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.
[5][13] Crundwell used the money not only to finance her Quarter Horse operation, but also to support a lifestyle well beyond her $80,000 city salary, purchasing several cars, a second house[14] and a $2.1 million 45-foot luxury motorhome.
[15][16][17] Crundwell covered up her embezzlement by claiming that the city's frequent budget shortfalls were due to the state being late in paying its share of tax revenue.
[20] For most of Crundwell's tenure, residents assumed either that she inherited her wealth and/or that her horse breeding business was profitable in its own right.
But the city's outside auditors, Clifton Gunderson (now CliftonLarsonAllen after merging with LarsonAllen in 2012) and local accountant Samuel Card presumed that Crundwell was honest and signed off on her annual financial statements without concern.
For small U.S. cities similar to Dixon, lack of sufficient outside audits was a recurring problem, as third-party auditors could give at best limited attention.
[5] In the fall of 2011, while Crundwell was on an extended vacation, city clerk and acting comptroller Kathe Swanson discovered the RSCDA account with 179 deposits and associated checking activity.
For the next six months, Burke and Swanson (whose payroll was controlled by Crundwell) remained silent while the FBI built their case.
She was arrested later that day and was indicted by a federal grand jury for embezzling $30 million in city money over the previous six years.
Crundwell was required to forfeit more than $53.7 million in cash, assets and possessions, equivalent to the amount she stole, which is being used to make full restitution to the city.
[6] Prosecutors later discovered that Crundwell's crimes had begun as early as 1988, when she siphoned off $25,000 from the Dixon Sister City program over two years.
Their case was bolstered by testimony from Burke and city staffers that Crundwell used dramatic analogies to force spending cuts in order to cover up her theft, which left Dixon unable to provide the most basic services.
Reinhard noted that she put her passion for raising horses ahead of the needs of the city residents who had entrusted her with their funds, and that a significant prison term was required to restore public confidence.
[30] On September 20, 2012, Crundwell was also indicted on sixty state counts of theft, alleging that she stole $11.2 million from April 2010 until the day of her arrest.
The motion also sought a transfer to home confinement based on a Response to the COVID-19 Pandemic memo dated March 26, 2020 from Attorney General William Barr to the Federal Bureau of Prisons.
[37] A little over a year later, on August 4, 2021, after serving half of the required 85% of her sentence (about 8+1⁄2 years), she was released by the Federal Bureau of Prisons (i.e. not by a court) on compassionate grounds to a residential reentry center - a halfway house[38] or a home confinement,[39] possibly her brother Richard Humphrey's ranch (farm[35]) in Dixon as she suggested in her previously withdrawn request for release.