Horse Breeder Crundwell Pleads Not Guilty to Fraud Charge

Rita Crundwell, the high-profile Quarter Horse breeder accused of embezzling millions of dollars from the coffers of a small Illinois town, has pleaded not guilty to the charge against her.

Crundwell owns RC Quarter Horses LLC and operates the Meri-J Ranch in Beloit, Wis., and another horse farm in Dixon, Ill. She has been a leading Quarter Horse breeder having earned Leading Breeder Award honors at eight American Quarter Horse Association World Championship Shows. In connection with the case, Crundwell's 311 horses are now in the care of the U.S. Marshals Service.

In April Federal Bureau of Investigation (FBI) agents arrested Crundwell and charged her with one count of wire fraud after a federal grand jury in Illinois returned an initial indictment accusing Crundwell of misappropriating $30 million in funds from the town of Dixon, where she had served as city comptroller since the 1980s. Further investigation resulted in an expanded indictment accusing Crundwell of allegedly misappropriating a total of more than $53 million from Dixon over more than 20 years.

A spokesperson for the U.S. Attorney's Office for the Northern District of Illinois said that on May 7 Crundwell appeared in U.S. District Court in Rockford, Ill., where she pleaded not guilty to the wire fraud charge.

Crundwell's attorney Paul Graziano, assistant defender for the Federal Defender Program, declined comment on the case.

While the case is pending, Crundwell remains free on bail.

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More than 300 Quarter Horses belonging to Rita Crundwell could become government property if a civil court grants federal prosecutors' request that the embattled breeder forfeit the animals.

Crundwell is the owner of RC Quarter Horses LLC, and operates the Meri-J Ranch in Beloit, Wis., and another horse farm in Dixon, Ill. Horses not located at those locations reside with various trainers around the country. Crundwell has been a leading Quarter Horse breeder having earned Leading Breeder Award honors at eight AQHA World Championship Shows.

In April, Federal Bureau of Investigation agents arrested Crundwell and charged her with one count of wire fraud after a federal grand jury in Illinois returned an initial indictment accusing Crundwell of misappropriating $30 million in funds from the town of Dixon, Ill. The charge carries potential maximum penalties of up to 20 years in prison and a $250,000 fine, or an alternate fine totaling twice the cost of the loss or twice the gain, whichever is greater.

Crundwell was later released on her own recognizance. Assistant United States Attorney Joseph C. Pedersen said further investigation resulted in an expanded indictment accusing Crundwell of allegedly misappropriating more than $53 million from the Town of Dixon over the course of more than 20 years.

Crundwell was unavailable for comment.

Pedersen said the expanded indictment seeks criminal forfeiture of $53 million as well as numerous assets seized from Crundwell at the time of her arrest. Those assets include the Dixon, Ill., horse farm, a luxury motor home, numerous vehicles, and other assets including Crundwell's championship trophies. On May 1 the U.S. government asked the court to issue a restraining order on the real estate that is allegedly subject to the criminal forfeiture, Pedersen said.

Also on May 1, the government filed a civil lawsuit alleging that 311 registered Quarter Horses owned by Crundwell are subject to civil forfeiture because she purchased and/or maintained them with criminal fraud proceeds, Pedersen said. In addition to the 311 horses, dozens of foals are expected to be born this spring, he said. As part of the civil lawsuit, the government requested a pretrial restraining order securing the government's interest in the horses, and allowing officials to take necessary steps to ensure the animals' veterinary and dietary care remains ongoing. The government will seek to eventually sell the horses and apply the proceeds toward restitution to the City of Dixon, said Pedersen.

In the meantime, the U.S. Marshals Service is expected to hire a contractor to manage the horses, Pedersen said. American Quarter Horse Association Director of Marketing and Publications Jim Bret Campbell said that federal authorities have consulted with the organization regarding the horses' care.

"They have contacted us and we have made some recommendations about how the horses will be brought through the transition process," Campbell said. "Right now, we don't know what that transition process is going to look like."

Crundwell is scheduled to appear in U.S. District Court in Rockford, Ill., on May 7 for arraignment.