Kelly Richmond Pope, Ph.D., CFE, CPA, an associate accounting professor, has produced and directed a riveting documentary, “All the Queen’s Horses,” about Rita Crundwell’s historic $53 million embezzlement from the city of Dixon, Illinois.
"Picture the small town of Dixon. The stereotypical white-picket fences and red, white and blue flags flying in front yards. It’s the hometown of Ronald Reagan,” says the narrator at the beginning of the documentary, “All the Queen’s Horses,” over scenes of horses grazing, children playing and townsfolk grooming modest homes.
The bucolic images in this quintessential Midwestern town in Illinois belie the shock of its almost 16,000 citizens when they discovered in 2011 that their trusted city comptroller had embezzled at least $53 million from city funds — the largest U.S. municipal fraud in history.
“If fraud is happening at this magnitude in Dixon, it can happen anywhere,” says director and producer Kelly Richmond Pope, Ph.D., CFE, CPA, in the film. “Fraud is a local, national and international problem. Over the past five years, we’ve seen a steady rise in fraud schemes — specifically embezzlement schemes — committed by an employee within a finance position. …
“The No. 1 question people ask me,” says Pope in the documentary, “is how does one person in a small town steal $53 million … and get away with it for 20 years.” Pope, an accounting professor turned documentary filmmaker, spends the rest of the full-length movie trying to answer that question.
She leads viewers through a visually vivid Fraud 101 class by examining the case’s evidence, interviewing key players and fraud examiners (including ACFE Regent Emeritus Tom Golden, CFE, CPA), plus describing the city of Dixon’s former lack of internal controls and eventual remedies.
During a recent Fraud Magazine interview, Pope says that from the start of her academic career she’s tried to engage her students in visual ways. “I think visual storytelling — using films and TV — is a powerful way to teach,” Pope says. “Students are able to connect with many accounting topics when they can see various scenarios depicted in film. Additionally, filmmaking is more scalable than research papers, so I enjoy incorporating my films into the teaching curriculum. … Educators and trainers need to feel comfortable incorporating non-traditional methods to get into the minds of students and professionals.”
In 2012, Pope was accepted into the prestigious documentary fellowship program Kartemquin Films,
Diverse Voices in Docs (DVID), during which she produced
“All the Queen’s Horses”. “In this program I had the opportunity to work with luminaries in the documentary film community like Gordon Quinn and Justine Nagan,” she says.
Pope says she found the Crundwell story intriguing because of the large size of the theft, the small size of the town and the length of the crime. “As I watched the news coverage, I felt that the main focus was on the perpetrator and not enough on how the fraud happened and how this type of fraud could happen anywhere,” she says. “So, I decided to do the documentary on the actual fraud and the courageous actions of the whistleblower Kathe Swanson.” Swanson was the city clerk who discovered the bank account into which Crundwell stashed the city’s funds.
“We’re trying to put the fraud behind us. You never believe it can happen to you. But obviously it can.” — Mike Venier, a member of the new Dixon city council.
Crundwell was Dixon’s comptroller and treasurer from 1983 to 2012. In December 1990, Crundwell opened a local bank account in the name of the City of Dixon and “RSCDA.” Until 2012, she repeatedly transferred city funds into this account.
Crundwell apparently used the stolen city money to buy hundreds of quarter horses and build a first-class, horse-farming business with an arena, an office and horse stalls. She also used the cash for business expenses, credit card payments, jewelry, home remodeling, real estate and vehicles, including a luxury RV bus. As she became one of the nation’s top breeders of quarter horses, she used her company, RC Quarter Horses LLC, to initiate and authorize her business transactions. (See “Comptroller, horse lady and crook,” and “The horses take a nasty fall,” by Henry C. Smith, III, Ph.D., CFE, CMA, CCS, and his then-students, Vincent Alger, Kevin Genter, Nichole Lawhorn, Melissa Lee, Heidi Mitchell, Kevin Murphy and Jared White, Fraud Magazine,
September/October and
November/December 2012.)
In the fall of 2011, Crundwell took 12 weeks of unpaid leave. During that time, Swanson discovered in a city of Dixon bank statement three large deposits in the RSCDA account in care of Crundwell that had nothing to do with city business. Swanson had never seen this account before. She told Dixon’s mayor who notified the FBI, which went to the district attorney’s office to open a grand jury and subpoena bank records. FBI investigators discovered multiple illegal transactions totaling millions from city accounts into the RSCDA account. The FBI didn’t find any evidence that anybody else was involved in the fraud scheme.
