Case: 3:12-cr-50027 Document #: 207 Filed: 12/19/14 Page 1 of 8 PageID #:1224

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS
WESTERN DIVISION
UNITED STATES OF AMERICA
)
)
v.
)
)
RITA CRUNDWELL,
)
)
)
Defendant,
) Case No. 12 CR 50027
)
and
) Judge Philip G. Reinhard
)
)
ILLINOIS MUNICIPAL RETIREMENT
)
FUND, NATIONWIDE RETIREMENT
)
SOLUTIONS,
)
)
Third-Party Citation Respondents.
UNITED STATES= REPLY SUPPORTING ITS
TURNOVER MOTIONS DIRECTED TO IMRF AND NATIONWIDE
Introduction
The United States seeks turnover orders directed to Illinois Municipal Retirement Fund
(D.E. No. 185, IMRF) and Nationwide Retirement Solutions (D.E. No. 174, Nationwide). IMRF
holds pension contributions Crundwell made and which it intends to refund to her. Nationwide
holds deferred compensation Crundwell earned while an employee at city of Dixon. Defendant
filed a letter claiming the assets are exempt. The Court allowed the government to file a legal
memorandum supporting its turnover motions as to IMRF and Nationwide, prior to Defendant,
IMRF and Nationwide filing objections, which it did (D.E. No. 186).
Subsequently, IMRF filed an objection (D.E. No 191) and Crundwell obtained counsel
who filed objections (D.E. No. 194). Nationwide filed no objection and has advised the
undersigned they have no objection to a turnover order so long as they are allowed to withhold

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statutorily mandated withholding taxes (and the government has no objection to such
withholding).
Discussion
Two Judgments: Restitution and Forfeiture
The Seventh Circuit has explained that
It might seem that a defendant should never have to pay more than his
victims loss, and therefore that a forfeiture order and a restitution order
should be considered alternative rather than cumulative punishments. But
the cases hold otherwise. . . . Thats not much of a paradox. It means,
very appropriately in a fraud case since fraud is a concealable offense that
the combination of a forfeiture order and a restitution order results in a
form of punitive damages piled on top of the other penalties for the
defendant's crime, such as imprisonment.

United States v. Navarrete, 667 F.3d 886, 888 (7th Cir. 2012). The Court will recall that over $9
million dollars garnered via the forfeiture process was relinquished by the the United States and
provided to the city of Dixon to apply to their restitution losses resulting from Crundwells
conviction. Unfortunately, rather than administrative grace, Crundwell, seems to regard this as
established procedure.
In her response, Crundwell observes that the IMRF and Nationwide accounts were not
similarly targeted for forfeiture and later relinquished to the city of Dixon. She argues that the
passage of time has somehow prejudiced Crundwell because she was not given the opportunity to
address her interest in this property prior to the plea agreement. D.E. No. 194, pp. 2-3. First,
unlike all the other property forfeited by the United States (e.g., horses), the IMRF and Nationwide
funds were neither obtained nor derived from her fraud, so they were not immediately subject to
forfeiture and thus were not included in the forfeiture allegations because they were not proceeds

