "greater passion for the welfare of her horses than the people of Dixon who she represented."

Her fraud on the town amounted to a theft of about $3,417 from each of the 15,511 people who reside in Dixon, according to a 2011 U.S. Census estimate.

In court filings, prosecutors said Crundwell managed to conceal her crime spree, which began in 1990, by telling other city officials that tardy payments from the state government, a common occurrence in fiscally strapped Illinois, were responsible for the city's chronically overdrawn accounts.

Crundwell still faces state charges as a result of the embezzlement, which highlighted the lack of official oversight of municipal finances in Illinois, a state notorious for its public corruption.

A study of federal public corruption prosecutions released in 2012 ranked Chicago the most corrupt city in the country and Illinois its third-most corrupt state.

In recent years, two Illinois governors -- Republican George Ryan and Democrat Rod Blagojevich -- have gone to prison for public corruption.

Under state law, most Illinois cities submit an annual financial report to the state comptroller's office in Springfield. But the comptroller does not audit the reports and so they are never reviewed for accuracy.

"Unfortunately, this case serves as a painful lesson that trust, without verification, can lead to betrayal," said Gary Shapiro, U.S. Attorney for the Northern District of Illinois.

In addition to its notorious public corruption, Illinois, the nation's fifth most populous state, faces an array of financial problems, including the most underfunded state pension system in the nation and a backlog of billions of dollars in unpaid bills.

Crundwell, who began working for Dixon's finance department in 1970 while she was still in high school, ultimately handled all the town's finances and was the only official with access to the city's bank accounts.

Her illegal transfers remained undetected until early 2012, when she took an extended vacation and a co-worker filling in for her discovered the secret account she used to make the illegal transfers.

In recent months, the U.S. Marshals Service has conducted a series of auctions of homes and other assets Crundwell acquired as a result of the scheme, including more than 300 horses.

Reagan, a Republican who was elected president of the United States in 1980 and served two terms, lived in Dixon from the age of nine until he was 22 years old, according to the city's website, graduating from the city's high school.

(Reporting by James B. Kelleher)

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