PHOENIX — A southern Arizona county has filed a lawsuit against a former treasurer with a history of withholding taxes, alleging he misappropriated more than $39 million in taxpayer money over more than a decade by funneling it into his own business and personal bank accounts.
The alleged theft by former Santa Cruz County Treasurer Elizabeth Gutfer came to light in April when Santa Cruz County's bank, JPMorgan Chase, reported 11 fraudulent transactions totaling $375,000 to the county, sparking an investigation by the FBI, the Department of Justice, the Arizona Office of the Auditor General and Santa Cruz County.
“In essence, for over a decade, Gutphul used county funds as a piggy bank to purchase items such as a ranch and vehicles to live a lavish and extravagant lifestyle,” prosecutors charged. The complaint was filed in Pima County Superior Court.
Santa Cruz County is pursuing several charges, including fraud, embezzlement, civil conspiracy, organized crime and breach of fiduciary duties, as well as alternative charges of negligent misrepresentation and unjust enrichment, if Gutfall and the other defendants are not convicted.
The county claims it has lost $1.35 million in interest as a result of the theft and is seeking compensation for the lost funds and trust control over all properties Gutfer purchased with county funds.
The Arizona fraud is the latest in a series of cases across the country as local governments grapple with insider fraud that has misappropriated funds meant for schools, health services and fire departments. Since last month, public officials in California, Alaska and Virginia have been convicted or pleaded guilty to millions of dollars in embezzlement, but the Santa Cruz County case appears to be the largest reported case of theft.
“Luxury homes, luxury cars, luxury designer clothes.”California school official convicted of embezzling more than $16 million in cash hidden in refrigerator
Gutfahr's companies and her family are involved in the plan
The investigation into the missing funds revealed that Gutfault allegedly misappropriated funds from county savings accounts to make interest payments to county departments and county entities, including the school district and fire district.
Prosecutors allege in court documents that the funds were diverted to one of her companies, Rio Rico Consulting, which is based in Oro Valley, a suburb about 10 miles north of Tucson, Ariz. The county alleges she owns several other companies that helped embezzle funds or owned properties purchased with county funds.
The defendants include Gutphard, her husband and son, and several other unnamed individuals and corporate entities accused of receiving or aiding in the theft of county funds.
The lawsuit alleges that Gutfer avoided detection by falsifying investment reports, misrepresenting fund balances in financial statements and misappropriating funds in certain months. During an annual audit by the Arizona Auditor General, state officials reviewed financial statements from the end of June of the previous year, allowing Gutfer to avoid misappropriating funds to Rio Rico Consulting in June and July, prosecutors allege.
“Gutfer was able to evade detection for so long through accounting tricks and outright fabrications,” state court documents state.
Gutfer, a Democrat, did not respond to a request for comment from The Arizona Republic, a USA Today Network subsidiary. As of Thursday, no documents addressing the allegations were listed in the Arizona Superior Court database.
Gutfahr has a history of tax liens.
According to court documents, Gutphard and her husband have had tax liens filed against them in the past. The first was filed in 2011 and was released. A second was filed in 2013 and a third, for $160,848, was filed in 2015 and released two years later, prosecutors said.
Gutfer was elected county treasurer in 2012 and then re-elected in 2016 and 2020. Before the embezzlement allegations came to light, he was running unopposed for the 2024 election.
She previously worked in real estate in Santa Cruz County. Investigators discovered that although she had a self-employed broker's license number issued in 2008, the employer associated with that license, Rio Rico Consulting & Real Estate, Inc., was not registered with the Arizona Corporation Commission.
GAO: At least $233 billion in taxpayer money lost to fraud each year
There is little data on the scale of embezzlement cases targeting local governments, but federal lawsuits point to numerous cases of embezzlement across the United States.
In California, a former public school district employee was convicted of embezzling more than $16 million over several years and sentenced to 70 months in prison. Orange County prosecutors announced they had seized a home in Yorba Linda, California, a 2021 BMW, 57 luxury designer bags, jewelry, designer clothing and shoes, and eight bottles of premium Azul Ultra tequila.
Also in July, a man Embezzled $4 million He received his degree from the Virginia Department of Health while working as deputy director of the Department of Health’s Bureau of Emergency Medical Services. City Treasurer of Houston, Alaska; He was sentenced to two and a half years in prison for embezzling more than $1 million from the city and depositing it in his own bank account.
New data shows federal taxpayer money is also being stolen, and researchers are calling on the government to do more to address this chronic problem.
The first report, released in April, U.S. Government Accountability Office estimates The federal government loses between $233 billion and $521 billion annually to fraud. The study concluded that federal officials should develop guidelines to improve fraud-related data and called on the Treasury Department to identify ways to expand fraud estimates.
“Given the scope of this problem, a whole-of-government approach is needed to address it,” the researchers wrote.
Contributor: Max Hauptmann, USA TODAY
The Arizona Republic's coverage of Southern Arizona is funded in part by a grant from Report for America.
