How one of the biggest swindlers in American history built a horse-breeding empire

Want to buy 767 horse-championship trophies belonging to one of the biggest swindlers in American history? Now’s your chance.

In 2013, a small-town city official by the name of Rita Crundwell was sentenced to almost 20 years in federal prison for stealing at least $53.7 million from the city of Dixon, Ill.

Crundwell, the town’s longtime comptroller, used the millions to build a horse-breeding empire so enormous that federal investigators are still auctioning it off, piece by ill-gotten piece.

Now the U.S. Marshals Service is taking bids for Crundwell’s hundreds of horse trophies and ribbons, piled up from the years when she dominated quarter horse breeding championships and was known to envious competitors and fans simply as “Rita.”

“Three and a half years after she was arrested, we continue to be on the hunt for her assets,” said Jason Wojdylo, a chief inspector for the Marshals Service who has spent that time chasing and seizing Crundwell’s money and property. “I think we’re getting close to the finish line.”

Crundwell, 62, had been a star before her fall from grace. Hundreds of her quarter horses were sold in 2012 in a spectacular auction that drew thousands of visitors from all over the country, reportedly jamming hotels for miles around. One of Crundwell’s world-champion horses, Good I Will Be, brought $775,000 from a Canadian bidder.

The feds have auctioned off frozen horse semen — valuable to breeders — a lavish motor home, trucks and trailers worth hundreds of thousands of dollars, which Crundwell acquired while making $80,000 a year from the city of Dixon, population 15,333.

A current online auction for 290 items including Crundwell’s clothes, shoes and handbags is a little more intimate, but no less unusual.

Fifteen bids have driven the cost of one T-shirt from a 2008 quarter horse championship to $205. NFL great Terry Bradshaw had signed the shirt, adding the message, “Rita, you are the best!” The word “best” is underlined.

At the time, among quarter horse owners, Crundwell was the best. Now, among residents, she’s reviled.

In October, a local columnist jokingly suggested readers could bid for one of Crundwell’s city of Dixon shirts — sewn with the name “Rita” and now going for $10 — to make a “Killer Comptroller” Halloween costume.

“This is the Rita outfit that says you’re here to work,” Brenden West wrote for SaukValley.com. “You’re rocking your official city gear that says to everyone you’re here to help Dixon function. No one should question that you’re secretly siphoning off millions from taxpayers when you’re in that unsuspecting salmon polo.”

That’s pretty much how it happened. Crundwell started working for the city part time as a high school student and later became city comptroller, a position she held for almost 30 years.

“She knew where everything was at,” James Burke, Dixon’s then-mayor, told the Los Angeles Times in 2012. “I could ask her for some contracts with the utility company or something several years ago, and she would wheel around and pull something right out of her desk.”

He added, “I guess that was her strong point and her weak point.”

A co-worker noticed suspicious bank activity while filling in for Crundwell, and an FBI inquiry revealed that the quarter horse queen had been funneling money from the city into her personal accounts since the 1990s.

In just six months, the FBI quietly watched Crundwell take at least $3.2 million from the city before arresting her in April 2012. Dixon’s operating budget is only about $10 million a year. Crundwell pleaded guilty to fraud a few months later.

“From the time she started to steal, the city had about $10 million in a fund balance,” said Paula Meyer, Dixon’s current finance director. “By the time she was arrested, we were $22 million in debt.”

Before Crundwell was caught, Dixon city employees had gone years without getting raises and streets went unpaved. At an October 2011 City Council meeting, officials fretted over a “fiscal crisis” that prevented them from hiring part-time employees.

“The city had been borrowing $5 million a year at the end of it because she was stealing so much,” said Liandro Arellano, a 34-year-old business owner who swept into the mayor’s office along with an all-new City Council this spring.

Crundwell’s massive theft prompted an uproar and questions about how she had gotten away with her crimes for so long. Seeking stronger oversight, the city’s voters last year chose to ditch its commissioner system and switch to a city-manager form of government.

The city also sued the auditors and bank that failed to catch the fraud and settled for $40 million, though attorneys’ fees claimed about $10 million of that amount. The city has since used the money to help pay off its debts and attend to long-neglected infrastructure projects.

The city has gotten less help from Crundwell’s estate. U.S. Marshals have been able to return $9.5 million to Dixon after seizing and selling her assets but are not expecting the total to be much more than $10 million.

That’s paltry compared with the $107 million that Wojdylo says Crundwell owed Dixon for restitution plus a monetary judgment awarded to the city.

In addition to all of Crundwell’s travel and pay for veterinarians and other employees, “most of the money she stole went through the horses … literally, in the form of hay, feed, and then out of the horses in the form of manure,” Wojdylo said.

In a way, Crundwell still works for Dixon: The city is garnishing the pay she gets from her work in federal prison in Waseca, Minn. On average, she earns about $65 a month.

“If she was supposed to pay us back $107 million, minus what we recovered … that means she still owes us $97 million,” said Meyer, the finance director, calculating how long Crundwell would have to work to pay back the money on $65 a month.

The answer: 124,359 years.

“I don’t think she’ll make it,” Meyer said.

Follow @MattDPearce for national news.

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