The city fired Crundwell in April 2012, and she was indicted on May 2 of that year. On Nov. 14, 2012, Crundwell pleaded guilty to a single count of wire fraud. She was sentenced to 19 years and seven months in prison on Feb. 14, 2013, at the Federal Medical Center Carswell in Fort Worth, Texas. She’s scheduled for release on March 5, 2030. She’ll be 82. The city of Dixon has recovered $40 million from a civil lawsuit and the sale of Crundwell’s assets.
“We now have put in multiple forms of fraud protection; multiple people have to sign checks,” says Mike Venier, a member of the all-new Dixon city council, at the end of “All the Queen’s Horses.” Dixon also has a new mayor, has changed to a city manager system and has a full accounting system of checks and balances.
“We’re trying to put the fraud behind us. You never believe it can happen to you. But obviously it can,” Venier says in the documentary. “I think our hometown boy, our President Ronald Reagan, said it best: We trust, but verify.”
FM: Did someone encourage you to go into accounting?
KP: I took my first accounting class when I was in high school. My father, the late Dr. Tyronza R. Richmond, encouraged me to major in accounting, so I did. I majored in accounting in undergraduate and graduate school.
FM: You worked in the forensic accounting practice at KPMG on anti-money laundering engagements, insurance fraud investigations and fraud risk management projects. What led you from that to academia? Did you feel you could make a larger impact as an educator and researcher?
KP: My father was a college professor and university administrator. My mother (the late Carol Kelly Richmond) was an elementary school guidance counselor. Education was always around me and I loved seeing the impact my parents had on students’ lives. So, I decided to follow in their footsteps. I left KPMG because I truly missed the classroom. I am a second-generation college professor at my core, and I decided to listen to my inner voice and return to teaching.
FM: Your specialty is research into fraudulent behavior. What drew you to this area?
KP: I have always been fascinated by how good people can rationalize bad decisions. As a child, I remember one of our neighbors was arrested and sentenced for mortgage fraud, and that story stayed with me for years. He was living the “American Dream” and risked it all. I wanted to learn more about how people rationalized unethical behavior.
FM: What do you enjoy most about teaching future fraud examiners in a university setting?
KP: My favorite class that I teach is my graduate forensic accounting course at DePaul.
What I love about this course is continuously showing students how easy it is for anyone to rationalize bad behavior and how difficult it can be to prevent fraud.
FM: I don’t know any accounting profs who are also filmmakers! How did it come about that you entered the documentary world? Why did you seek film as a way to educate?
KP: You are right; I would argue that I am the only accounting professor who is a documentary filmmaker, received 3½ stars from film critic Richard Roeper [for the documentary, “All the Queen’s Horses”] and has an IMDb page. So, yes, I think I have developed a unique quality. I like being different and developing my own niche. Many students are visual learners, so teaching accounting using film is a natural progression for my teaching style.
FM: Though you weren’t able to talk with Crundwell, you did spend a lot of time with the case’s whistleblower, former Dixon City Clerk Kathe Swanson. She seems to be the core of your film. Who does Kathe represent to you?
KP: Kathe represents the typical employee within any organization who sees something and debates whether she should report it or not. Kathe represents us all. It takes a tremendous amount of courage to report a superior.
FM: If you could eventually interview Rita, what would you ask her?
KP: I would ask Rita if anyone ever got so close to the fraud that she thought she would be discovered. I would also ask her about her exit strategy. What did she think would happen when she retired? Also, did her boyfriend know she was stealing? I would ask tons of questions.
FM: Though this case happened several years ago, why do you think it’s still relevant?
KP: I think this case will always be relevant because it is the largest municipal fraud in U.S. history. Historic cases like these should stay in the forefront of everyone’s mind so that we can learn from them and never forget that this happened.
FM: What fascinates you about whistleblowers?
KP: I am fascinated by their bravery. Not many people have the courage to do it.
FM: What were your goals in interviewing the principal characters and townsfolk in the Crundwell case?
KP: Whenever a fraud case happens, I think it is important to hear from the victims. Far too often we only focus on the perpetrators, but in this case, it was critical to hear the perspectives of the victims as well as the individuals responsible for running the town.
