IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS

WESTERN DIVISION

United States of America, )

) Case No. 12 CR 50027-1

Plaintiff, ) 

 ) 

 vs. )

)

Rita A. Crundwell, )

) Judge Philip G. Reinhard

Defendant. )

ORDER

For the reasons stated below, the government’s motions for turnover [174] [185] are

granted. The IMRF is ordered to turnover the sum of $73,104.50 and Nationwide is ordered to

turnover the sum of $17,461.36 – less any statutorily mandated withholding taxes – to the Clerk

of the United States District Court, Northern District of Illinois, 219 South Dearborn Street,

Chicago, IL 60604 with the case number 12 CR 50027 written in the lower left corner of the

check. 

STATEMENT - OPINION

The United States moves for the entry of turnover orders directed to the Illinois

Municipal Retirement Fund (“IMRF”) [185] (holding pension contributions made by defendant)

and Nationwide Retirement Solutions (“Nationwide”) [174] (holding deferred compensation

owned by defendant). Defendant, Rita Crundwell, objects to the entry of these orders. The

IMRF objects to the order directed to it. Nationwide does not object.1

On November 14, 2012, defendant pled guilty to wire fraud. In her plea agreement [45],

she acknowledged that the total amount of restitution owed to the City of Dixon was $53,740,394

and that the court “must order defendant to make full restitution in the amount outstanding at the

time of sentencing.” She also agreed to the entry of a forfeiture judgment in the amount of

$53,740,394. Certain property was identified in the plea agreement for forfeiture. The plea

agreement stated: “Defendant understands that forfeiture of this property shall not be treated as

satisfaction of any fine, restitution, cost of imprisonment, or any other penalty the court may

impose upon defendant in addition to the forfeiture judgment.” Pursuant to the judgment in a

criminal case [70], entered on February 14, 2013, the court ordered restitution in the amount of

 Nationwide and the government have agreed that Nationwide may withhold statutorily 1

mandated withholding taxes from the funds to be turned over. 

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$53,740,394. The court also ordered forfeiture of certain property pursuant to a preliminary

order of forfeiture. A final order of forfeiture [142] was entered as to the specified property on

May 16, 2013 and an amended final order of forfeiture [148] was entered on June 6, 2013.

The government instituted supplementary proceedings by issuing third-party citations to

discover assets to various entities and individuals, including the IMRF and Nationwide to enforce

the judgment. The IMRF answered the citation served on it stating it held $73,104.50 in pension

contributions made to it by defendant and claiming these funds were exempt under Illinois law. 

Nationwide answered the citation served on it stating it held $17,461.36 in deferred

compensation plan funds of the defendant’s.

Defendant argues the government’s motions for turnover are procedurally improper

because the government is required by the preliminary order of forfeiture to file a motion for

substitution of assets before requesting permission to seize such assets. Defendant notes that the

judgment entered in this case, including the order for restitution, is a final order. She points out

that in her plea agreement she was required to agree to the entry of the forfeiture judgment and to

entry of the preliminary order of forfeiture relinquishing her rights in the property named in the

forfeiture allegations, and the amended and second amended bills of particulars. Since those

documents did not identify the IMRF or Nationwide contributions, defendant argues she was not

given an opportunity to address her interest in this property prior to the plea agreement and entry

of the judgment in this case. She contends this renders the government’s motion for turnover

untimely and improper.

Defendant’s argument is baseless. Forfeiture and restitution are separate matters. U.S. v.

Navarrete, 667 F.3d 886, 888 (7 Cir. 2012). They are cumulative not alternative punishments. th

Id. The government has a restitution judgment and it may collect it “in accordance with the

practices and procedures for the enforcement of a civil judgment under Federal law or State law.”

18 U.S.C. § 3613 (a) and (f). Illinois law allows for supplementary proceedings including

citations to discover assets served on third parties. 735 ILCS 5/2-1402. The government

appropriately followed these procedures in seeking to collect assets of defendant held by third

parties to apply against the restitution judgment. 

Defendant expressly acknowledged in her plea agreement that forfeiture “shall not be

treated as satisfaction of any fine, restitution, cost of imprisonment, or any other penalty the court

may impose upon defendant in addition to the forfeiture judgment.” Despite having clearly made

this acknowledgment in her plea agreement, defendant now argues to the contrary, in effect, that

the government cannot proceed except by forfeiture and that as to the IMRF and Nationwide

assets, it is too late to recover those assets even via forfeiture. This argument is completely at

odds with the terms defendant expressly agreed to in her plea agreement and clearly contrary to

established law. Navarrete, 667 F.3d at 888.