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of Crundwells fraud scheme. We could chose to forfeit them post-conviction as substitute assets
but we have chosen instead to employ our enforcement rights under our restitution judgment.
All that said, the reasoning of Crundwells arguments in this regard is unknown. The
government has two valid judgments, one for forfeiture and one for restitution. It has within its
rights the ability to enforce either or both judgment according to the procedures for the
enforcements of such judgments. Now, it is specifically enforcing its restitution judgment against
accounts Crundwell established with IMRF and Nationwide. Crundwell, however, seems to be
laboring under the impression that an asset, for example an IMRF asset, must first be forfeited or
identified for forfeiture before it can be seized and applied to restitution. See brief at pp. 4-5.
This is obviously incorrect. There is no requirement that the government forfeit an asset
either voluntarily or involuntarily prior to seeking to apply the asset, or better its liquidated value,
to the restitution judgment. Crundwell provides no case law in support of such a proposition but
mere speculation based on a misreading of United States v. Novak, 476 F.3d 1041 (9th Cir. 2007)
and United States v. Hoskings, 567 F.3d 329 (7th Cir. 2009).
Crundwell was perhaps confused by the fact that many of her assets were first forfeited by
the U.S. Marshall Service and then applied to the restitution judgment. However, when applying
for the release of forfeited assets for restitution purposes the U.S. Attorney must certify that:
reasonable efforts to locate additional assets establish that the victims do not
have recourse reasonably available to obtain compensation for their losses
from other assets, including those owned or controlled by the defendants.
Department of Justice, Restoration Guidelines, Chapter 12, p. 6. (Available at http:
//www.justice.gov/criminal/afmls/victims/ (accessed December 18, 2014). Obviously, Crundwell
did not have $53 million in assets to satisfy Dixons losses. That is why the Department of Justice
was successful in obtaining approval for forfeited assets to be turned over to the city of Dixon.
3

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That said, the remainder of Crundwells assets are not left shielded from execution in the
governments continuing efforts to reduce Dixons restitution losses. Nonetheless, Crundwell
throughout her brief argues puzzlingly that because the IMRF and Nationwide funds were not
identified in connection with forfeiture, they somehow cannot be seized and made subject to a
turnover order. See, e.g., Crundwell Brief at pp. 2 (at no point were the IMRF or Nationwide
funds identified for restitution purposes); 4 (the IMRF and Nationwide accounts were not
identified as subject to turnover); and 5 (the IMRF and Nationwide accounts were not identified in
the preliminary order of forfeiture). Crundwells objection lacks any weight whatsoever.
Judgment Enforcement Remedies
The government has two primary judgment enforcement methods for collecting fines and
restitution. First, a Title 18 criminal money judgment can be enforced via a writ of execution in
rem against all property and rights to property of the defendant with certain specified exceptions.
18 U.S.C. 3613(a). 1 Execution necessarily includes proceedings supplementary to execution
like garnishment and citations to discover assets.

The sole determinants in considering a

garnishment or turnover order is whether the property belongs to the defendant (as opposed to a
third party) and whether it is exempt. Here, Crundwell has not credibly controverted either of
1

18 U.S.C. 3613 provides:

(a) Enforcement.--The United States may enforce a judgment imposing a fine in accordance with
the practices and procedures for the enforcement of a civil judgment under Federal law or State law.
Notwithstanding any other Federal law (including section 207 of the Social Security Act), a
judgment imposing a fine may be enforced against all property or rights to property of the person
fined, except that
(1) property exempt from levy for taxes pursuant to section 6334(a)(1), (2), (3), (4), (5), (6), (7), (8),
(10), and (12) of the Internal Revenue Code of 1986 shall be exempt from enforcement of the
judgment under Federal law;
(2) section 3014 of chapter 176 of title 28 shall not apply to enforcement under Federal law; and
(3) the provisions of section 303 of the Consumer Credit Protection Act (15 U.S.C. 1673) shall
apply to enforcement of the judgment under Federal law or State law.

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these matters. There has been no dispute that the IMRF and Nationwide Funds belong to her.
Moreover, she has not credibly raised any exemption issue besides the groundless argument that
she can claim state law exemptions, which the government demonstrated are not properly asserted
(D.E. No. 186, pp. 2-3) or the illogical argument that an asset must first be forfeited before it can
be applied to a restitution judgment. Thus, Crundwell has not raised any credible defense to the in
rem enforcement remedy the government has employed of seeking a turnover order.
Equity
Undeterred, Crundwell, argues that the Court should employ fairness by taking into
consideration the factors set out in 18 U.S.C. 3664(f)(2). 2

However, these are the factors a

district court uses in establishing a payment order at sentencing. The payment order is the second
primary enforcement method to collect fines and restitution. The payment order is enforced by
the government in personam, via a rule to show cause, when the defendant fails to pay according to
the payment orders instructions. All that said, a payment order does not restrict the government
enforcement of a restitution order in rem via execution or garnishment. United States v. Ekong,
518 F.3d 285, 286 (5th Cir. 2007) (upholding in rem garnishment order effectuating immediate
restitution recovery from third party despite judgment orders in personam payment plan that

