All the Queen's Horses

Picture the small town of Dixon.

The stereotypical white picket fences

and red, white, and blue flags flying in front yards,

it's the hometown of Ronald Reagan.

It's a community, it's about 16,000 population.

Basically kind of a conservative county, in a way.

A month ago I was at Old St. Pat's in Chicago.

And the usher says, "Where're you from?"

I said, Dixon, and he goes, "Oh, you're the town

that the woman stole the 54 million from."

It is the biggest case of municipal fraud in history.

The tiny town of Dixon, Illinois, lost an astonishing

$53 million to one government employee.

If fraud at this magnitude is happening

in Dixon, it can happen anywhere.

Federal agents and local police carry out--

Man who evaded police for half a decade

pleads guilty to wire fraud. - Nine top officials accused

of taking $150 million. - James Hollis may be hiding--

Fraud is a local, national,

and international problem.

Over the past five years, we've seen a steady rise

in fraud schemes, specifically embezzlement schemes

committed by an employee within a finance position.

Allegedly embezzling thousands

of dollars from her former-- - $6.4 million over 11 years.

Embezzlement is a $3.7 trillion problem.

Government entities are the second most

frequent victims of embezzlement.

A nationally renowned horse breeder,

a city employee since the 1980s,

and a world class thief.

The number one question people ask me

is how does one person in a small town

steal $53 million, and no one know,

and get away with it for 20 years?

Rita and I worked together from 1991,

up until the time she was arrested in 2012.

When I first started, my capacity was deputy treasurer,

under Rita Crundwell.

She made it easy to work here.

She would always say to me, "If ever you make a mistake,

"don't worry, it can always be corrected."

In October of 2011, Rita was out of town and I needed

my bank statements to produce my treasurer's report.

In the past, Rita would say to me,

"Now be sure and give them the list over the phone,

"of the statements that you want."

I would just run down the list, but that day

I was under the gun, I had too much work to do,

and I just called and said,

I want all of the bank statements.

That's when they came.

I saw this one account that I had never heard of before.

And, what I noticed on it was three large deposits.

And it was in care of her, it was RSCDA,

City of Dixon, in care of Rita Crundwell.

I didn't know who to go to.

I sat on it for a couple of days.

I hid it in my car.

In three days' time, the mayor came into my office,

Mayor Burke, so I told him about it.

He said, "Go and get me a copy of that, right now."

My initial reaction was that there had to be

an explanation for it, but Kathe kept looking

and she couldn't tie it into anything.

And so, she asked me if I was gonna go to the police

with it, and I said, "No, absolutely not."

He said, "Kathe, I will take care of this,

"I will go to the FBI, but we cannot say anything because

"if we're not correct, we don't wanna harm Rita in any way."

I called the FBI, I said, I think there's a cancer

in city hall, but I need to talk with somebody,

and I took the bank statement along.

The mayor came into the field office, sat down

and discussed with the case agents what they'd discovered.

I told 'em, I said, I hope I'm wrong about this thing.

And he said, "I don't think you are."

So we were able to go to the U.S. Attorney's Office

and get a grand jury opened, and during that grand jury,

subpoenas issued for these different bank accounts.

I was very scared because I was told

you keep it quiet, you say nothing to nobody,

we'll handle the investigation.

So I believe that when the FBI tells you

to keep your mouth shut, you keep your mouth shut.

We had it set up that

if the FBI needed

any kind of documentation from here, I would come in early,

I would make the copies,

I would put them in a sealed envelope,

put 'em on the Mayor's desk.

Kathe Swanson, she was very instrumental

in determining what accounts were real,

what accounts were fake, how the money

should have flowed through the city of Dixon.

From there, looking at all the massive amounts

of paperwork that came in.

They wanted one of our reports, so I just took it.

Well, two days later, Rita went looking for it.

And I'm thinking, what am I gonna tell her?

I have to come up with an excuse.

And she came up with the excuse for me.

She said, "Oh, wasn't that the one that was incorrect

"and we sent it back to the accountants to redo it?"

And I said, you know what, you're right.

I had to do this for six months.

I had to keep that status quo in the office.

I had to ask her how her trips were, how her dogs were,

so as not to let on that something was not right,

and I knew about it.

She came to me one morning and she said,

"I don't know if I can handle this any longer."

My boyfriend Tom would say to me quite frequently,

"Are you sure you're okay,

"is there anything wrong with your kids?

"You don't seem like yourself."

And I would just say, oh, I have a lot of work to do.

There's a lot going on at work,

I need to get a lot of things done.

You know, over the next months, we'd look at

surveillance of the subject to see what's involved,

the scope of her and her lifestyle.

One of the things the FBI wanted to find out

during the investigation was, did she do this alone?

Was she hiding for somebody else?

She had loved ones, family members that worked

also for the city of Dixon, they were in the area.

She helped support nephews, she'd given loans out to family,

she had a boyfriend who was also involved in a business.

Are they involved?

But once they got hold of the RSCDA account,

it was pretty obvious what she had done.

They could see where the money went from there.

When we had discovered, through the FBI,

what she was doing and how she was going about

getting the money and putting it into that account,

I felt betrayed.

You know, while we're doing the investigation

she was able to take $1.5 million from Dixon.

I would sit and I'd watch her at lunch time

go and get the checkbook to write her check out,

after she called the money up,

and then she would turn around and deposit it

into her account over at the bank.

So the minute we got the money in,

it was gone in the afternoon.

I called the FBI agent and I said, if we don't

put a stop to this thing pretty quick,

there isn't gonna be anything left.

The night before she was arrested, we had a

budget hearing in here and I thought,

boy are people gonna be surprised tomorrow.

That morning, I went into the mayor's office.

I said, Jim, I can't do this anymore.

And he just looked up at me and he said,

"Kathe, today's the day."

So, I just called her on the intercom,

I said, Rita could you stop up here,

and she said, "Sure."

She came down the hall, I couldn't look at her

because I knew right then and there

they were already in the office waiting for her.

So, she come up to the door, she said, "Yes, sir."

I said, Rita, these gentlemen would like to

ask you a few questions, and she said, "Sure."

And I was lookin' right at her face,

and her continence never changed at all.

So, with that, I exited the office.

And then, just like that, there's like about

15 of 'em, came into city hall.

Come right upstairs and they shut city hall down.

We brought in agents from downtown,

used the agents out of Rockford.

Of course the marshals were with us

because of the amount of seizures that were going on.

They sealed off the stairs, it was quite intense.

And at that time she was approached.

She was given her Miranda rights and asked

if she would like to talk to us, which she did

give an interview, that lasted about an hour and a half.

During that interview, she was cooperative.

She only thought she'd taken around $10 million.

If somebody gives a partial confession or something,

we want that, it locks their statement in.

And that's what she did.

I think she was a little overwhelmed, surprised.

You know, 20 years of her life and basically

everything she knew, that was all comin' down.

And it hit her like a ton of bricks very quickly and,

people get emotional and they probably later go,

you know what, I maybe shouldn't have done that,

maybe shouldn't have talked, but they do.

She was in here singin' like a canary.

We never saw her, they took her right out

through the council chambers, and then took her to Rockford.

And immediately it felt like

this weight had been lifted off my shoulders.

This afternoon, in the central Illinois town of Dixon,

authorities announced a 60 count indictment