DIXON – An agency that oversees professional licenses statewide may be launching an investigation into auditing firms the city says failed to detect two decades of fraud committed by Rita Crundwell.
The Illinois Department of Financial and Professional Regulation sent a letter to the Lee County Circuit Clerk's office Jan. 25, saying it learned of the city's lawsuit and was requesting all documentation.
Specifically, the letter cites lawsuit defendants Samuel Card, Ron Blaine, and Todd Etheridge, as well as CliftonLarsonAllen LLP and the now-defunct Clifton Gunderson LLP.
The letter, sent by the agency's business prosecutions unit, was filed Jan. 29 in the court file, which made it public information. As per the agency's policy, IDFPR spokeswoman Sue Hofer would not confirm whether it has opened an investigation.
Attempts to reach Blaine, Card, and Etheridge were unsuccessful.
Jennifer Dirks, a spokeswoman for CliftonLarsonAllen, said she has not been notified of any investigation, but said the company will "cooperate fully with any such undertaking by the board."
Crundwell, 60, was arrested April 17 and charged with federal wire fraud. She pleaded guilty in November, admitting that she stole nearly $54 million while working as the city's comptroller.
She faces up to 20 years in prison at her sentencing a week from today.
In June, the city sued the Janis Card Co. LLC and Sam Card, CPA, both based in Sterling, which conducted the city's audits from 2005 until after Crundwell's arrest.
Prior to that, the audits were performed by CliftonLarsonAllen LLP, formerly known as Clifton Gunderson LLP.
The city's suit claims the auditors failed to spot multiple red flags that would have identified the fraud. Specifically, they did not verify or question numerous phony invoices Crundwell submitted for payment on bogus capital improvement projects, the suit says.
The city funds Crundwell stole were funneled into a secret account labeled RSCDA. The city also claims CliftonLarsonAllen knew of the secret account as early as 2010, but made few inquires. In response to one inquiry, Crundwell told auditors it was the "Reagan Statue Committee Fund."
The city also claims CliftonLarsonAllen continued to do the audits after 2005, even though Card was contracted to do the work.
In a deposition last year, Card said he simply signed off on the audit. CliftonLarsonAllen, however, maintains it was doing compilations, not audits, after 2005.
Clifton partners Blaine and Etheridge were added to the suit Monday.
The city is asking for damages in excess of $53 million.
One of the IDFPR's duties is to investigate any complaints made against any licensed professional in the state of Illinois.
If the agency finds the complaint is valid, it can take such disciplinary actions as suspending or revoking his or her license.
Under the state Public Accounting Act, an accountant or firm can face disciplinary action for several reasons, such as being convicted of a crime or engaging in dishonorable, unethical, or unprofessional conduct "likely to deceive, defraud, or harm the public."
None of the auditors have been charged with any crime in connection with Crundwell or any other case.
According to IDFPR website, Card first obtained his license as a certified public accountant in October 1993, Etheridge in December 1999.
Both licenses are set to expire in 2015.
Blaine opted not to renew his license, which expired in September.
IDFPR records indicate that Blaine was reprimanded in 2000 for "allegedly authorizing the issuance of an unqualified opinion on financial statements that may have failed to fully disclose the financial conditions of one company."
A reprimand is an official record that the licensee has been disciplined, but typically it does not affect the status of the license or the licensee's ability to practice, according to the IDFPR website.
No other information was available on that complaint.
CliftonLarsonAllen, based in Peoria, has multiple licenses.