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Rita Crundwell and the Dixon Embezzlement

THE $53 MILLION BAMBOOZLE: How the trusted comptroller of a small Illinois town became the biggest municipal embezzler in U.S. history, according to the feds—and no one noticed

Rita Crundwell leaves a Rockford, Illinois, courthouse after a hearing on her embezzlement case in August 2012.   Photo: Ray Whitehouse

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One of six children, Rita Crundwell (née Humphrey) grew up in the cow-patty and chores-at-dawn world of a modest farm just off U.S. 52 on the southern outskirts of Dixon. On Sundays, Caroline and Ray Humphrey and their three boys and three girls piled into a pew at Dixon’s Immanuel Lutheran Church.

The Humphreys were known as the kind of salt-of-the-earth people who formed the backbone of the town in the days before chain stores and fast-food joints became as ubiquitous as grain silos. “I can remember [Caroline] coming into town in her beat-up pickup truck,” says Joseph Rock, a local farmer. “[Her face] was weathered and her hair was pulled back. She’d be wearing boots. She looked like she was a hard worker.”

But the family wasn’t all work. Caroline, in particular, had a cherished avocation: showing quarter horses.

The nation’s most popular breed, the American quarter horse has long held the imagination of equine lovers. It is known for its looks (muscular, though more compact than a thoroughbred) and athleticism (its name comes from its speed in races of under a quarter mile).

Agile and good at working ranches, this is the horse that helped win the Wild West. A quarter horse can cost anywhere from a few thousand dollars to $250,000 or so. Preparing to show one can be costly too. Like dog shows, horse shows involve training, grooming, and parading prime specimens before judges.

The family hobby was more than just pricey; it was a source of conflict between Rita and her younger sister, Linda. The two never really got along, says a childhood friend who went to school with both girls and remains friends with Linda, who today owns a Dixon saloon called Tipsy. (She asked that her name not be used.) Some of the fights may have stemmed from resentment over who got the best horses to show. “Whatever Rita wanted, Rita got,” says a family member who asked not to be identified. Other members of Crundwell’s family didn’t return phone calls seeking comment.

A pretty girl with long brown hair and big round glasses, Rita Humphrey was smart—of the more than 300 Dixon High School students named to the National Honor Society, she landed in the top 20—and a hard worker like her mother. Through the school’s work-study program, she got a part-time job at City Hall, where she impressed her bosses. “She just caught on to everything so well,” recalls Walter Lohse, a city commissioner from 1967 to 1987.

Rita had planned to attend nearby Sauk Valley Community College after graduation, but when Darlene Herzog, Dixon’s first comptroller, encouraged her to stay on at City Hall, she decided to skip it. “Darlene took Rita under her wing,” says Lohse. “We hired Rita full-time because Darlene spoke so well of her.”

It didn’t hurt that the teenager was already familiar to the denizens of City Hall, both past and future. Burke, for example, had known her for years. “My real-estate office sponsored a girls’ baseball team she was playing on,” he recalls. “We had a pool then, and I remember she and all these girls came up to our house once. So I’ve known her for a long time.” Bridgeman—who was her supervisor during most of the time she was allegedly stealing—taught Rita typing at Dixon High. (“He was a great teacher,” Crundwell told the local newspaper when Bridgeman retired. “I loved him.”)

Three years out of high school, in 1974, Rita met Jerry Crundwell. An engineer with Homer Chastain and Associates, an engineering firm based in Decatur, he was working on a highway project with Rita’s brothers. Though little is known about their courtship (Chicago was unable to track Jerry down; through relatives, he has refused to publicly discuss her), something clicked. They were married that same year.

As the years went by, Rita stayed at City Hall, working her way up from secretary to treasurer. Finally, in 1983, health problems forced Herzog to retire as comptroller. Her replacement was obvious. “Rita was very efficient, very pleasant. She got along with everyone, and she knew the job in and out,” says Jim Dixon, who by then had begun his first of two terms as mayor. “She seemed like a perfect fit.”

Rita’s personal life wasn’t so perfect, however. In 1984, her mother died; two years later, she filed for divorce, alleging “extreme and repeated mental cruelty.” Jerry did not show up at the hearing.

The divorce was granted, and their few assets were split. Rita was awarded their $80,000 house at 1673 U.S. Route 52 and her six-year-old Oldsmobile Cutlass. Jerry got to keep his 1983 truck.


