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- Arizona has rebutted Santa Cruz County after the county sued the state auditor, claiming negligence in a $38 million embezzlement case.
- The state lawsuit alleges that various county officials, including current and former board members, have failed to review their financial reports and oversee the former accounts.
- The state also claims that the county’s outdated accounting system and the actions of former vice-treasurer contributed to a decade of embezzlement.
Arizona and its chief auditors have returned to Santa Cruz County on a legal application that accused former county officials of negligence and other misconduct after embezzling about $38 million in public funds over a decade.
The lawsuit comes from responding to legal action filed by the county against Arizona Auditor Lindsay Perry and the state in November 2024. The county lawsuit alleges Perry’s office was grossly negligent and says it involved former county Elizabeth Guffer.
“We are disappointed, but we are not surprised by the filing of the counter’s complaints,” Santa Cruz County supervisor Rudy Morera, who was named in the lawsuit, said in a statement. Posted on the county website. “Instead of addressing the serious concerns raised in the original submission, the Auditor General chose to distract him through retaliation tactics.”
Two other current supervisors also issued statements.
The lawsuit alleges that the embezzlement of Gutfahr, discovered in April 2024, has resulted in several former and current county officials being “unreasonably enriched.”
Gutfahr embezzled $38.7 million in November between 2014 and 2024 and was guilty of money laundering and tax evasion for failing to pay more than $13 million in income tax. She was waiting for the sentence, but it was now scheduled for June 18th.
The lawsuit also alleges that current and former Santa Cruz County board members and other county employees were negligent and failed to review the report and oversee Guffer, if any of the other issues.
According to the lawsuit, Ritaseto, who signed up to complete the Maricopa County financial statements, was negligent in failing to detect “fraudulent reports and documents” by Guffer.
The lawsuit, filed in Maricopa County on April 3 and served on the county board of supervisors on April 15, also includes dozens of unknown people and businesses who participated in the embezzlement of Gutfahr..
State officials claimed they didn’t review the treasurer’s report, updating the outdated system
The 59-page lawsuit alleges that the county is responsible for detecting fraud and points to various failures by the authorities.
Some of the ways Gutfhar hid her theft included creating investment account statements in June and July, months reviewed by the auditors, and avoiding transfer funds from county accounts to personal accounts.
The state is blaming county officials for not revealing the lack of funds.
The lawsuit points to the board breaking down on its failure to review Gutfahr’s financial report, including a cash settlement report and her monthly treasurer’s report.
The board requires that all departments submit monthly reports. This included the Treasurer’s office with a cash settlement report between the bank, investment account and the Treasurer’s report, the Auditor’s Office said in it. Story 2024 Regarding the investigation into Gutfhar’s embezzlement.
The board received a settlement report during the meeting, lAwsuit points out the agenda and the minutes show that the board reviewed them. Unlike cash settlement reports, the lawsuit alleges that the board never received a monthly treasurer’s report. The suit alleges that the board’s clerk or the elections director will grant receipt of the treasurer’s report and return it to the treasurer’s office without sending a copy to the board.
The lawsuit alleges that board members knew they had not received the report.
The state lawsuit pointed to fraud in a cash adjustment report detailing the UBS Financial Services investment account, which was supposed to be flying the flag. The balances in investment accounts usually fluctuate from month to month, but UBS investment account balances did not fluctuate, the lawsuit says.
In another example, Gutfahr recycled the amount of balance for different months in her report. Cash settlement reports from February 2021 and February 2022 show several accounts with the same balance for both months, adding that the account balances have been forged.
“If someone in the county had reviewed Gutfer’s monthly cash settlement report, they would have noticed the irregularity and discovered Gaffer’s behavior,” the lawsuit says.
The state also accused the county of failing to update its “inadequate and outdated” accounting system that failed to record Gutfer’s wire transfers and deleted data at the end of each month, the lawsuit said.
The auditor said her office has reported a lack of internal control over the information technology system since 2009.
The nation claims abetted gutfahr, helped by former staff
Maria Acuna, the former Chief Deputy Treasurer of the County, was the only staff member in the lawsuit accused of causing fraud. The lawsuit alleges that Gutfahr, who appointed Acuna in 2014, did not like Acuna’s predecessor because he wanted to manage the department’s processes.
The lawsuit alleges that ACUNA was “not fully qualified for liability” in her job.
Acuna was accused of sharing a password and a multifactor token with Gutfahr, allowing former county treasurer to bypass the two-stage approval process and wire stolen funds.
Gutfahr reportedly lied to Acuna and told her that he was transferring funds to Wells Fargo’s investment account at a more favorable interest rate.
Acuna once questioned her while Gutfhar stole public funds. In November 2021, the lawsuit stated that $225,000 was transferred from the county office to a checking account.
Gutfhar reportedly told Acuna that she allegedly filed a lawsuit saying that she mistakenly transferred the account “not from the county treasurer’s money market savings account, but from the county treasurer’s checking account.”
Acuna followed up Gutfahr once because no money had been returned.
“ACUNA was unable to record transactions through the county treasurer’s accounting system and $225,000 was not returned,” the lawsuit alleges.
Gutfar gave gifts to some officials, the lawsuit states.
Gutfahr gifted money and other items to officials at the treasurer’s office with the stolen funds, the lawsuit alleges.
Tax officer Susan Gonzalez received a gift for her son’s wedding, the lawsuit alleges. Gutfahr also reportedly took place at one of the ranches that Gonzalez’s daughter’s wedding with the money she embezzled. Gonzalez and Guffhar reportedly travelled for their long weekend stay in San Carlos, Mexico.
The lawsuit claims that ACUNA will provide $6,000 loan for new air conditioners from Gutfahr, a $3,000 car for Acuna sisters, and financial support for paying mobile phone bills from 2019 or 2020.
Gutfahr also paid the personal bill for Gloria Patricia Ibarra, the county’s former senior secretary, giving Ibarra’s children $100 for their birthday and $1,500 for Ibarra’s birthday, the lawsuit alleges.
The lawsuit also alleges that Guffhal had “personal relationships” with an unnamed adviser who handled some of the county’s investments, and attempted to provide one of the family homes around February 2023.
The lawsuit states that the authorities’ spouse on the list of defendants and that Acuna and others acted on behalf of the married community, saying they received benefits from embezzlement.
Other officials accused of negligence, lawsuit alleges
The lawsuit accused several county officials of enriching Gutfahr’s plan, and the negligence helped theft not to be detected for a long time.
The state alleges that two former staff members and one current official were tasked with overseeing the operations of the county. Jennifer St. John, former Director and County Manager of Management Services. Jesus Valdez, former county manager.
The state also accused three former and three current members of the County Board of Supervisors of various types of negligence in Gutfahr’s oversight for failing to review Gutfahr’s report and not suspend and investigate her before the suspension.
Two weeks after the county bank reported a suspicious wire transfer on April 3, 2024, the county removed approved signatories for the Treasurer’s Office, and according to the lawsuit, the county suspended Guffer before filing his resignation.
The state claims the county is obligated to remove her from work in connection with her “misuse of funds,” but it argues that she should have requested an investigation into her actions before suspending her.
Reach the reporter with sarah.lapidus@gannett.com. Reports from the Republic of Southern Arizona are funded in part with grants from the US report. Support Arizona news coverage with tax-deductible donations supportjournalism.azcentral.com.
