No. 13-­--1407 UNITED STATES OF AMERICA v. Rita A. Crundwell

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-­‐‑1407
UNITED STATES OF AMERICA,
Plaintiff-­‐‑Appellee,
v.
RITA A. CRUNDWELL,
Defendant-­‐‑Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Western Division.
No. 12 CR 50027 — Philip G. Reinhard, Judge.
____________________
ARGUED NOVEMBER 4, 2013 — DECIDED NOVEMBER 15, 2013
____________________
Before EASTERBROOK, KANNE, and TINDER, Circuit Judges.
EASTERBROOK, Circuit Judge. In 2011 a Commissioner of
Dixon, Illinois, the childhood home of President Reagan,
lauded Rita Crundwell, the City’s Comptroller since 1983,
because “she looks after every tax dollar as if it were her
own.” How right he was. The next year Crundwell pleaded
guilty to embezzling approximately $53 million from the
City between 1990 and 2012. She used the money to support
more than 400 quarter horses and a lavish lifestyle, which

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No. 13-­‐‑1407 2
she explained to co-­‐‑workers as the fruit of the horses’ suc-­‐‑
cess. During the final six years of her scheme, the embez-­‐‑
zlement averaged 28% of the City’s budget. In exchange for
her guilty plea, the prosecutor limited the charge to a single
count of wire fraud. See 18 U.S.C. §1343.
Crundwell told other public officials that the City had to
tighten its belt. She blamed a downturn in the economy and
a reduction in remittances from the state, when her own
theft was the real cause. Police went without valuable
equipment. The City reduced the staff of its Street Depart-­‐‑
ment from nine to six and cut the rate of maintenance. In the
decade before Crundwell’s arrest, the City resurfaced only
65 blocks of its more than 100 miles of paved roads. The list
of ways in which Crundwell’s crime injured the population
of Dixon is long and played a major role in the district
court’s decision to sentence her to 235 months’ imprison-­‐‑
ment, substantially above the Guideline range of 151 to 188
months.
The scheme was not particularly sophisticated.
Crundwell opened an account at a local branch of Fifth
Third Bank. The account was called “RSCDA Reserve Fund”
and nominally was owned by the City, but Crundwell held
sole control over disbursements. She used her authority as
Comptroller to move money from the City’s legitimate ac-­‐‑
counts to the RSCDA account. Once the money was there
she wrote checks for her own benefit. She created bogus in-­‐‑
voices to justify the transfers from the legitimate accounts.
For more than 20 years, the bank failed to notice that the
funds in the RSCDA account were being put to private ra-­‐‑
ther than public use. And the City’s auditors—
CliftonLarsonAllen and Samuel Card, a local accountant—

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3 No. 13-­‐‑1407
failed to detect the scam, even though the spot checks of in-­‐‑
voices and disbursements required by auditing standards
ought to have turned it up long before 2012. The embezzle-­‐‑
ment was caught when a bank statement of the RSCDA ac-­‐‑
count reached the Mayor by accident, and he phoned the FBI
because the transactions it revealed startled him. The City
sued the bank and the two auditors, which recently settled
for approximately $40 million. Sales of Crundwell’s assets
realized another $10 million, so the City has recovered much
of what Crundwell took (if we disregard interest, which over
this lengthy period would have been substantial) but lost the
benefits, such as well-­‐‑paved roads and efficient police, that
the money could have achieved had it been available be-­‐‑
tween 1990 and 2012.
Crundwell asked the judge to impose a sentence at the
low end of the Guideline range, contending that a higher
sentence could hold her well into her 70s (she was born in
1953). She contended that she had provided extraordinary
assistance to the prosecution by describing all details of her
scheme and helping agents marshal her assets, so that they
could be sold for the City’s benefit. The prosecutor, by con-­‐‑
trast, depicted Crundwell as being no more candid than she
thought necessary and less candid than she should have
been. She initially asserted that the embezzlement began in
1999 or 2000, a decade after it actually started, and that the
total take was approximately $10 million. She admitted the
earlier start, and the higher total, only when confronted by
evidence. She did not bother to tell her debriefers that she
began stealing from the City in 1988, using a method differ-­‐‑
ent from the RSCDA account, until federal agents discovered
that additional crime on their own.

