perry griggs behind bars eight years earlier, he believes that griggs' failure to stop his criminal activity is a sign that the man is unwilling to change. >> i would never bet money against perry. i think perry is capable of continuing this on until he's no longer on the earth. >> narrator: in this episode of "american greed"... ride 'em, cowgirl! rita crundwell appears to be a humble, small-town civil servant, but she's living a double life as a world champion horse breeder. it's a deception that comes at a huge price. >> everything that i've learned about showing horses, you must either be independently wealthy, or you're stealing the money. >> narrator: when this cunning comptroller diverts more than $53 million of dixon, illinois' money into her horse empire, she leaves a city on the verge of collapse. >> people are gonna have to lose their jobs to balance this budget. for what, a horse? for a trophy? are you kidding me?

>> narrator: in the fall of 2011, as autumn leaves begin to warm the landscape of the picturesque town of dixon, illinois, a cold reality is taking hold. >> the city was drowning in debt. there were streets that went unpaved, there were sidewalks that went, you know, unfixed because the city, as they believed, had no money to take care of those sorts of things. >> narrator: dixon mayor jim burke hears the message of distress year after year from the city official pulling dixon's purse strings -- comptroller rita crundwell. >> she would present the figures for the annual budget workshop and would show that it was gonna be nip and tuck because of the financial situation. >> narrator: but this fall,

crundwell is taking vacation time to prepare for a quarter horse exhibition. she's hoping to add to her already extensive collection of trophies as a world champion show-horse breeder and exhibitor. back in dixon, however, the woman filling in for crundwell goes through the city's financials and uncovers a mysterious bank account under crundwell's control. in september alone, she finds more than $750,000 are inexplicably siphoned into that strange account from the city's coffers. she alerts the mayor. >> our city clerk brought a bank statement to me. and she said, "i cannot connect this with anything." i started to get sick to my stomach 'cause i realized this was a big rip-off going on. >> narrator: six months later, mayor burke sits in front of the citizens of dixon and cameras from media outlets across the country to explain what authorities believe may be the

biggest municipal fraud in u.s. history. >> first of all, i would like to thank the fbi for their comprehensive response to our request for a criminal investigation into this matter. this is a traumatic, upsetting event that the citizens and council are experiencing. >> narrator: "traumatic" and "upsetting" are not words typically used in association with dixon, illinois. u.s. marshal jason wojdylo is dispatched to dixon just days after mayor burke's press conference in the spring of 2012. >> the city was the size of 15,000, 16,000 people. good, hardworking farmers, a lot of farmers in the community. you know, your typical heartland of america city. >> narrator: rita crundwell has worked in dixon city hall since 1970, beginning as an eager high schooler and eventually making her way up to city comptroller in 1983. >> my name's dan langloss. i'm the chief of police in the city of dixon. >> narrator: by the time dan langloss becomes the dixon

chief of police in 2008, crundwell has been the trusted guardian of the city's finances for 25 years. >> she was very highly regarded, very well-respected. if you had a question, go to rita. if you need something, go to rita. and, you know, everybody always looked at her that she could fix any problem or just take care of anything that needed to be done. >> narrator: if crundwell's dependability is exhibited in her work, her passion is on display in another arena -- showing quarter horses at exhibitions nationwide. marcia freeman breaks and trains horses near crundwell's home in illinois and remembers crundwell's early years in the industry in the mid-'80s. >> at that point, i think she was just like the regular horse person, showing -- showing horses as a hobby, which would involve moving in on a thursday, showing horses friday, saturday, sunday, and returning back home and going back to a normal job and work week. >> narrator: but crundwell takes this more seriously than a weekend hobby. in 1990, she starts her own

horse-breeding business named rc quarter horses, llc. there's only one problem. >> showing horses is an expensive hobby, so you're gonna need to have some start-up cash to do it correctly. >> narrator: with her humble background, crundwell doesn't have enough money to support the boarding, medical care, transportation, and trainers necessary for a world-class breeding program. but, as dixon's comptroller, large amounts of cash pass through her hands every day. according to assistant u.s. attorney joe pedersen, on december 18, 1990, crundwell crosses a line that will change her life and the city of dixon forever. she opens a secret bank account in the city's name. and only she has control of it. >> she named it the r.s.c.d.a. account, which stood for some acronym involving a sewer -- reserve sewer account, but it really was not a legitimate city account at all. >> narrator: because crundwell

has full authority to write checks on the city's behalf, it's easy for her to filter government money into the new account. >> she was creating fictitious invoices, purportedly representing different projects that were going on in the city that, in fact, never were going on, and then she would pay the bills. she would pay the invoices and then deposit those checks into the secret bank account. >> narrator: as the fbi will come to learn, with no one else's eyes on the secret account, crundwell is free to divert the city's money into her personal business. and she does. >> it has become known as the single largest municipal fraud in u.s. history. >> narrator: when "american greed" returns... rita crundwell uses dixon's money to become a world beater, but the city of dixon is just beaten down. >> it becomes a free-for-all for her. she was aware of the infrastructure projects that needed to be performed in the city, but, again, feeding her needed to be performed in the city, but, again, feeding her ego seemed to be more important.