FM: In October, you showed the film for the first time in a public setting to the Dixon-area residents. Were you nervous going into that? What was the reaction of the viewers? What kinds of questions did they
ask you?
KP: Yes — I was extremely nervous. I viewed the Dixon screening as the most important screening for the film. I wanted Dixon residents to be proud of how I depicted the town and the case. I am proud to report that they were extremely pleased and thanked me for doing the documentary.
The film answered many unanswered questions for the residents. Here are some of the Dixon viewers’ questions:
- Were there any co-conspirators?
- Do I think the sentence was fair?
- Why didn’t the auditors find the fraud?
- Why didn’t the mayor resign?
- Why wasn’t the boyfriend charged?
FM: After you made the film, were you able to answer for yourself, “How could one woman steal $53 million without anyone noticing?”
KP: Yes — one person can steal any amount of money when there are no internal controls.
FM: I understand that other Dixon residents who were close to the case want to talk with you now that the film is produced. Who are some of those people and what do they want to say? Will you include their interviews in an expanded documentary or will they come out with a part 2?
KP: Former employees of Rita, past city council members who were in office during the fraud. Yes — we will interview them, and, yes, there will be a part 2.
FM: What are some takeaways from the film for our readers — ACFE members?
KP: Small governments are often more susceptible to fraud. We all have a “Rita” in our organizations — someone we unconditionally trust. Therefore, we need to be extremely careful when we abandon policies because we’ve developed close relationships with fellow colleagues. Skepticism is often taught but not always followed. It’s tough to be skeptical of people you have close relationships with. Never underestimate how difficult it is to truly exercise professional skepticism.
FM: How are documentary filmmakers similar to Certified Fraud Examiners?
KP: Conducting an investigation is very similar to developing a documentary. Numbers tell the best stories. Now I just follow the numbers with a camera crew.
FM: What are lessons about fraud (and possibly overall life lessons) you’ve learned from this project?
KP: Most people can rationalize a bad decision. Although Rita stole a significant amount of money, her fraud started somewhere. Be careful how you rationalize bad behavior because you never know where it could lead and how it could impact your ability to rationalize a much larger decision.
FM: Why did you start Helios Digital Learning?
KP: Helios Digital Learning was started to provide teaching and training resources based in storytelling to help individuals become better ethical citizens.
FM: What kinds of questions do you ask your students concerning fraud?
KP: I urge my students to ask themselves, “What is your price?” I ask them to think about what amount of money is worth it to them that would allow them to rationalize committing a fraud. I urge my students to constantly be self-reflective. Incorporating films into the curriculum helps my students be more self-reflective.
FM: What’s your approach to training?
KP: My approach in training is to urge people to see themselves faced with the scenario we are discussing. Far too often, I believe people have the mindset of “it’s them; not me.” I often lecture that fraud can happen to any of us, and anyone can commit it. Once I jump over that hurdle with an audience, we can have an honest and open discussion.
FM: This isn’t your first film. You’ve also produced “Crossing the Line: Ordinary People Committing Extraordinary Crimes.” What did you learn from that film that you applied to the Crundwell movie?
KP: The main lesson is that anyone can commit a crime. I know that there is a good amount of research that discusses the profile of a white-collar felon. Personally, I don’t believe that there is an exact profile. I believe that we all have the propensity to commit a crime.
FM: What other festivals and venues will you be showing the film?
KP: "All the Queen’s Horses" will screen in the
Fraud Film Festival in New Zealand, March 2 and 3. After April, the film will be available for wide distribution on various online platforms.
FM: Do you have any other movie projects in the works?
KP: I am working on a few short films that we hope to complete in the early part of this year. I learned that filmmaking is a powerful platform and can really help educate people about a range of topics including accounting.
FM: What did you learn about filmmaking — besides that it’s exceedingly difficult — from this project?
KP: I learned that filmmaking is a powerful way to educate people about a particular issue. My hope is that “All the Queen’s Horses” will reach a global audience so I can share this important message that fraud can happen anywhere and can be committed by anyone — even a trusted employee.
To learn more about Kelly Richmond Pope and “All the Queen’s Horses,” check out the ACFE podcast, The Stories Numbers Tell: How One Woman Stole $53 Million Over 20 Years, with host ACFE Research Director Andi McNeal, CFE, CPA.
Dick Carozza, CFE, is editor-in-chief of Fraud Magazine. His email address is: dcarozza@ACFE.com.