18 U.S.C. 3664(f)(2) provides

(2) Upon determination of the amount of restitution owed to each victim, the court shall,
pursuant to section 3572, specify in the restitution order the manner in which, and the schedule
according to which, the restitution is to be paid, in consideration of
(A) the financial resources and other assets of the defendant, including whether any of these
assets are jointly controlled;
(B) projected earnings and other income of the defendant; and

(C) any financial obligations of the defendant; including obligations to dependents.

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allowed defendant to pay over time). In rem execution via writs of garnishment or execution and
in personam enforcement of a 3572 payment order via a rule to show cause are distinct remedies.
Crundwell asks this Court to be equitable. The balancing she advocates is simply not to
be found when enforcing a judgment in rem as the government is doing in connection with the
IMRF and Nationwide Funds. The balancing is found in the exemptions from execution that
Congress established in 3613(a), and in that exclusive list of exemptions is not found IRAs or
pension refunds. Congress must have realized that the enforcement regimen it created was severe,
but it bespeaks a dogged insistence on the government collecting every dime that can be recovered
for crime victims.
Crundwell notes that Dixon has mostly been made whole. The city of Dixon has been
fortunate enough to recover via the forfeiture process approximately $9.2 million and
approximately $40 million via certain civil proceedings, but that $49 million recovery still leaves
Dixon shy of the $53 million it lost over the decades when Crundwell was comptroller, a loss
amount it should be noted that fails to take into account prejudgment interest. In a final plea,
Crundwell argues that the Court should employ the standard set forth in 18 U.S.C.
3663(a)(1)(B). 3 Brief, p. 7. However, 3663 is the discretionary restitution statute and the
particular provision cited by Crundwell relates to the standard district courts employ at sentencing
as to whether to impose restitution.

However, this Courts imposition of restitution in

18 U.S.C. 3663(a)(1)(B) provides:

(i)

The court, in determining whether to order restitution under this section, shall consider

(I)

the amount of the loss sustained by each victim as a result of the offense; and

(II)

the financial resources of the defendant, the financial needs and earning ability of the
defendant and the defendant's dependents, and such other factors as the court deems
appropriate.

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Crundwells case was mandatory under a parallel provision: 18 U.S.C. 3663A. Thus, the
discretionary sentencing provision Crundwell cites ( 3663) has no applicability, and it certainly
provides no basis for the Court post-sentence to exercise discretion in refusing to grant a turnover
order as to IMRF or Nationwide. The same holds true with regard to 18 U.S.C. 3664(f)(2),
which Crundwell also cited previously. Section 3664(f)(2) does not provide the Court any
discretion in refusing a turnover motion. Ekong, 518 F.3d at 286 (garnishment order is neither
controlled nor made unnecessary by the existence of a payment order).
Conclusion
For the foregoing reasons the Court should grant the United States turnover motions.
Respectfully submitted,
ZACHARY T. FARDON
United States Attorney
By: s/ Joseph A. Stewart
JOSEPH A. STEWART
Assistant United States Attorney

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CERTIFICATE OF SERVICE
The undersigned Assistant United States Attorney hereby certifies that he caused a copy
of the following document:
United States Reply Supporting Its Turnover Motions Directed To IMRF and Nationwide
to be served pursuant to the district courts ECF system as to ECF filers, if any, and served by
first-class mail on the non-ECF filers listed below on December 19, 2014:
Rita Crundwell

Anthony Todd Schneider, Esq.

Law Offices of Capuani & Schneider
Managing Attorney - Nationwide Trial Division

Illinois Municipal Reitrement Fund

Attn: Beth Janicki Clark
Associate General Counsel

Nationwide Retirement Solutions

Attn: Huda M. Ahmed

s/ Joseph A. Stewart
JOSEPH A. STEWART
Assistant United States Attorney