ROCKFORD – As lawyers convened behind closed doors Friday, Rita Crundwell stared straight ahead as she waited for a decision on whether her 401 prime quarter horses would be sold before her case is resolved.

While the former Dixon comptroller and her attorneys already had agreed to the sale, there was a brief hold-up Friday as the federal prosecutors consulted with two attorneys representing some of the companies that have been taking care of the horses since Crundwell’s arrest.

The attorneys for the companies – Percott Company of Beloit, Wis., and a horse company and two veterinarians from Texas – want “assurances” that they would have chance to recoup some of their costs from sale proceeds.

Crundwell purchased the horses, along with other properties and assets, with city funds, according to federal prosecutors.

Crundwell, 59, is charged with one count of federal wire fraud as part of a scheme to misappropriate more than $53 million since 1990, according to prosecutors.

Crundwell will be back in court July 23 in both her civil and criminal case.

During a 30-minute hearing Friday, Magistrate Judge P. Michael Mahoney gave the U.S. Marshals Service the go-ahead to sell the horses, as well as 21 embryos, 13 saddles, and frozen stallion semen from eight horses.

Read the order allowing the sale.
Rita Crundwell Horse Order 12-cv-50153

A similar request to sell five of Crundwell’s properties and a $2.1 luxury motor home was granted late last month.

Marshals have been caring for the horses, properties and other assets seized from Crundwell after her April 17 arrest at City Hall.

Marshals did not return calls or emails seeking comment Friday.

Assistant U.S. Attorney Joe Pedersen told Mahoney that selling the horses now will “be in the best interest of all parties involved.”

In a motion filed Thursday, Pedersen wrote that maintenance costs are “burdensome,” especially because some of the mares are pregnant or recently gave birth.

Prolonging the sale may also devalue the horses, Pedersen said.

Pedersen told Mahoney that it will take 60 to 90 days for marshals to bid out contracts to companies to conduct the sales.

All proceeds, minus costs incurred by the Marshals Service in setting up the sale, will be held in an escrow account managed by marshals until the case is resolved, Pedersen said.

Percott and Texas horse breeders Brock and Kristi Allen of Allen Equine, and veterinarians A. Barry Wood and Hartman Equine Reproduction Center, filed motions in late May to intervene in the civil suit.

In the motions, attorneys wrote that they have incurred substantial costs in caring for the horses, which have resulted in a lien of more than $150,000.

The attorneys argued that in the event the horses would be sold, they intend to make a claim from the proceeds to recover those costs.

Crundwell’s federal defender, Paul Gaziano, told Mahoney that he still is going over 17,000 pages of discovery provided by prosecutors, 6,000 of which were provided within the past month.

Mahoney told Gaziano to file any pretrial motions before Crundwell’s next court date.

After Friday’s hearing, Crundwell and her second attorney, Kristin Carpenter, walked briskly past a throng of reporters and into a small black car; a black trash bag had been placed over the license plate.