Revisiting Fraud & Embezzlement Episode: Rita Crundwell and Biden Commutation
Recent leniency digs up old wounds
The time-”honored” practice of going hog-wild with pardons and commutations is ongoing with Joe Biden’s administration.
Who knows which people are involved in deciding this particular group of folks getting sprung from the rest of their sentences, but a few have raised much ire from the victims, just now finding the criminals got let off lightly. Many people are making much of a corrupt judge who got kickbacks in sending minors to for-profit jails in what was called “kids for cash” getting out of a couple years left on his sentence.
The one that annoys me is Rita Crundwell, so let me give you the current coverage, and then I’ll remind you of my prior coverage:
NBC 5 Chicago: Former Dixon comptroller who embezzled more than $50 million has sentence commuted
Rita Crundwell, the former Dixon comptroller who stole more than $50 million in what some publications called “the largest municipal fraud in United States history,” had her sentence commuted by President Joe Biden Thursday.
Crundwell was one of nearly 1,500 individuals who had their sentences commuted by the president in one of the largest single-day actions in U.S. history, with the president also issuing more than three dozen pardons.
Crundwell served as Dixon’s comptroller for more than 20 years, and pleaded guilty in 2013 to embezzling more than $50 million from the city over the course of that time. She used the funds to build a massive championship-winning horse breeding and show operation, according to prosecutors.
Crundwell, originally sentenced to 19 years and seven months in prison, was released from prison in 2021 under a federal program under the CARES Act that allowed for those at high-risk of COVID to be released into home detention.
Crundwell, unlike the corrupt judge, had more than 2 years left on her sentence when it was commuted.
Here are some nasty kickers from the commutation:
In addition to Crundwell's prison sentence, she was also required to pay restitution. The U.S. Marshals auctioned off her estate and assets as part of the sentence, netting $9.2 million. The city of Dixon also filed lawsuits against insurance companies and auditors that had not detected the thefts, and were awarded more than $30 million in settlements.
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More critically, a commutation can include the lifting of financial obligations that are imposed as part of a sentence.
Horses owned by Crundwell were still generating royalties while she was in prison via so-called “breeder’s trusts,” which “make it possible for breeders to collect proceeds even if they won't own a winning show horse, and allowing them to earn money as a ‘subscriber’ -- a person who resisters a stallion to sire foals -- or as a ‘nominator’ -- a person who previously owned a foal that eventually earns money,” according to NBC 5 Investigates.
She had stolen $54 million from Dixon. According to the above, the non-interest-adjusted amount they managed to claw back from Crundwell and insurers was about $39 million. There is still a sizeable gap.
Reaction from Dixon, Illinois Officials: Not Happy
For many in Dixon, the move was not a welcome one.
“This definitely cuts the scar open. It’s not a scab, it’s a scar. It’s a deep one,” said Dixon City Manager Danny Langloss, who was the city’s police chief when Crundwell’s theft was discovered. “At a time when the federal government is the least trusted institution in the country, to do something like this?”
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“It’s not justice. This is a criminal,” said Langloss. “A sociopath who demonstrated no remorse, who destroyed the people that were closet to her without a feeling of guilt of what she put our town through. And after eight years, she walks? It’s just not right. Just the laziness to carte blanche commute the sentence of everyone, or nearly everyone that was put on home detention during COVID, without even giving consideration to the victims or their crimes.”
Following Crundwell’s downfall, Dixon residents in 2015 voted out the mayor and entire city council, and moved to a different, professionalized form of government.
Their new mayor, Li Arellano – who completed two terms in May and was last month elected to serve in the state Senate – said they worked to right the city’s fiscal and ethical ship.
Arellano said Biden’s commutation of Crundwell falsely gives the impression that white collar crime is victimless.
“Anyone who thinks you can steal $54 million from a town and call that non-violent? You can’t steal $54 million and it’s non-violent. It hurts your public safety,” Arellano said. “We had an ambulance that smoked when it went down the street. We weren’t able to hire as many police officers. It caused a lot of damage, and yes it also caused some violence, without a doubt.”
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According to Federal Bureau of Prisons records, Crundwell had been under supervision by a residential reentry management field office in suburban Downers Grove. She left prison in August 2021.
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Crundwell’s sentence was scheduled to run through Oct. 20, 2028.
The press release from the U.S. Attorney’s office at the time said “Crundwell must serve at least 85 percent of her 235-month sentence and there is no parole in the federal prison system.”
She had been released in 2021, due to COVID, into home confinement/ankle monitor/yadda yadda.
