Dixon, Illinois. Population 15,733. A bucolic, all-American river town two hours west of Chicago, the boyhood home of Ronald Reagan, and victim of the largest case of municipal fraud in U.S. history.
For 20 years, Rita Crundwell, the city’s comptroller, used a secret bank account to steal over $53 million from a town whose annual budget never exceeded $8 million. She used the money to finance a lavish lifestyle that included a Florida mansion, $2 million custom-made motor coach, spa visits, jewelry, and a horse breeding business that involved over 300 equines—and all this as her crimes caused a financial shortfall forcing Dixon to make cuts in many of its essential services.
The amount Crundwell embezzled is astonishing enough, but becomes even more mind-boggling because of the small size of the city she robbed. Why she did it, and how she got away with it for so long—a combination of misplaced trust, banking and auditing negligence, and a certain amount of small-town naiveté—is the subject of All the Queen’s Horses, a compelling documentary that enjoyed its world premiere at the Martha’s Vineyard African-American Film Festival, and will be released theatrically in the fall.
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“Rita did it because Rita could,” says Kelly Pope, director of the documentary and an accounting professor at Chicago’s DePaul University. “She had access, she was a trusted person, and oftentimes people don’t want to know about the money, the financial details. So the person who will handle everything, like Rita, you’re relieved about that, because no one else wants to.”
Crundwell’s process was a simple one, and one often used in fraud cases: she set up a secret city banking account, and made out phony invoices (179 in all) for imaginary capital improvement projects (one fake invoice for $350,000 was from the State of Illinois for a sewer project). Then she transferred money from legitimate city accounts to her fake one, and wrote checks to finance her lavish lifestyle.
It’s that lifestyle that seemed to be a red flag—especially given Crundwell’s $80,000 yearly salary—but Rita had that covered, too. She led people to believe that her parents were investors in the Campbell’s Soup Company or that she had inherited money from a deceased boyfriend. Many Dixon locals also just assumed that her money came from an investor and her hugely successful horse breeding business.
“We really don’t know where people who have money, where it’s coming from,” says Pope. “When she started saying, ‘I have an investor,’ those things are hard to verify, and they are believable. She said enough things that were highly plausible.”
Besides, Crundwell’s breeding success—and the extent of her holdings—was a source of local pride. You can get a sense of this from a sequence in the film that takes place at an auction of her stables, horses and breeding equipment organized by the U.S. Marshal’s Service after her arrest. The scope of her breeding farm is truly awe-inspiring—the stables and barns seem to stretch on endlessly—as is her trophy room, literally filled floor to ceiling with the ribbons and plaques she won.
Watch an exclusive clip from All the Queen's Horses
“Rita was from the Dixon community, she went to high school there, and they were proud of her success; she was one of the top quarter horse breeders in the country,” says Pope.
But other than the enormous amount of money she stole, Crundwell’s crime was also, in one sense, nothing unique. A 2013 report on major embezzlement crimes in the U.S. found that 61 percent of the perpetrators were women, and that the majority of embezzlers—nearly 70 percent—held bookkeeping or finance positions (most embezzlers were driven by a desire to live a richer lifestyle, not financial woes).
“A lot of times women are in more mid– to- lower-level jobs in government, or corporations,” says Pope. “When you think about an administrative assistant who has access to a corporate credit card, it’s easy to make personal purchases with that. But when you think of more complicated schemes, like insider trading, you have to be higher up, and they often are men.”
If Crundwell fits this profile, she also fits the profile of a trusted worker whom no one ever questioned. And it’s not necessarily a small-town thing, although it’s easy to attribute the cluelessness of Dixon and its residents to Midwestern naiveté. “Whether it’s a small, medium or large town we trust people, and that’s a common thread regardless of size,” says Pope, who notes that the second largest case of municipal embezzlement, $48 million, occurred in Washington, D.C., perpetrated by a mid-level tax manager.
“We all have a Rita in our lives,” Pope adds, “someone we trust unconditionally. If this can happen to Dixon at this level, then it can happen anywhere. I don’t want people to feel that it’s because it was a small town, and they all knew each other.”
Crundwell was able to take advantage of the trust she had from the town mayor and members of the city council. When the town’s finances started dipping significantly into the red, particularly around 2008, she blamed the recession and what she claimed were late tax revenue payments from the state. She also may have had a real stroke of luck. Members of the city government in Sterling, the next town over, which had a similar population and budget, began to wonder why they were running a surplus while Dixon was drowning in debt. So they sent a letter to the Dixon government, suggesting they look into the matter. Nothing ever came of it because, says Pope, “that warning message probably went to Rita. She had absolute control, and was able to intercept outside messaging. The message was probably directed to Rita, because she handled all the finances.”
She was finally undone when, while she was on vacation, her assistant asked the local bank for the city’s bank statements and discovered the secret account. The FBI was called in, and eventually Crundwell pled guilty to one count of wire fraud. On Valentine’s Day, 2013, the 60-year-old swindler was sentenced to a 20-year term in federal prison. If she lives, she’ll get out when she’s 82.
Dixon managed to recover over $7 million of its lost assets through the federal auction, and another $40 million in a lawsuit brought against the town’s auditors and the local bank, neither of which managed to catch onto Crundwell’s schemes. But a significant portion of this recovered money went toward lawyer’s fees and to pay down the town’s debt.
Crundwell has been resolutely tight-lipped since her arrest. She has not spoken to reporters, refused to appear in All the Queen’s Horses, and at her sentencing mumbled a brief apology to her friends and family. Nothing more.
Pope, who prepared materials for a course on the case that is now being taught at DePaul, Wake Forest and other schools, claims that “everyone played a role to allow that to happen in that town. If I had been the mayor, or a city council member, I would have taken more accountability.”
Dixon did learn its lesson. A city manager now runs the town, and multiple parties have to approve payments and sign checks. The big takeaway from all this, says Pope (quoting Ronald Reagan) is to trust and verify. “We all have to trust someone, but to the extent possible, verify, especially if it’s related to financial matters,” she says. “Everyone had questions about how Rita could do this. If more people had followed that feeling, it would have led them to ask more questions.”
