TUCSON, Ariz. (13News) – The Arizona Auditor General has released the results of a financial investigation into approximately $40 million that disappeared from Santa Cruz County accounts.

April 2024, County Treasurer Elizabeth “Liz” Gutfer resigned after several financial irregularities were uncovered.

In August, Gutphal is accused of receiving nearly $40 million for his personal gain.

According to the AAGO investigation, between March 2014 and March 2024, Gutphal made at least 182 “unauthorized wire transfers from two county accounts to a business bank account connected to her.”

“To conceal his actions, the Treasurer allegedly failed to record unauthorized wire transfers in the County Treasurer's accounting system, lied to county entities, officers and employees, the County's financial consultants and the Arizona Auditor General, and submitted numerous false investment statements, cash reconciliation statements and Treasurer's reports,” AAGO said in a statement.

AAGO also made nine recommendations to county officials to “improve internal controls over public funds to help prevent and detect fraud.”

The report also made two recommendations to the Arizona Legislature: “Consider amending statutes to allow the Department of Finance direct access to financial institution records and require newly elected or appointed county treasurers and chief deputy treasurers to meet minimum training requirements.”

AAGO alleged that Gutfahl circumvented internal controls to make the wire transfers.

“The Chief Deputy Treasurer told us that the Treasurer requested access to her password and multi-factor token authentication device so that the Treasurer could transfer funds into a Wells Fargo investment account that offered a more favorable interest rate than the State Treasurer's LGIP (Local Government Investment Pool),” AAGO wrote in the report. “As a result, the Treasurer and Chief Deputy Treasurer shared passwords and provided each other with access to the token authentication device. By ignoring this internal control, the Treasurer developed a way to make multiple fraudulent wire transfers from the County Treasurer's office account without detection.”

The report said Gutphard may have used the stolen money to provide loans and gifts to other county employees.

“Several of these employees admitted to receiving personal financial assistance and gifts from the Treasurer,” AAGo wrote. “In particular, the Chief Deputy Treasurer said he received a $6,000 'loan' from the Treasurer to purchase a new air conditioner and that he intended to repay the 'loan' after he left the company. The Chief Deputy Treasurer also said he received a car from the Treasurer worth $3,000 for his sister, and that the Treasurer had been paying for her personal cell phone since 2019 or 2020.”

The senior secretary told AAGO that Gutphard “occasionally paid personal bills, gave $100 to each of his children for their birthdays and gave $1,500 to the senior secretary for his own birthday.”

The taxman alleged that Gutfall “gave substantial gifts to his son when he got married” and that he hosted his daughter's wedding at his ranch, and that she and Gutfall traveled together to San Carlos, Mexico.

The Santa Cruz County Board of Supervisors released the following statement in a statement:

“We are deeply disappointed that instead of working constructively to provide relief for Santa Cruz County residents, the Arizona Auditor General released his report as a blatant attempt to minimize responsibility for allowing former Santa Cruz County Treasurer Elizabeth Gutfer's theft of approximately $40 million to go unchecked for a decade.”

Looking back at the Auditor General's inaction in this matter over the past decade, it is clear that he has not applied basic auditing principles in his oversight of the Santa Cruz County Treasurer. Thus, the Auditor General's true motive in issuing this “report” is clear: to shift the blame from his own failures.

Last week, on August 19, 2024, the County filed a Notice of Claim with the Auditor General, accusing the office of failing to comply with basic accounting principles and overlooking Mr. Gutfer's misconduct. In response to the County's Notice of Claim, the Auditor General rushed to release this so-called “investigative report” that is clearly intended to deflect attention from the Auditor General's failure to oversee Mr. Gutfer.

Notably, the Auditor General's own cover letter to the purported report explicitly states that the report was not prepared in accordance with generally accepted accounting principles (as have been the case for the past decade) and that third parties should not rely on the report's veracity. Moreover, the report was issued without consultation with county officials, which runs counter to the established practice of the Auditor General meeting first with the governmental entity being audited to ensure that the entity (in this case the county) has an opportunity to challenge the findings and respond to recommendations.

“The fact that this long-standing practice was not followed here is just another example of the Auditor General neglecting his basic audit duties and attempting to avoid financial responsibility to the residents of Santa Cruz County. The County intends to pursue a Notice of Claim against the Auditor General through the Court and have a jury decide the extent of the Auditor General's liability for failing to fulfill his duties to the residents of Santa Cruz County.

The County further demands that the Auditor General retract his self-serving and misleading report.”

Be sure to subscribe to the 13 News YouTube channel: www.youtube.com/@13newskold

Copyright 2024 13 News. All rights reserved.