Rita Crundwell

The following month, Dixon's new finance director said that the city had seen an almost $3 million rebound since Crundwell's arrest, but that the operating budget was still off by $16.6 million. It was also reported that Dixon lost $30 million in operating funds over the prior decade. The city sued its outside auditors, as well as the city's banker, Fifth Third Bank, for ignoring numerous red flags in Crundwell's actions. In September 2013, the auditors and Fifth Third agreed to pay the city $40 million in a legal settlement, while the auction of Crundwell's assets brought in over $9 million.

At sentencing on February 14, 2013, prosecutors sought the maximum sentence of twenty years in federal prison. Their case was bolstered by testimony from Burke and city staffers that Crundwell used dramatic analogies to force spending cuts in order to cover up her theft, which left Dixon unable to provide the most basic services. The defense asked for thirteen years, saying that Crundwell had cooperated with authorities in recovering the money. Ultimately, Reinhard sentenced Crundwell to nineteen years and seven months in prison, close to what prosecutors had sought. Reinhard noted that she put her passion for raising horses ahead of the needs of the city residents who had entrusted her with their funds, and that a significant prison term was required to restore public confidence. Reinhard was so disgusted with Crundwell's behavior that he revoked her bail and remanded her to custody rather than allow her to self-report to prison. Crundwell appealed the sentence, but the Seventh Circuit Court of Appeals upheld it in November 2013.

For most of Crundwell's tenure, residents assumed either that she inherited her wealth and/or that her horse breeding business was profitable in its own right. However, by the onset of the Great Recession, some grew suspicious that Crundwell was stealing money. But the city's outside auditors, Clifton Gunderson (now CliftonLarsonAllen after merging with LarsonAllen in 2012) and local accountant Samuel Card presumed that Crundwell was honest and signed off on her annual financial statements without concern. For small U.S. cities similar to Dixon, lack of sufficient outside audits was a recurring problem, as third-party auditors could give at best limited attention. For most of her tenure as comptroller, Crundwell had nearly complete control over the city's accounts, while few city employees had access to the city's financial statements.

Crundwell arrived for work on April 17, 2012 to find FBI agents waiting for her. She was arrested later that day and was indicted by a federal grand jury for embezzling $30 million from the city during the previous six years. Crundwell was charged with one count of wire fraud and released on $4,500 bail the next day. On May 2, 2012, a superseding indictment charged Crundwell with embezzling $53 million over the prior 22 years.

On November 14, 2012, Crundwell pleaded guilty before Judge Philip Reinhard to a single count of wire fraud. As part of the deal, she also admitted to money laundering by using the embezzled money to finance her horse operation. Crundwell was required to forfeit more than $53.7 million in cash, assets and possessions, equivalent to the amount she stole, which is being used to make full restitution to the city. She reportedly told FBI agents that some of the money was spent on her horses and their upkeep. Prosecutors sought the forfeiture of her horse farm and 300 horses, in addition to her three homes and a luxury motor vehicle. Prosecutors later discovered that Crundwell's crimes had begun as early as 1988, when she siphoned off $25,000 from the Dixon Sister City program over two years. Had she not pleaded guilty, she would have faced additional charges of bank fraud, wire fraud and money laundering that could have sent her to prison for the rest of her life.

On September 20, 2012, Crundwell was also indicted on sixty state counts of theft, alleging that she stole $11.2 million from April 2010 until the day of her arrest. Burke and Lee County State's Attorney Henry Dixon said the state charges, which carried a minimum of six years per count, were a backup in case Crundwell was acquitted on the federal charges. The state charges were dropped in April 2013. Dixon's successor as state's attorney, Anna Sacco-Miller, said that it did not make sense to spend taxpayer money on prosecuting Crundwell, as there were virtually no assets left for the state to seize (though Dixon had initially said he had no plans to seize assets from her). Sacco-Miller also said that because Illinois sentencing guidelines require state and federal sentences to run concurrently, Crundwell would likely serve out any sentence imposed at the state level while she was still in federal prison.

In the fall of 2011, while Crundwell was on an extended vacation, city clerk and acting comptroller Kathe Swanson discovered the RSCDA account with 179 deposits and associated checking activity. Not recognizing the account as a legitimate city account, Swanson alerted Dixon mayor James Burke, who in turn contacted the Federal Bureau of Investigation (FBI). For the next six months, Burke and Swanson (whose payroll was controlled by Crundwell) remained silent while the FBI built their case.

On average, Crundwell stole nearly $2.5 million per year from the city. In 1991, she stole $181,000, while in 2008 alone she managed to embezzle $5.8 million from a city with an annual budget of $8–9 million. Crundwell used the money not only to finance her Quarter Horse operation, but also to support a lifestyle well beyond her $80,000 city salary, purchasing several cars, a second house and a million-dollar motorhome.

On December 8, 1990, Crundwell opened a secret bank account named the Reserve Sewer Capital Development Account (RSCDA), making it appear to be a city account. She was the only signatory. Crundwell would have money deposited into another account called the Capital Development Fund, create false state invoices, and then write checks from the fund payable to "Treasurer," which she would deposit into the RSCDA account. According to federal investigators, this relatively uncomplicated scheme continued for 22 years.

In 1983, Crundwell was appointed the treasurer and comptroller for Dixon, working in this capacity for almost three decades. Crundwell acquired a sterling reputation; in 2011, one of the city commissioners praised her stewardship of city finances, saying "she looks after every tax dollar as if it were her own."

She married engineering technician Jerry L. Crundwell in 1974, while working as a secretary for Dixon's mayor, but divorced Crundwell in 1986.

Born Rita Humphrey, the daughter of Ray and Caroline Humphrey, Crundwell grew up on her family's farm near Dixon a smart and popular student. In 1970, a year before graduating from Dixon High School, she began working at the Dixon City Hall as a work-study student. When she voted she chose Republican ballots in the largely Republican town, once home to Ronald Reagan. She began showing American Quarter Horses in 1978.

Rita A. Crundwell (née Humphrey; born January 10, 1953) was the appointed comptroller and treasurer of Dixon, Illinois from 1983 to 2012, and the admitted operator of what is believed to be the largest municipal fraud in U.S. history. She was fired in April 2012 after the discovery that she had embezzled $53.7 million from the city of Dixon for over twenty-two years to support her championship American Quarter Horse breeding operation. Crundwell pleaded guilty to her crimes and was sentenced to 19 and a half years in prison.