Attorneys: How Dixon auditors missed $54 million fraud [Chicago Tribune]
(Chicago Tribune (IL) Via Acquire Media NewsEdge) Sept. 26--For two decades, Dixon's city treasurer created fictitious invoices for made-up capital projects, but auditors never raised any red flags despite misspellings and the lack of construction equipment around the city, Dixon attorneys said Thursday.
During that time, treasurer Rita Crundwell transferred nearly $54 million for those non-existent projects into a secret account the local bank allowed her to open in the city's name without proper documentation, the attorneys allege.
The details came out at a downtown Chicago press conference a day after the city announced it has settled its lawsuit against the auditors and bank for $40 million. Attorney Devon Bruce, who represented Dixon in the lawsuit, shed more light on how Crundwell's schemes went on for more than two decades without detection.
Accounting firm CliftonLarsonAllen agreed to pay out $35.15 million as part of the settlement, while $3.85 million will come from Fifth Third Bank and $1 million from the accounting firm of Janis Card Associates and owner Samuel Card.
Bruce called CliftonLarsonAllen's actions "grossly negligent."
"Part of the audit is to identify fraud, irregularities and theft in the city's financial statements," he told reporters. "That's the duty and responsibility of an auditor."
CliftonLarsonAllen's CEO issued a statement Wednesday saying the firm believed "there was a shared responsibility that resulted in Ms. Crundwell's fraud continuing undetected."
Andrew Hayes, vice president of public relations for Fifth Third Bank, has said the bank "agreed to the settlement without any admission of liability."
Crundwell, who used city money to fund a lavish lifestyle and a horse-breeding operation is now serving a nearly 20-year prison sentence after pleading guilty to a single count of wire fraud and admitting to money laundering. She is appealing the sentence.
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