By the way, the Dixon officials were very loud in 2020 in opposing her release under those terms. This was not a new objection.
Dixon City Council, all 103 employees in the city government and members of the community have written a letter asking officials not to release Rita Crundwell from prison after she asked for a compassionate release in the midst of the COVID-19 pandemic.
Crundwell, the ex-comptroller of the city of Dixon, was sentenced to more than two decades in prison for embezzling $53 million. Crundwell's crime is believed to be the largest theft of public dollars in U.S. history.
"This crime was not a spur of the moment or made under duress," the letter sent to the Federal Correction Institution in Pekin. "This crime was not precipitated by financial hardship depriving her of basic human needs. This was premeditated, carefully calculated plan fueled by greed and a desire for fame that was executed over a 20-year period."
The letter goes on to say that an early release would destroy the community's trust of the judicial system and send a dangerous message to any public official considering theft. The letter, signed by City Manager Danny Langloss, ends by saying Crundwell must pay her debt to society through the service of her full sentence.
The city also released a victim impact statement, which was sent on behalf of the Dixon City Council, all 103 employees within the city, and the community, detailing the damage left by Crundwell's embezzlement.
"She drove on the streets that didn't get repaired or replaced because of her theft! She saw city employees every day that had gone over 2 years without raises because of her theft! She saw the Street Department trucks well past their useful life that couldn't be replaced because of her theft! She saw the results of deferred maintenance in almost every city department because of her theft!"
The 67-year-old's release date is scheduled for Oct. 29, 2029. She says she has multiple health problems and has been a model minimum-security prisoner.
Note the disparity in dates for her sentence to run. I do wonder when the end of her sentence actually was.
Reminder: What was the Dixon and Crundwell story?
I covered this back in a June 2024 podcast episode:
Fraud and Embezzlement! How to Prevent and Detect
Here is the Crundwell portion:
Wikipedia: https://en.wikipedia.org/wiki/Rita_Crundwell
Rita A. Crundwell (née Humphrey; born January 10, 1953) is the former 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 22 years to support her championship American Quarter Horse breeding operation, as well as a lavish lifestyle away from work.[1][2][3] Crundwell pleaded guilty to her crimes and was sentenced to 19 and a half years in prison.[4]
Crundwell used the stolen money to turn her Quarter Horse breeding operation, RC Quarter Horses, into one of the best-known in the country; her horses won 52 world championships and she was named the leading owner by the American Quarter Horse Association for eight consecutive years prior to her arrest.[5][6] She spent less than 8+1⁄2 years (43% of her sentence) in prison before being released in mid-2021 to serve the remainder of her sentence in home confinement at her brother's 80 acres (32 ha) farm in Dixon.
Wikipedia: https://en.wikipedia.org/wiki/Dixon,_Illinois
Dixon is a city and the county seat of Lee County, Illinois, United States.[2] The population was 15,274 as of the 2020 census. The city is named after founder John Dixon, who operated a rope ferry service across the Rock River, which runs through the city.[3] The Illinois General Assembly designated Dixon as "Petunia Capital of Illinois" in 1999 and "The Catfish Capital of Illinois" in 2009.
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In April 2012, Dixon Municipal Comptroller Rita Crundwell was indicted by a Federal Grand Jury for embezzlement. She used the embezzled funds to pay for her lavish lifestyle and what became one of the nation's best-known quarter horse-breeding programs, among other things. Crundwell's crimes, thought to be the most substantial municipal theft in U.S. history,[8][9] impacted Dixon's finances severely. Federal prosecutors estimated the amount embezzled at $53 million since 1990.[10] The city sued the auditors who had failed to detect the embezzlement and the bank at which Crundwell maintained a secret account, and received $40 million in settlements.[11] In February 2013, Crundwell was sentenced to almost 20 years in prison.[9][12]
Politico: She Stole $54 Million From Her Town. Then Something Unexpected Happened.
This is a very good, in-depth article from 2023. I used this excerpt:
Another intangible change: Dixon voters didn’t just throw out their council but their form of government itself, separating the legislative role of the City Council from the executive role of the city manager (whom the council appoints). Langloss, the current city manager, said the job functions like a that of a CEO, with a code of ethics not to get involved in politics. “The council really becomes a board of directors and the staff are in charge of running the operation day to day.”
