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City: Bank shares blame in Crundwell theft

Published: Monday, March 18, 2013 4:17 p.m. CDT • Updated: Monday, March 18, 2013 4:19 p.m. CDT

DIXON — Fifth Third Bank has joined the list of entities being sued by the city of Dixon in the aftermath of Rita Crundwell’s theft of nearly $54 million in city funds.

In an amended lawsuit filed Friday, the city of Dixon says Fifth Third Bank was negligent in applying commercial bank standards.

The lawsuit also lists the city’s former auditors – CliftonLarsonAllen, LLP, Clifton Gunderson, LLP, Janis Card Co., LLC, Samuel S. Card, CPA, P.C., Samuel S. Card, Todd Etheridge and Ron Blaine – saying they should have detected the ex-comptroller’s theft. The complaint asks for damages of more than $53 million.

Crundwell is listed as a third-party defendant. A third-party defendant is one whose guilt is tied to that of an original defendant.

The amended complaint, filed by attorney Devon Bruce on behalf of the city, says Fifth Third Bank had knowledge of Crundwell’s secret account, which she used to transfer city funds for her personal use by creating fake invoices from the Illinois Department of Transportation.

Despite that knowledge, the suit says, the bank did not disclose the account when auditors asked for a list of all of the city’s accounts.

The lawsuit also says a resolution approved by the Dixon City Council was required to open an account dealing with the transfer of city funds. At no time did the council adopt such a resolution to open the secret account.

The bank has no valid documents from council members approving the account, the complaint says.

Of the checks used to transfer city funds, 179 were made out to “Treasurer,” the suit says. At no time did the state treasurer endorse those checks, nor did the checks have an authorized signature.

Crundwell used the account to write personal checks to Chase, Four Winds Casino, Nicor Gas, Gordy’s, Discover, Nextel, ComEd, and Liberty Coachlines, among others, the court document reads.

The city also argues the bank had fraud detection procedures in place that were unable to detect the theft.

Fifth Third Bank already filed a motion last month to name itself as a defendant in the case, a legal move that will, among other things, allow it access to evidence.

A defense is yet to be filed by the bank, which is the 24th largest holding company in the United States.

The next case hearing in the lawsuit is scheduled for May 9 in Lee County.

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