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Stray Thoughts

Millions of reasons why outside scrutiny is important

5/24/2023

When FBI agents led a Dixon, Ill., official out of city hall in handcuffs and the charges against her became public, the most often asked question was “How.”

How did City Comptroller Rita Crundwell manage to embezzle an astounding $54 million from the northwest Illinois community of 15,700 people before she was finally detected?

How did city officials and an outside CPA auditing firm fail to get even a whiff of her brazen scheme for the 22 years she robbed the city treasury?

Crundwell was arrested in 2012. Her case is old news now. But Iowans should have more than idle curiosity in her crime.

Hers is a textbook case of why it is important to have independent outside auditors and investigators with the legal tools and the expertise to dig into potential “paper” crimes or misconduct involving government employees.

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At its core, that is what is at stake in the coming days when Gov. Kim Reynolds decides whether to sign or veto Senate File 478, a bill that would severely tie the hands of Iowa’s state auditor to dig into suspected malfeasance or unwise spending by government or its employees.

Yes, there are FBI agents and Iowa Division of Criminal Investigation agents who can crack open cases like these. But the actions of Rita Crundwell show you need more people looking for scoundrels, not fewer people. And no political party is ever immune from misconduct.

Whether Governor Reynolds and Republicans in the Iowa Legislature personally like State Auditor Rob Sand is immaterial. Everyone in Iowa should want someone like the Des Moines Democrat and his staff doing the spade work to find possible financial irregularities in state and local governments.

Crundwell’s 22-year-long crime spree right under the noses of Dixon’s elected city leaders is laid out in fascinating detail in the latest issue of Politico magazine. (Here is the article: https://tinyurl.com/yx7k4spr)

You and the governor will learn, for example, that the nearly $54 million Crundwell stole came out of a city budget that was about $10 million per year. Over the 22 years, her thefts averaged about $2.5 million per year.

There were red flags to see over the country home and horse farm of the comptroller, who was paid about $80,000 per year. She owned 400 American Quarter Horses; she won dozens of world championships; she traveled in a million-dollar motor home, and she owned a second house in Florida.

Her undoing began innocently enough a few months before her arrest when she was on vacation.

A clerk who was subbing for her called the bank and asked for the latest copies of the city’s various bank statements. Among the documents the bank sent over was one for the Reserve Sewer Capital Development Account. But instead of being a city account, that was a private account belonging to Crundwell that no one at City Hall had knowledge of or access to.

The FBI soon learned that in hundreds of transactions, complete with phony invoices, Crundwell shifted money into the fake sewer account from legitimate city accounts.

Kelly Richmond Pope, a professor of forensic accounting at DePaul University in Chicago, has studied the Crundwell case and other cases of white-collar crime and corruption. “Dixon was an open safe to Rita,” Pope told Politico.

During the Crundwell era as comptroller, Dixon’s system of  city government did not have effective checks and balances. City government’s checks, bank deposits, financial statements and funding requests were all handled by Crundwell.

The supposed outside independent audits by a CPA firm were not designed to find fraud, Pope told Politico. Instead, those audits simply provided reasonable assurance the financial statements Crundwell prepared accurately reflected what she said City Hall was doing. And Pope said Crundwell tailored her financial statements to conceal what really was happening.

The Dixon City Council member during Crundwell’s tenure who held the role as city finance commissioner was a high school typing teacher, Roy Bridgeman. When he retired from the council the year before FBI agents arrested his former student, Bridgeman praised Crundwell’s stewardship, saying, “She looks after every dollar as if it were own.”

That is certainly ironic.

My advice that Iowans should be looking at the Rita Crundwell scam is not to suggest that unscrupulous government employees are regularly bilking Iowa  governments out of huge sums. Of course, no one thought Crundwell was, either.

One of the lessons from the Illinois case hit especially close to home in Dixon, where former President Ronald Reagan grew up. He had a phrase and it applies to the work of state auditors and leaders of governments large and small: “Trust but verify.”

The bill on Governor Reynolds’ desk to muzzle the state auditor’s investigative authority is not in line with the late president’s advice. ♦

Randy Evans can be reached at DMRevans2810@gmail.com

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