By all accounts, Rita Crundwell blossomed both professionally and personally after the divorce. Because Dixon’s comptroller was not elected but appointed, her job was secure. She began to make herself indispensable, tightening her grip on the city’s books and studying the finer points of the complex and politically charged budget process.

By the late 1980s, says Jim Dixon, she controlled virtually everything having to do with the city’s money. She balanced the checkbook. She wrote the checks. She made the deposits. She requested funds. If people wanted money for a project, it was Crundwell to whom they appealed. Financial statements were sent to a City of Dixon post office box that she controlled; when she was away, a relative collected the mail.

That mail would have included statements for the secret account authorities say she created in 1990.

Though it was not a city account, Crundwell tried hard to make it look that way, federal sources say. She designated the City of Dixon as the primary account holder, with a second account holder listed as “RSCDA c/o Rita Crundwell.” Not that she needed to: Apparently no one at City Hall—or at the bank—ever questioned her about it.

As commissioners came and went, it was Crundwell—who had spent her entire adult life working for the city—who showed newcomers the ropes (Burke says five city councils, three mayors, and three financial commissioners came and went during Crundwell’s alleged spree). She knew what bills needed to be paid and when, whose arm to twist when checks were late. And she was meticulously organized. “I could go into her office and say, ‘Rita, do you have a copy of the cable TV contract from 1986?’” Burke recalls. “And she’d go right to a drawer and pull it out.”

Cheerful, smart, and attractive, she represented Dixon well, professionally and socially. During the 1980s, for instance, she played on the softball team of the accounting firm Clifton Gunderson, which would eventually prepare audits for the city.

If there was one complaint about Crundwell’s work—and it wasn’t so much a complaint as an understanding—it was the amount of time she took off for quarter horse competitions. She had been participating in them at the regional level since 1978. “We’d occasionally see something pop up in the paper about some ribbon or other that she’d won,” recalls Lohse. In 1985, the year before her divorce, she won both the Indiana State Quarter Horse Championship and a national quarter horse title in Texas.

By the mid-1990s, however—unbeknown to the folks down at City Hall—Crundwell had become far more than a hobbyist. She was now a major player in the big-money, high-stakes horse world. And her success demanded requests for more and more time away from the office.

In 2011, for example, in addition to her four weeks of paid vacation time, Crundwell took off an extra 12 weeks. But even there, she seemed scrupulously honest. “What she did was, she would dock herself for her time off,” recalls Burke. So instead of the $83,000 annual salary that Crundwell was scheduled to be paid—not bad for a small-town resident without a day of college—she would wind up making about $61,000.

“The ladies up here [in City Hall] told me that if we wanted to get in touch with her, she was always accessible. They said she had computers in her motor home and would call right away,” Burke explains. “I think most of us thought, Well, she’s doing the job, and when she’s gone, she’s docking herself for it. We’re actually kind of making out on the deal.”

Starting around 1990—the year the feds say she opened the secret account—Crundwell began investing heavily in horses. Her collection went from a handful of mares and stallions to a trophy-winning herd of several hundred championship-caliber animals.

By the end of the decade, she had developed a multimillion-dollar breeding and showing empire so vast that even the high rollers of the horse world were taken aback. “People said, ‘Where did this woman come from?’” says Sally Hope, a certified appraiser with the American Society of Equine Appraisers, who watched Crundwell’s rise. “I was showing with my daughter in the ’80s, and I [had] never heard of Rita Crundwell. She came in with everything blazing.”

In 1997, Crundwell had stables built for her horses on the 6.9-acre property in Dixon that her mother left her, according to records. (She later renovated the house, doubling its square footage, and had an in-ground pool installed.) In 2006, she turned a nearby 88-acre parcel she had bought for $540,000 from her brother Richard into Rita’s Ranch: a breeding and showing operation that included a 20,000-square-foot barn, complete with an arena, an office, and stalls.

While Crundwell kept most of her horses at Rita’s Ranch, she began stabling some at the Meri-J Ranch in Beloit, Wisconsin, little more than an hour north of Dixon. It was run by her new boyfriend, Jim McKillips, a longtime fixture on the competitive quarter horse circuit. (The McKillips family had originally owned the ranch but later sold it; Jim, now 67, stayed on as a paid manager and lives in a house on the property. He did not respond to a request by Chicago for an interview.)

