Lisa Madigan charges the village lied to the Illinois Environmental Protection Agency more than 120 times about the source of its drinking water, the Chicago Tribune reported Wednesday.
In 1986, the EPA told the village its community well was contaminated with a cancer-causing chemical related to a highly-toxic dry cleaning solvent.
Crestwood officials were ordered by the state to test the well for toxic chemicals nine years ago.
At the time, Frank Scaccia, the village's certified water operator, said in a letter to the state that testing wasn't necessary because all of the village's drinking water came from Lake Michigan.
By telling the state Lake Michigan was the only source of drinking water, Crestwood avoided scrutiny and fended off authorities for two decades, the Tribune said.
"Crestwood officials violated the public's trust and the laws designed to protect public health," Madigan said.