More than $39 million has disappeared from Santa Cruz County's coffers, up from the $4 million originally reported by the Nogales International newspaper last month.

Angela Gervasi has been covering this case, which began when she discovered county emails reporting missing $4 million that had been deposited in the former county treasurer's bank account.

Gervasi appeared on the show to expand on the matter.

Complete conversation

Lauren Gilger: Okay. You came on the show last month to talk about $4 million that went missing in Santa Cruz County. Now, that amount is over $39 million. This was revealed in a closed-door executive meeting, right? How did you find out?

Angela Gervasi: Yes. One of the most interesting and frankly odd things about this is how the information was disclosed. On Monday, Santa Cruz County Supervisors scheduled an executive meeting with a financial firm called B. Riley Advisory Services. As you know, executive meetings are typically closed to the media and the public.

However, for reasons that are entirely unclear, the session was broadcast on YouTube and left up for several hours before being removed on Monday afternoon.

But the last time I looked, it had over 50 views.

GILGER: Wow. Okay. So let's talk about this $39 million. Where did the money go? As I said to the former county treasurer, this is relevant. How?

Gervasi: That's right: Three-quarters of that $39 million came from Santa Cruz County school districts, much of it deposited in an account called Rio Rico Consulting and Real Estate, which is registered in the name of Liz Gutfer, who served as Santa Cruz County treasurer for nearly 11 years before resigning in April, according to a presentation by B. Riley Advisory Services.

GILGER: Angela, did she say anything about this at this point?

Gervasi: She has not returned calls or voicemails from Nogales International, we have not heard any statement whatsoever, and what's really interesting is that Santa Cruz County has still not acknowledged the fact that this video was released and people have seen it, the school district has seen it, and the public now knows about these numbers.

I spoke with County Administrator Jesus Valdez yesterday afternoon, but he said he couldn't comment for now.

GILGER: Wow. Okay. So can you tell us more about what this board meeting found out about this money? When did it suddenly disappear? I don't think so.

Gervasi: Yeah, it's a really interesting progression. Liz Gutfer was elected in 2012. Her first term began in January 2013. And according to this presentation, you know, the funding started to essentially disappear in 2014, in Gutfer's second year in office. And, you know, they also presented a graph where you can see the steady progression of money going out of the county's funds. In 2023, her last year in office, over $11 million has disappeared from Santa Cruz County. This was the largest amount of money that had disappeared before she left office.

GILGER: Okay. So I want to ask you, how did this happen? Were there checks and balances in place to prevent this from happening? Were there audits?

Gervasi: Yes. The Arizona Auditor General conducts regular annual audits of Santa Cruz County, as well as every other county in Arizona. And during the first five years of Mr. Gutphard's tenure, the Auditor General cited several operational issues and spoke about unreconciled funds.

But the auditor general did not cite any operational problems during the final years of his tenure, and the new county treasurer appointed to replace Gutfer outlined many new checks and balances. Treasurer Alejandro Paz said Santa Cruz County now has five people balancing funds, compared to just one person previously.

GILGER: Okay. So let's talk about who was affected here. $39 million is a lot of money. Where was it supposed to go?

Gervasi: Yes, what has many local residents really frustrated and frankly angry is the fact that three-quarters of this funding comes from local school districts. For example, according to B. Riley Advisory Services, the Nogales Unified School District has a deficit of more than $11.3 million, and the Santa Cruz Valley Unified School District has a deficit of more than $14 million.

And the three superintendents I spoke with this week were, as you can imagine, very frustrated and pointed to a lack of communication from Santa Cruz County: They didn't know about these missing numbers until this video was released on Monday.

GILGER: Well, what are the schools saying about this? I mean, does this affect students? This is a lot of money.

Gervasi: That's a lot of money. The school says they're still assessing the impact. It's a busy time for the school because the new semester starts next week, but they're still assessing the impact.

Santa Cruz Valley Unified School District Superintendent David Lugo, who I spoke with, said that everything was resolved on the district's side, so he now suspects that something was fabricated on the county side and we will continue to monitor how this plays out as this case develops.

GILGER: So, Angela, my final question: have any charges been filed in this case? Do you know what the next steps are? Have any criminal charges been filed against Liz Gutfer?

Gervasi: I checked about 30 minutes ago. [on Thursday, Aug. 1, 2024] And we haven't seen anything in the federal court documents yet. I spoke with former IRS Special Agent Brian Watson, and he said that's pretty common in white collar crime. It takes a really long time to build a case. But the community members here are very frustrated, and a lot of people have expressed concern that some of this money may never be recovered.