By the late 2000s, Crundwell had established herself as the undisputed grande dame of the competitive quarter horse circuit. Its two showcase annual events—the All American Quarter Horse Congress in Columbus, Ohio, and the American Quarter Horse Association World Championship Show in Oklahoma City—are among the biggest conventions in the world. The Columbus show, for example, draws hundreds of thousands of people each year, placing it just below the Democratic and Republican National Conventions in size. The events attract socialites, captains of industry, and celebrities such as Robert Redford, Harrison Ford, and Lyle Lovett.

Crundwell would sweep into town in a vehicle so grand that the term “mobile home” doesn’t do it justice: a 45-foot Liberty Coach with marble countertops, tile floors, leather-wrapped railings, a king-size bed, five satellite televisions, even a washer and dryer. Accompanying the coach were custom-painted 10-horse trailers, some with attached living quarters, all emblazoned with her initials. (The typical competitor brought a horse or two.) One trailer, a Featherlite, cost nearly $260,000. “Everyone knew that Rita Crundwell was coming with the best horses in the country,” says Hope.

A retinue of hired hands would appear to clean the stalls, brush and exercise the horses, and set up stall decorations. “There would often be a luxury car of some kind,” Hope adds. Plus a couple of gleaming new Ford F-650 pickups. All around her encampment, Crundwell would string yellow police tape.

The setup in the parking lot across from the exhibition hall was only the beginning. Inside the arena, where breeders and performers put up booths to advertise wares such as saddles, costumes, and tack, Crundwell erected a replica of a log cabin as an entrance to her personal exhibit. Custom stall curtains hung next to expensive decorations. “She would have shelving where she would place the trophies that she had won, and she won a tremendous number of trophies,” recalls Debby Brehm, a horse owner from Lincoln, Nebraska, who has competed against Crundwell many times. Out front, a bartender would serve cocktails from a fully stocked bar.

While City Council members back home in Dixon were lamenting tight budgets, cutbacks, and a cash-flow crisis bordering on calamity, Crundwell was hosting lavish parties and dinners with her boyfriend at her side. Crundwell’s 57th birthday bash, thrown by McKillips in Venice Beach, Florida, featured “delectable” jumbo shrimp cocktail, Caesar salad, prime rib, and “other mouthwatering entrees,” wrote fellow competitor Dakota Diamond Griffith in an article for the website Go Horse Show. In 2009, the site named McKillips the best horse show tailgater, noting: “There’s never a shortage of food when Jim’s behind the grill.”

Crundwell became known for her fashion sense. She arrived at that birthday party in a snow-white coat with a plush fur collar. (“Where does she find these items!” gushed Griffith.) The shirts she wore to the shows were usually beaded and sequined, Hope recalls. “They’re beautiful. I went to look at a couple of the blouses she wore. The used ones were $1,800 a pop—and Rita didn’t wear used. I thought, Gadzooks!”


And Crundwell won. Big. At the time of her arrest, her horses had taken 54 prizes at the Oklahoma City world championships, the Oscars of the quarter horse world, which in 2011 drew competitors from eight countries. The American Quarter Horse Association had named her the leading owner—an honor that goes to the person who racks up the most points for horses he or she enters—for the eighth straight year.

Brehm and Hope didn’t give much thought to where Crundwell’s money was coming from. “I knew she worked for the city in Dixon, so I kind of wondered,” says Brehm. “But the story I heard was there was something from her past, where she had inherited land in the Chicago area, so I never thought anything of it.”

Neither, apparently, did Dixonites. That’s partly because, for all her flash on the horse circuit, Crundwell appeared modestly in town, never in expensive cars or dripping with jewels. “She wasn’t showing any diamond rings or anything,” Burke says. “It wasn’t like she was driving that [$2 million] bus around.”

It’s also partly the classic Midwestern reluctance to pry. When asked if anyone wondered where Crundwell got the money to fund her horse empire on an $83,000 salary, Burke says no: “We all knew that she had these horses, but, you know, there were big write-ups about her in the papers that she’s winning all these national championships, and there were stories flying around town that she was selling horses for $250,000, $300,000. So we thought that this was what was providing her this nice income: a successful horse business.”

It was true that Crundwell sold horses. It was also true that she collected stud fees and sold semen from her championship stallions and that she won hundreds of thousands in prize money. But those revenues were a drop in the bucket of the cost to maintain her horses—not to mention her own travel expenses and lavish spending on jewelry, clothes, cars, and parties. That lifestyle requires the kind of deep pockets that even millionaires struggle to fill. When she was arrested, a former ranch hand told me at Rita’s Ranch one day in late September, “it finally made sense. I know how much this stuff costs, and we were always wondering where she got the money.”


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