Closure. That’s all Kathe Swanson was looking for.
She was the city clerk of Dixon, Illinois, when in October 2011 she discovered some fishy bank statements that implicated longtime comptroller, Rita Crundwell, for embezzling from Dixon. The city fired Crundwell in April 2012. That didn’t give Swanson closure. After an FBI investigation, Crundwell was indicted for stealing $53.7 million from city coffers for over two decades. No closure. Crundwell was convicted in February 2013 and sentenced to 19 years and seven months in federal prison. Still no closure.
But after receiving the ACFE’s Sentinel Award during Wednesday’s closing general session of the 29th Annual ACFE Global Fraud Conference, Swanson said, “I have finally received my closure,” as supportive attendees gave her a standing ovation.
When Swanson found suspicious deposits of $200,000, $300,000 and $500,000 in a local bank’s city account, “RSCDA,” that Crundwell had opened, she said she did what any scared person would do. “I folded [the bank statement] and hid it in my car for three days,” she told attendees. She initially thought Crundwell, a top U.S. quarter-horse breeder and competitor, was hiding the sale of some of her horses from the IRS. But when Swanson gave Dixon’s then mayor, Jim Burke, the bank statement, and he immediately contacted the FBI, the ensuing investigation discovered more nefarious and costly crimes.
Though Swanson was relieved that she’d let her boss know, her travails were just about to begin. “Jim came back and told me that we had to be quiet about this because if we were wrong we could be sued,” Swanson said. “The six months that followed in keeping that secret was probably the hardest thing to do.” She had to nicely greet Crundwell every day even while she knew she was still embezzling thousands. “It’s funny — I had to keep the secret for six months,” Swanson said. “Rita had to keep her secret for 20 years.”
City hall lockdown
In April 2012, Swanson said Burke called Crundwell into his office where FBI agents confronted her and questioned her for an hour. “When she was in [Burke’s office], it was like someone was pushing a button,” Swanson said. “The U.S. marshalls came in storming city hall. … They put police tape up. No one could come upstairs. They locked the elevator.”
Even after the FBI carted Crundwell off, Swanson’s work wasn’t done. “I had to search her records,” she said. “There were days when all I did was pack up boxes to be sent to [FBI investigators].”
Crundwell used the stolen city money to buy hundreds of quarter horses and build a first-class, horse-farming business with an arena, an office and horse stalls. She also used the cash for business expenses, credit card payments, jewelry, home remodeling, real estate and vehicles, including a luxury RV bus. Crundwell used her company, RC Quarter Horses LLC, to initiate and authorize her business transactions. (See “Comptroller, horse lady and crook,” and “The horses take a nasty fall,” by Henry C. Smith, III, Ph.D., CFE, CMA, CCS, and his then-students, Vincent Alger, Kevin Genter, Nichole Lawhorn, Melissa Lee, Heidi Mitchell, Kevin Murphy and Jared White, Fraud Magazine, September/October and November/December 2012.)
Swanson, now retired from her city job, thanked her family and friends; her boyfriend, who attended the session; Patrick Derry, the FBI’s lead investigator; Jason Wojdylo, CFE, chief inspector, U.S. Marshall's Office in Houston, Texas; the Chicago attorney, Devon Bruce, who enabled the capture of $40 million from lawsuits against the bank and two accounting firms; Kelly Richmond Pope, the creator of the documentary, “All the Queen’s Horses"; and the citizens of Dixon, “who lost out on all the things the city should have had,” Swanson said.
And, of course, she thanked the ACFE and the attendees for the award and the closure that had eluded her for so long.