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No. 13-­‐‑1407 4
The district judge recognized that Crundwell had pro-­‐‑
vided some aid, principally in rounding up assets, but he
thought that the value of the assistance paled in comparison
with the injury that Crundwell had inflicted on the citizenry.
The judge noted that her thefts deprived the citizens of the
services for which their taxes had paid, and the discovery
that her long-­‐‑running scheme had gone on under the noses
of mayors, members of the local legislature, auditors, and
banks alike led to a slump in the citizens’ estimate of the
government’s competence and value. The loss of public ben-­‐‑
efits and confidence justify a penalty above the Guideline
range, the judge concluded. The judge also noted that a 235-­‐‑
month sentence would allow Crundwell to be released in
2030, when she would be 77, well under the life expectancy
of a 60-­‐‑year-­‐‑old woman.
In explaining why he chose a sentence above the Guide-­‐‑
line range, the judge relied in part on U.S.S.G. §2B1.1 Appli-­‐‑
cation Note 19(A)(ii), which says that a sentence may depart
from the range recommended by the Sentencing Commis-­‐‑
sion for financial crimes when “[t]he offense caused or
risked substantial non-­‐‑monetary harm. For example, the of-­‐‑
fense caused physical harm, psychological harm, or severe
emotional trauma”. (This language is part of Application
Note 20(A)(ii) in the current version of the Guidelines; its
substance is unchanged.) The judge thought that citizens of
Dixon suffered “psychological harm” from the revelation
that a prominent officeholder was crooked, that other offi-­‐‑
cials did not detect the crime, and that for 20 years they had
been deprived of valuable municipal services. Crundwell
contends that only the City counts as a victim and that or-­‐‑
ganizations cannot suffer psychological harm because they
are insensate. Yet §2B1.1 Application Note 19(A)(ii) does not

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5 No. 13-­‐‑1407
specify the crime’s immediate victim only; the language asks
whether the crime caused physical or psychological harm to
anyone. We stated in United States v. Pabey, 664 F.3d 1084,
1098–99 (7th Cir. 2011), that a loss of public confidence in
government caused by a public official’s defalcation is “psy-­‐‑
chological harm” for the purpose of this text.
What’s more, a sentence’s propriety does not depend on
whether the Sentencing Commission has authorized a depar-­‐‑
ture from the Guidelines—and departure is what §2B1.1
Application Note 19(A)(ii) is about. United States v. Booker,
543 U.S. 220 (2005), made departures obsolete. That’s why
we held in United States v. Townsend, 724 F.3d 749, 751 (7th
Cir. 2013), that it no longer matters whether a sentencing
judge properly understands the Commission’s prescriptions
about when departures are justified. Once a judge correctly
calculates the applicable range—and Crundwell does not
contest the calculation of her range—everything depends on
the judge’s reasonable application of the criteria in 18 U.S.C.
§3553(a). Judges are entitled to implement their own penal
philosophies; they are not bound by the Sentencing Com-­‐‑
mission’s. See Spears v. United States, 555 U.S. 261 (2009);
Kimbrough v. United States, 552 U.S. 85 (2007); United States v.
Corner, 598 F.3d 411 (7th Cir. 2010) (en banc).
Crundwell contends that Townsend is distinguishable be-­‐‑
cause it involved the denial of a defendant’s request for a
downward variance, while her case entails the grant of the
prosecutor’s request for an upward variance. That’s a differ-­‐‑
ence, to be sure, but it is an irrelevant difference. Townsend
reflects the fact that Booker supersedes departures. Judges are
entitled to discretion whether the variance is above or below

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No. 13-­‐‑1407 6
the Guideline range; the terms on which departures used to
be authorized do not matter in either direction.
Townsend observes that a judge could misuse or misun-­‐‑
derstand the remnants of the old departure system in three
ways: a judge might suppose that a variance is forbidden un-­‐‑
less authorized by the Sentencing Commission in a policy
statement or application note (that would be an error under
Booker and later opinions); a judge might refuse to entertain
an argument based on a policy statement or note (that would
be an error because many of the criteria formerly used to jus-­‐‑
tify departures remain salient under §3553(a)); or a judge
might believe that the policy statements and notes in the
Guidelines Manual exhaust the appropriate grounds for a
variance (that would be an error because §3553(a), not the
Guidelines Manual, supplies the legally controlling criteria).
Crundwell does not contend that the judge made any of the-­‐‑
se mistakes. The most one can say for her position is that the
judge may have understood “psychological harm” different-­‐‑
ly from the Sentencing Commission—but as any difference
on that score does not affect the validity of her sentence, the
possibility gets her nowhere.
The district judge pronounced a substantively reasonable
sentence after giving Crundwell full opportunity to present
evidence and arguments. The judge thought a substantial
penalty justified by considerations of deterrence and desert.
Crundwell single-­‐‑handedly stole from the citizens of a small
community (Dixon’s population is under 16,000) ten times as
much as public officials in the Teapot Dome Affair, the na-­‐‑
tional government’s most notorious financial scandal, mis-­‐‑
appropriated from the citizenry of the country as a whole.
(Secretary of the Interior Albert Fall received about $400,000,

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7 No. 13-­‐‑1407
worth $5.3 million in current dollars.) Crundwell maintains
that the judge did not consider her arguments, but the judge
addressed every one of them. That he thought less well of
her cooperation than Crundwell herself did, and gave a low-­‐‑
er weight to her age than she asked him to, does not under-­‐‑
mine the sentence’s validity. Judges must consider a defend-­‐‑
ant’s principal arguments but need not agree with them.
AFFIRMED

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