Prosecutor: Embezzlement plea a warning to others

ROCKFORD, Ill. (AP) -- A federal prosecutor said Wednesday that a small-town Illinois bookkeeper's admission that she embezzled more than $50 million should serve as a warning for other public officials.

Gary Shapiro, the acting U.S. Attorney for northern Illinois, called the case of former Dixon comptroller Rita Crundwell "one of the most significant abuses of public trust ever seen in Illinois."

Crundwell pleaded guilty Wednesday to siphoning public money into a secret account while overseeing finances in President Ronald Reagan's boyhood home and spending it on a lavish lifestyle that included a nationally known horse-breeding operation.

"If nothing else, what we have in this case is an object lesson in how not to manage public funds," Shapiro said. "This is a crime that should never have been allowed to occur."

Crundwell, 59, pleaded guilty Wednesday to a single charge of wire fraud in federal court in Rockford. She was allowed to remain free until her Feb. 14 sentencing hearing and still faces 60 separate but related state felony charges for theft in Lee County. She has pleaded not guilty to those charges.

She has never commented publicly on the charges and did not make a statement during the hearing, answering the judge's questions with "yes" and "no." But afterward, her lawyer gave a brief statement that emphasized her cooperation with prosecutors.

"Rita Crundwell today admitted her guilt, saving the government the burden and expense of a lengthy trial," attorney Paul Gaziano said. "Rita, since the day of her arrest, has worked with the government to accomplish the sale of her assets, including her beloved horses, all with the goal of hoping to recoup the losses for the city of Dixon.

"I think the people of the city of Dixon ought to know that."

The U.S. Marshals service still has some assets in her name to sell, including about $450,000 worth of diamonds and other jewels, ranch land and a house in Florida. With the plea, she has agreed not to contest the forfeiture of her assets.

The marshals already auctioned dozens of Crundwell's horses and other property, raising $7.4 million, but they say they doubt they'll recover the full amount Crundwell stole.

"We're very happy that she pleaded guilty," Dixon Mayor James Burke said. "There's no feeling sorry for her at all."

Burke said Crundwell deserves a long prison sentence, and he hopes her plea will help the town recoup more of its $53 million in losses. He said he would convene a public meeting to discuss how recovered money will be spent.

In response to Shapiro's comments, Burke told The Associated Press that independent auditors who reviewed the city's books over two decades failed to catch on to Crundwell's scheme. Lessons have been learned and changes have been made, he said.

"There are all kinds of things that I wish I would have done differently," Burke said.

The wire fraud count carries a maximum sentence of up to 20 years in prison and a fine of up to $250,000. Crundwell's plea agreement also requires her to pay full restitution.

Crundwell had worked for the city about 100 miles west of Chicago since she was 17 and started to oversee public finances in the 1980s. The town's residents are largely lower-middle class, working at factories and grain farms. Prosecutors say that they came to trust her with the town's finances, but she began stealing money in 1990 to support her extravagant way of life.

Authorities say Crundwell bought luxury homes and vehicles and spent millions on her horse-breeding operation, RC Quarter Horses LLC, which produced 52 world champions in exhibitions run by the American Quarter Horse Association.

Her scheme unraveled when a co-worker filling in during Crundwell's vacation stumbled upon her secret bank account, prosecutors said.