TUCSON, Ariz. (13News) – Former Santa Cruz County Treasurer Elizabeth Gutfahr pleaded guilty to three felonies in federal court on Thursday, Nov. 21.

Gutfahr was accused of stealing nearly $40 million from the county over a 10-year period and admitted embezzlement, money laundering and tax evasion.

Her sentencing was set for February 6, 2025, and she agreed to repay the money to the county. The governing body set up at the start of the case said it believed only a third of the funds would be recovered.

Santa Cruz County has filed a civil lawsuit against Gutfahr. It is unclear how the plea deal will affect the civil case. But the county has already sued the state of Arizona for mismanagement.

The news spread quickly in Nogales, and 13 News was able to speak with residents and county officials.

“I feel bad for her, but I also think she should have known better,” said Santa Cruz County resident Elvia Rodriguez.

Gutfahr admitted in court Thursday that he stole the money and used it to buy real estate, operate a ranch and cattle business, renovate the ranch, buy at least 20 cars and pay for personal expenses. .

Rodriguez said part of the blame lies with the county.

“County supervisors should have had better oversight of our funds,” she says.

Santa Cruz County Board of Supervisors Chairman Manny Ruiz said the county has already begun internal work to change the way it handles public money, but argued much of the responsibility lies with the state Legislature.

“This is what happens when you don’t see the big picture in front of you,” he says. “At the end of the day, it is the Legislature that sets the duties of each elected official, and I hope that Congress can put some mechanism in place there so that we can strengthen the functioning of the Board and have better checks and balances. ” No matter who the treasurer is. ”

You can read the plea agreement below.

Previous coverage of this story is below and in the video player.

The Arizona State Auditor’s Office has announced a financial investigation into the disappearance of approximately $40 million from Santa Cruz County’s accounts.

In April 2024, County Treasurer Elizabeth “Liz” Gutfahr resigned after several financial irregularities were discovered.

In August, Gutfahr is accused of accepting approximately $40 million for personal benefit.

According to AAGO’s investigation, Gutfahr made at least 182 “fraudulent wire transfers from two county accounts to bank accounts of businesses associated with her” from March 2014 to March 2024.

“To cover up her actions, the treasurer failed to record her fraudulent wire transfers in the county treasurer’s accounting system, lied, and submitted numerous false investment statements, cash adjustments, and financial statements. AAGO said in a release: “The county financial consultant; and/or the Arizona State Auditor General’s Office.”

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

It also requires the Arizona Legislature to amend the statute to provide the department with direct access to financial institution records and to require newly elected or appointed county treasurers and chief deputy treasurers to meet minimum training requirements. There were also two recommendations to consider.

AAGO said Gutfahr circumvented internal controls and made the wire transfers.

“The Principal Deputy Treasurer told us that the Treasurer requested access to her password and her multi-factor token authentication device because the Treasurer was seeking a better interest rate than the State Treasurer LGIP (Local Government). AAGO said in its report that the funds could be transferred to Wells Fargo investment accounts provided by the Government Investment Pool. “As a result, the Treasurer and Principal Deputy Treasurer shared passwords with each other and kept token authentication devices accessible to each other. “He created a method to repeatedly make fraudulent wire transfers from the County Treasurer’s Office account.”

Gutfahr may have provided loans or gifts to other county employees from the stolen money, the report said.

“Some of these employees admitted to us that they had received personal financial assistance or gifts from the Secretary of the Treasury,” AAGo wrote. “Specifically, the Principal Deputy Treasurer stated that she had received a $6,000 ‘loan’ from the Treasurer for the purchase of a new air conditioner and that she intended to repay that ‘loan’ upon retirement.” The Chief Deputy Treasurer also said she received a car valued at $3,000 from the Treasurer for her sister’s use and that the Treasurer has not paid for her personal cell phone since 2019 or 2020. He said he is doing so. ”

A senior secretary told AAGO that Gutfahr “occasionally paid personal bills, gave his children $100 on their birthdays, and gave his senior secretary $1,500 on his own birthday.” he said.

One tax official claimed that Mr. Gutfahr “gave a generous gift to his son when he got married” and that Mr. Gutfahr hosted his daughter’s wedding at his ranch. She also said she traveled with Mr. Gutfahr to San Carlos, Mexico.

The Santa Cruz County Board of Supervisors issued the following statement:

“The Arizona State Comptroller’s office is seeking to minimize responsibility for former Santa Cruz County Treasurer Elizabeth Gutfahr’s nearly $40 million theft, which she allowed to go unchecked for 10 years without working.” We are extremely disappointed that they chose to issue this purported report.”We are working constructively with Santa Cruz County to improve the health of our residents.

In reviewing the Auditor General’s inaction in this matter over the past decade, it is clear that the Auditor General has failed to utilize basic auditing principles in his oversight of the Santa Cruz County Treasurer. Therefore, the true purpose of the Board of Audit in issuing this “report” is clear: to escape responsibility for its own failures.

Last week, on August 19, 2024, the county sent a notice of claim to the auditor general, holding the auditor responsible for failing to expose Mr. Gutfahr’s misconduct and failing to comply with basic accounting principles. Submitted. In response to the county’s notice of claim, the comptroller’s office rushed to release what it called an “investigative report,” apparently designed to distract from the comptroller’s failure to oversee Mr. Gutfahr. It is.

Of note is the Auditor General’s own cover letter for the purported report, stating that the report was not conducted in accordance with generally accepted accounting principles (as with audits over the past decade); It makes clear that third parties should not rely on the truth of the report. Additionally, the report was issued without consultation with county officials, which means they first meet with the agency being audited to ensure the agency (in this case, the county) has an opportunity to object. This is contrary to the established practice of the Auditor General. Has the ability to understand factual findings and respond to recommendations.

The fact that this long-standing practice was not followed here is just another example of the Comptroller’s Office neglecting its basic audit duties and attempting to avoid financial responsibility to Santa Cruz County residents. The county plans to pursue the notice of claim against the auditor through the court system and have a jury decide the extent of the auditor’s liability for failing in his duties to the residents of Santa Cruz County.

The county is also asking the auditor’s office to retract its self-serving and misleading report. ”

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