More checks and balances, yes, but still no matter the form of government, someone has to hold power, and there’s no inherent reason an appointed city manager would be immune from abusing it. (The former city manager of Bell, California, was convicted of corruption, along with six other city officials, in 2014.) Meanwhile, the city has also instituted new financial controls, separating out functions once all concentrated in the person of Rita Crundwell. And one study suggests that city manager-run governments are indeed less susceptible to corruption; for one thing, an appointed city manager does not depend on campaign contributions the way an elected mayor does. Then again, though, neither did Crundwell.
What I did not use: the mayor died within a year, from cancer, and the whistleblower who found the issues during Crundwell’s vacation, Kathe Swanson, retired soon after all this.
All this is very stressful on those exposing the wrong-doing. It’s better if the wrong-doing never happens in the first place. (This is for another time)
Crundwell was swept up in a group of people released to home confinement during the COVID pandemic under “compassionate release” and a new adaptation specifically for COVID.
Data on Federal Compassionate Release
This was part of the CARES Act of 2020. You can read some of the report from March 2022:
This doesn’t cover the period when Crundwell was released, but that gives you an idea of how the applications for compassionate release from federal prison increased after the passage of the CARES Act of 2020.
The grant rate for compassionate release was low. A lot of people may have applied, and the absolute number also increased, the percentage of applications approved was relatively low.
Useful stats to look at — the distribution by age:
There is a huge bias by age, which one would expect. It would be the oldest prisoners most in need of compassionate release.
They have a data dashboard with more recent data, and I found this view helpful:
This shows the initial increase in applications, with more throughout 2021. But the ones actually granted were at a fairly low rate.
Finally, here is a breakout of the types of offenses by type, whether compassionate release was granted or denied:
There are some distribution differences, but perhaps it’s confounded by the ages of those in federal prison for those offenses.
ACLU Celebrates the Commutations
President Biden heeded the calls of advocates and families today by granting commutations to close to 1,500 people who were released to home confinement at the height of the COVID-19 pandemic under the CARES Act and pardons to 39 additional people, including many veterans and women.
The CARES Act, passed in 2020 in response to the COVID-19 pandemic, allowed certain groups of people to serve part of their sentences at home to mitigate the dangers of COVID-19 in federal prisons. Since then, thousands of people have been allowed to serve part of their sentences at home, securing jobs, reconnecting with loved ones, and reintegrating into their communities. The American Civil Liberties Union advocated for the CARES Act and has been urging President Biden to provide clemency to CARES Act release recipients since 2021, launching a six-figure ad buy, engaging grassroots supporters, filing FOIA litigation, and more.
“We are thrilled that President Biden has allowed people to remain with their families and communities, where they belong, said Cynthia W. Roseberry, director of policy and government affairs at the ACLU’s Justice Division. “The CARES Act was an unprecedented experiment in decarceration, and the data tells us it was incredibly successful. Of the over 13,000 people released, more than 99 percent have safely and successfully reintegrated into their communities. We urge Congress to build on the remarkable success of the CARES Act and pass other decarceration policies that prioritize compassion, redemption, and public safety.”
“President Biden’s actions today also remind us of the incredible and unique power of executive clemency,” Roseberry continued. “The ACLU has long advocated for the categorical use of clemency to address unjust outcomes of the criminal legal system. While today’s announcement is wonderful, there is more to do in the final weeks before President Biden leaves office. We strongly urge President Biden to use his power to address this country's failed death penalty by commuting death row sentences.”
According to data the ACLU obtained this year through FOIA litigation, the vast majority (71.8 percent) of those on home confinement had less than one year remaining in their sentence. Almost a quarter (23.5 percent) of CARES Act clemency recipients are older than 61 and over half (59.4 percent) are people of color.
We have the open question of whether this blanket commutation had those secondary effects, such as releasing other conditions of the sentences in terms of monetary restitution.
It’s one thing to argue that people, due to health conditions, needed to be released to their homes. It’s another to release them from their obligation to attempt to make restitution for their embezzlement and fraud.
That’s the thing with these blanket pardons and commutations - there may be people in the mass who might require a little individual treatment.
The compassionate release given to many was under the special case of COVID … and, y’all, COVID dropped in intensity quite a lot in 2023. The emergency is over.
There was no reason to argue that all who had compassionate release under COVID should have had their sentences commuted now that COVID has subsided.
It’s hardly a shock that some of the people who got the respite under a public health emergency may not be seen by the public as deserving much compassion now.
First shocked by the Dixon pardon then knocked off my feet by the Pennsylvania corrupt judge-kids to jail pardon. The latter pardon injures a whole state. No politics at this site, which is nice, so I hope this is not a violation: the corrupt judge pardon will hurt the Democratic party in Pennsylvania in the future.