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30 years. and even he is impressed as he watches crundwell turn a one-horse stable into an american quarter horse dynasty. >> over the last i'd say 10 -- 10 to 12 years, she had elevated herself to be in the very top echelon of breeders and exhibitors. if she is not the leading owner of or breeder of world champions, she would be very close. >> narrator: crundwell comes to own more than 400 horses, with more than 50 of them becoming world champions in their class. and she isn't shy about flaunting her success in front of other horse exhibitors. >> when she would show up, it was this entourage of tractors and trailers -- you know, 18-wheeler-type rigs. rita crundwell, in her mind, became a brand, and it was that brand that was built over time that was feeding her ego. and the only way it was being fed in this case was by siphoning money off from the city of dixon. >> narrator: because with prize

money typically coming in at $5,000 to $10,000, winning doesn't equal riches. >> it's expensive to get to the level that she was at. and she had horses in over 15 states where she would pay people to board the horses, train them, feed them, and that cost a lot of money. >> everything that i've learned about showing horses, you must either be independently wealthy, or you're stealing the money. >> narrator: and rita crundwell is not independently wealthy. while dixon citizens believe that crundwell's world champion horse business pays for itself in prize money and breeding fees, in reality, it's all being funded by the city coffers. and each year, her theft grows more outrageous. >> this sort of depicts a graph of what the total loss was, what she was stealing. she started out in 1991. she stole $181,000.

as it progressed, in 1999, she had hit the million-dollar mark, and then two years later, she's into the $2-million mark. it escalates to over $5 million by 2008. it all depicts the total loss of more than $53 million. >> narrator: it's a simple fraud that wojdylo says points to a systemic failure of dixon's government. >> there were no checks and balances. there was no separation of duties, no segregation of duties. she did it all. >> narrator: with that power, crundwell has the city's checkbook to use as she pleases. >> when you have part-time city administrators, the mayor's part-time, the city commissioners are part-time, you know, they're trying to earn a living, to provide for their families doing something other than running the city. people simply weren't asking enough questions or perhaps the right questions. >> narrator: in the meantime, crundwell is stealing more money under dixon's nose every year, and every year, dixon is forced into painful decisions to stay

afloat. >> in april of 2009, they needed to cut $38,000 that was intended to be used to purchase ambulance equipment, while at the same time in 2009, rita crundwell stole almost $5.6 million from the city of dixon. >> narrator: year after year, it's more of the same -- less money for dixon's basic needs and more money for rita crundwell's world champion lifestyle. >> when she purchased several motor homes during the course of the scheme, the last one she purchased for over $2 million. she also purchased several homes. she purchased land. she purchased a large number of vehicles. she purchased jewelry for herself and others. >> hundreds and hundreds of pieces of jewelry, a lot of it custom-made, as you can see, with her name on it, with the "rc" -- again, her brand. "good ride" was the theme of that necklace. >> narrator: and back on her ranch, her extravagant trophy room is a shrine to all her accomplishments, paid in full by

dixon taxpayers. >> the room is -- it reeks of wealth. she had custom-made barstools that had a horse theme. the sofas in the trophy room were of a horse theme. again, it was clear where she was spending a lot of the money that she was stealing. >> narrator: but to residents of dixon, the newfound wealth has a perfectly reasonable explanation. >> well, there would be stories like, you know, floating around town that, you know, that she'd sold a horse for, say, $250,000. she had people coming from all over the united states and even some people from europe that came for this auction. so she did a great job of cultivating this image of having a very, very profitable and successful horse business. >> narrator: besides, crundwell works hard to keep her modest down-home image in dixon separate from the celebrity image she cultivates on the exhibition circuit. >> it is my understanding that

she really didn't show a lot of glamour in the city. she wasn't wearing a lot of expensive jewelry, you know, wasn't wearing a lot of expensive clothing. now, the clothing that she bought to take to the horse shows, if you're in that industry, you understand that it is rather expensive. >> narrator: it's another way that crundwell keeps her double life a secret. >> we've had a lot of people come into our industry and spend a lot of money. sometimes you find out where their money came from, and sometimes you don't, but mostly we're glad they're in our business, you know, for a while. >> narrator: but she won't be an industry leader much longer. when "american greed" returns... on her quest for fame as a horse breeder, rita crundwell lets go of the reins at work... and takes a nasty fall. >> the fraud was caught because, again, as is often the case with fraudsters, it occurs when they again, as is often the case with fraudsters, it occurs when they go on vacation.

>> narrator: by the fall of 2011, dixon comptroller rita crundwell's message of austerity has become agonizingly repetitive. >> each year at the budget hearings, you know, she would show up, certainly in the latter years as it came out as evidence sin this case, she would show up with booklets, where she had characters of, you know, someone drowning, or, you know, a pair of scissors. and it was -- her message was "cut, cut, cut." >> narrator: eventually, the heads of the city's various departments learn to simply stop asking for funding. >> again, not to be critical of the form of government, but when you have part-time city

administrators, the mayor's part-time, the city commissioners are part-time, you know, they were relying very heavily, understandably, as many city officials do, on their annual audits that were occurring, or perhaps not occurring. >> 21 annual audits, and -- and no warnings of any red flags. nothing. i'd read these audits over every year, and there was never, never any indication that -- that they found anything that -- that we ought to be taking a look at. >> another piece of the puzzle is that evidence came out during the civil litigation that the auditor had a personal interest in rita crundwell. she had had him over for dinner. he had asked her out on dates. so perhaps his eyes were a little glazed over in looking at the numbers. >> narrator: could the entire town have been seduced by crundwell's charms? how could they have not known $50 million were missing from the town's coffers?

