City comptroller accused of embezzling millions

It is one of the biggest cases ever of alleged municipal fraud: The longtime chief financial officer of the small town of Dixon, Ill., is accused of stealing $30 million from the city’s coffers. Federal prosecutors charge that Rita Crundwell, Dixon’s comptroller and treasurer for three decades, stole more than the annual police and fire department budgets combined in each of the last six years, according to the Chicago Tribune.

Authorities say Crundwell raided city coffers to finance an extravagant lifestyle that included operating champion horse breeding farms, buying a $2.1 million luxury motor home and $340,000 in jewelry since mid-2006. The salary in her city job was $80,000 a year.

Government finance experts say there was a complete breakdown of financial safeguards in the northwestern Illinois town of 16,000 people. City officials did not notice huge amounts of disappearing tax dollars, a local bank did not alert the mayor about a city bank account controlled by Crundwell, and an annual audit by two independent accounting firms raised no red flags about transfers of hundreds of thousands of dollars in and out of the account.

It all combined for a “perfect storm of embezzlement,” a former Internal Revenue Service agent told the Tribune. City officials said Crundwell was a long-serving, trusted employee who effectively had unfettered control of the city’s finances.

Dixon’s commission form of government, with each council member responsible for a particular city function, may also have helped keep the alleged fraud from being detected. The system, rare among Illinois municipalities, weakens financial oversight, Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, told the newspaper.

A similar commission style of government was in place in Bell, Calif., where the mayor, city manager, city council members and other officials were accused of fraud. The officials were accused of bilking the city out of $5.5 million by paying themselves huge salaries for mostly non-existent duties.