The City of Dixon is suing its former accountants for not catching on to Rita Crundwell and her $53 million dollar shell game.
“Rita Crundwell stole money and she stole a lot of money for many, many years but that’s exactly why you have an auditor. To identify fraud and mis-statement in the city of Dixon,” said Devon Bruce, an attorney with Power Rogers & Smith in Chicago.
The law firm represents the City of Dixon in its lawsuit against the CliftonLarsonAllen Accounting Firm, which did the books for the city for years.
“What we found out is one of the nation’s largest accounting firms for over15-20 years, missed year after year, they missed Rita’s theft of millions of millions of dollars,” Bruce said in an interview with WQAD-TV.
In court documents, he points to more than 170 phony invoices created by Crundwell, supposedly from the Illinois Department of Transportation. The fake invoices are visibly different from the real deal. They lack the IDOT logo, are printed in different font, the word “section” is misspelled, and there is no phone number listed.
“The invoices that she showed to Clifton auditors were palpably different. They were day and night than the true invoices from the Illinois Department of Transportation. All those are red flags that Clifton should have identified, should have followed up on and it would have simply been a two minute phone call to the Illinois Department of Transportation in Springfield,” Bruce said.
CliftonLarsonAllen released a media statement to WQAD-TV, which says the firm did nothing wrong. It says the type of audits they were hired to perform for Dixon “did not require the sort of detailed testing need to uncover the fraud.”
It also says it warned the city about Crundwell’s role as both comptroller and treasurer.
“We advised various City officials in writing on multiple occasions that a significant deficiency did exist in its internal controls involving lack of segregation duties.”
Bruce says he has other issues to explore in the lawsuit. He says Clifton learned about Crundwell’s secret bank account in 2010 and didn’t pursue an investigation. He also says Clifton performed Crundwell’s personal tax returns for many years.
“In 2005, her cash flow in and cash flow out, if you analyzed that, and Clifton acknowledges that, she spent over $300,000 more than she took in. In accounting, if you spend beyond your means, that’s a red flag for someone who may be a fraud risk. What’s the entity that truly knew about Rita Crundwell’s personal finances? Clifton. It’s shocking,” Bruce said.
“There are many, many ways Clifton should have identified this fraud when Rita stole the money and they were paid to do so. They let the City of Dixon down.”
A trial date hasn’t been set yet.