>> to put this in context, when the city was a smaller population, a smaller government, when, you know, the large box stores didn't exist in the community, when the, you know, the illinois toll road wasn't going through the county, the budget wasn't as large. and so, as the city grew over time, understandably there was more revenue being generated from taxes, from real property, and the like. as that grew, the city wasn't necessarily missing it because they didn't know it existed. >> narrator: in october 2011, crundwell looks to add yet more trophies to her collection from one of the biggest single-breed horse shows in the world in columbus, ohio. but it comes at a huge cost. while filling in for crundwell, a city clerk uncovers crundwell's phony sewer account that has eluded city hall's eyes for more than 20 years. >> one of the statements from

the r.s.c.d.a. account came across her desk. she looked at it, didn't recognize it as a city account, and then expressed those concerns to the mayor, and then he forwarded that information to the fbi. >> narrator: for mayor burke, it's the beginning of six months of nearly unbearable anxiety as he sits back and watches crundwell continue to steal millions while the fbi conducts its investigation. >> once i knew what her method of operation was, we were able to see that she was taking these funds. and i even told the fbi agent once. i said, "you know, if we don't find this pretty quick, there won't be any money left at the rate that she's going." >> narrator: when "american greed" returns... the fbi is ready to make an arrest. >> i said, "these three gentlemen would like to talk with you. >> she said, "sure," and her face never changed emotion or anything. i was watching that carefully to see how she would react, and it was just, like, real nonchalant.

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>> narrator: finally, in the spring of 2012, mayor burke is told that the fbi is ready to make an arrest. early in the morning on april 17th, crundwell walks into mayor burke's office and finds three fbi agents waiting. >> yeah, i said, "these three gentlemen would like to talk with you." she said, "sure." and the -- her face never

changed emotion or anything. i was watching that carefully to see how she would react, and it was just, like, real nonchalant. almost made me wonder if she hadn't, you know, kind of mentally rehearsed. >> narrator: later that day, crundwell is escorted from the office, charged with one count of wire fraud, but for u.s. marshal jason wojdylo, the work is just beginning. he seizes crundwell's possessions... and brings in auctioneer mike jennings to conduct one of the largest, most prestigious horse auctions in the world... all to raise money to give back to the town. >> this was a world-prized herd that was being sold, and i knew that people were gonna come from around the world to dixon, illinois, for this auction, and they were gonna spend money. they were gonna eat at restaurants, they were gonna stay at hotels, and all that tax revenue was gonna be a by-product or our auction, but it was very important to me,

having sat down across from the dinner tables of many of these people in this community, who were true victims, who were victimized for so long and deprived of services -- public services -- it was very important to me to have that auction, the live auction in dixon, illinois. >> narrator: crundwell's horses bring in $5.5 million. combined with selling crundwell's other properties and assets, the u.s. marshals return to dixon about $9.2 million. most of the rest of the $53 million she stole are simply the sunken costs of rita crundwell riding after her extravagant and expensive dream. >> in the five months that we managed the herd, we spent about $1.8 million in costs, and that's simply to manage the herd. we're not showing the horses. so, you know, our taking over of the operation, i think, speaks to knowing what we were paying, clearly what she must've been paying. >> narrator: but it turns out,

all is not lost. in october 2013, mayor burke addresses the town of dixon once again. the year before, the city sues its two auditors for not detecting $53 million being diverted into crundwell's pocket... and sues fifth third bank for allowing her to operate the secret account right under their noses. without admitting wrongdoing, the three companies agree to pay $40 million back to the city of dixon. >> out of this will come a better, a sounder, and a more attractive dixon for all of us to live in. >> narrator: crundwell pleads guilty to one count of wire fraud, and on february 14, 2013, is sentenced to 19 years and 7 months in prison. if she's ever going to see dixon's economic recovery, it won't be until she's 77 years old. in the meantime, people who worked with her day in and day out, like police chief dan langloss, still have

questions. >> how could you, rita? how could you? how could you hurt so many people? how could you do this? how could you put people's jobs, people's families at risk over your greed? for what, a horse? for a trophy? are you kidding me? - [narrator] the following program is a paid presentation for the oxypure air purifier, brought to you by nuwave, llc. asthma and allergies are at an all time high, and it seems to get worse every year. it's not your imagination. allergy season continues to get longer and more intense as temperatures rise and airborne viruses are becoming an epidemic problem worldwide. with the changing environment and unseen dangerous air pollution surrounding all of us, you need clean air more than ever. if you suffer from mold, dust, pet dander, smoke, odors or sleeping problems, discover the nuwave oxypure air purifier,