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Crundwell files appeal

DIXON – Rita Crundwell’s attorney is asking a federal court of appeals to reconsider her prison sentence.

In documents filed Wednesday, attorney Paul Gaziano says the U.S. District Court in Rockford abused its discretion and did not give enough weight to Crundwell’s communication with authorities when she was sentenced.

The former Dixon comptroller was sentenced Feb. 14 to 19 years, 7 months for wire fraud in connection to her theft of nearly $54 million. It is widely regarded as the largest municipal embezzlement in U.S. history.

The sentencing was four years longer than recommended in guidelines used by federal courts to standardize sentences, and just six months short of the maximum sentence possible, Gaziano says.

U.S. District Judge Philip Reinhard went beyond the advisory sentence, citing the amount of psychological and emotional damage done to the victims.

Letters from Dixon citizens, in which they expressed a loss of confidence in their local government as a result of the theft, were used to reach this conclusion, the judge said.

Gaziano argues that Dixon was the victim, and a municipality, by definition, cannot suffer psychological or emotional damage.

“The residents of Dixon are not the victims of this crime. Admittedly, they do have an interest in the affairs of Dixon, but they are not victims,” he wrote.

The definition of a victim is any entity “who sustained any part of the actual loss; or an individual who sustained bodily injury as a result of the offense,” he said, adding that prosecutors did not provide any expert witness to establish that any person suffered psychological or emotional harm.

“ ... It is true that the district court received a number of letters from Dixon residents, but those letters do not amount to a showing of the harm contemplated,” Gaziano wrote.

He cited U.S. v. Neadle in support of his argument. In that case, which involved a $20 million fraud, the loss of confidence in an “important institute” was not considered as psychological or emotional damage.

Gaziano also says Crundwell did not receive any credit for owning up to the crime. He also said she was not given credit for fully cooperating with authorities.

An FBI agent noted Crundwell’s input assisted in the recovery of funds for the purpose of restitution, and even went above and beyond, but Reinhard passed over that principal argument, Gaziano said.

“A judge who fails to mention a ground of recognized legal merit is likely to have committed an error or oversight,” he wrote.

Prosecutors have until Aug. 9 to file a response, then Crundwell’s attorneys can reply to that, if they wish, by Aug. 23.

Crundwell is serving her 19 years and seven month sentence in a federal prison in Waseka, Minn.

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