Defendant also argues that the funds held by the IMRF and Nationwide are exempt from

the restitution judgment under Illinois law, 40 ILCS 5/7-217(a). This statute, which applies to

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the IMRF, provides that “all accumulated contributions and other credits of employees in this

Fund, and the right of any person to receive an annuity or other benefit under this Article, or a

refund or return of contributions, shall not be subject to judgment, execution, garnishment,

attachment, or other seizure by process, in bankruptcy or otherwise, nor to sale, pledge, mortgage

or other alienation, and shall not be assignable.” However, “[f]ederal law governs what is

exempt from federal levy.” U. S. v. Mitchell, 403 U.S. 190, 204 (1971). Exempt status under

state law is not binding on the federal government. Id. Only property exempt from levy under 26

U.S.C. § 6334(a)(1) through (8), (10), and (12) is exempt from enforcement of a restitution

judgment. 18 U.S.C. § 3613(a)(1). None of those provisions of Section 6334(a) exempts

pension contributions or deferred compensation funds. See U.S. v. Hosking, 567 F.3d 329, 335

(7 Cir. 2009). th

 Defendant states in her brief that “it is not at all clear that the various circuits are aligned

with respect to whether anti-alienation provisions of a state statute apply to federal forfeiture

claims.” She then quotes a Fourth Circuit case, Smith v. Mirman, 749 F.2d 181, 184 (4 Cir. th

1984), in which the Fourth Circuit says it “sees a danger in eroding through exception the antialienation policy of ERISA.” Mirman has nothing to do with a criminal restitution judgment, a

forfeiture judgment, or a state anti-alienation provision. It deals with the non-assignability

provisions of ERISA as applied in the interval between a decision to terminate an ERISA plan

and the actual the distribution of the assets to participants. Mirman is completely irrelevant. 

Defendant’s resort to Illinois exemption law is unavailing. 

Defendant also asks the court to look to funds received by the victim, City of Dixon, from

a settlement with the city’s auditors and CPAs, and funds received from the prior forfeiture of

certain property of defendant. Defendant argues that since these amounts leave the City only a

few million dollars short of recovering the money she stole from it, that the court should weigh

the amounts so recovered against the interest of having defendant support herself when she gets

out of prison and allow her to keep the money ($90,000) held by IMRF and Nationwide.

Defendant’s argument overlooks the fact that, as she acknowledged in her plea

agreement, full restitution is mandatory in this case. 18 U.S.C. § 3663A(c). She does not claim

full restitution has been made. She cites 18 U.S.C. § 3663(a)(1)(B) as establishing factors the

court should consider in determining whether to enforce a restitution order but 18 U.S.C. §

3663(a)(1)(B) lists factors to be considered in determining whether to set restitution in

circumstances where it is not mandatory. 18 U.S.C. § 3663(a)(1)(B) does not deal with

enforcement of a restitution judgment. Likewise, 18 U.S.C. § 3664(f)(2) and (3), cited by

defendant, deal with factors considered in determining at sentencing the manner in which

restitution will be paid. Those provisions do not deal with enforcement of restitution judgments.

Even assuming that, despite the government’s position that enforcement of the restitution

judgment is an in rem proceeding, the court has discretion at this time to set the manner in which

restitution is collected, defendant’s argument is unavailing. Defendant is serving a 235-month

sentence. Her projected release date is far in the future and a determination of her financial needs

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and ability to support herself at that time would be highly speculative as would any discussion of

the likelihood of full restitution having been made in the interim. 

For the foregoing reasons, the government’s motions for turnover [174] [185] are granted. 

The IMRF is ordered to turnover the sum of $73,104.50 and Nationwide is ordered to turnover

the sum of $17,461.36 – less any statutorily mandated withholding taxes – to the Clerk of the

United States District Court, Northern District of Illinois, 219 South Dearborn Street, Chicago,

IL 60604 with the case number 12 CR 50027 written in the lower left corner of the check. 

Date: 1/21/2015 ENTER:

 

United States District Court Judge

Electronic Notices. (LC)

 

 

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