Santa Cruz County in southern Arizona has been rocked in recent months by revelations that a former county treasurer allegedly embezzled $39 million from the county coffers.

The case unfolded for more than a decade under the noses of both county supervisors and state auditors, and now has widespread political fallout. Santa Cruz County voters are also unhappy with the supervisors' lawsuit last month against Elizabeth Gutfahr on embezzlement charges.

Arizona Daily Star columnist Tim Stellar joined the show to discuss the incident.

whole conversation

Tim Stellar: So, in fact, I think the entirety of the $39 million that was apparently embezzled was unintentionally leaked the day before, if not two days before the primary. They did a livestream on YouTube. And Nogales International picked it up and heard the disclosure to the audit committee, which was supposed to be confidential, and the amount was $39 million.

Now, the next day, people went to the polls and talked to Bruce Blacker, one of Santa Cruz County's longtime supervisors, and he said he had just been killed on Election Day. That huge amount really upsets you, right?

Lauren Gilger: So you saw the political implications right away. This is an area with a lot of Democrats, right? Can you see the challenger from across the aisle?

Stella: Yes, that's right. There are only three supervisor races in these small counties, as there are challengers in every region. And yes, there are Republican challengers who are trying to push this as the main reason to vote for them.

One of them told me, you know, he's a former state trooper. He knows how to investigate and how not to be driven to the wall. However, they must confront the fact that two of the three Democratic incumbents were defeated in the primaries. So it's not like Republicans aren't fighting in these two races against people who are theoretically responsible for overlooking this embezzlement.

Gilger: Interesting. Tim, what do you get from talking to people locally, at least about the voters, like, like, people are mad at the board for letting this happen on their watch? Do people feel that they should have been able to realize that this amount of money was missing?

Stella: Well, I think some people feel that way. Other people said to me, “I mean, it's just her fault, look, the treasurer did it, and she did it really despicably.'' And, of course, in this There's an interesting dynamic here, where regulators actually filed a legal claim against the Arizona State Auditor General, arguing that the Auditor General should have known about this during the 10-year period they believe. It means that it is. It continued.

In response, the Auditor General issued a report stating that he believes the supervisory authorities should have been aware of this. That's led to a lot of finger-pointing between the board and the state auditor general.

Gilger: Could you give us some details about that? Because there are some interesting things that come up in the claims that the Board made to the Auditor General about why we think the Auditor General should have noticed.

Stella: Well, one important detail was that they were only checking the June and July financial statements. And the treasurer knew it. Therefore, she did not move any funds during June and July. As a result, the Auditor General was unable to capture some of the transfers that he otherwise would have been able to capture. That's what this Santa Cruz County Commission is thinking.

Gilger: That's really interesting. And you also point out in your column that this is not the first time something like this has happened. And that may be contributing to some kind of political backlash against the board.

Stella: Yeah, I always find it funny that people think, well, Nogales, that Santa Cruz County is a border county. It has drugs and other things in it. None of the corruption we're talking about here actually has anything to do with borders.

So the other case you're referring to is that of former Santa Cruz County Assessor Felipe Fuentes. He was convicted and pled guilty to accepting bribes from a large landowner and businessman in the Nogales area in order to lower the valuation of his property. I mean, that happened exactly two years ago. He has also been charged with felony bribery, although the man who allegedly bribed him is still on trial and his case is unresolved.

Gilger: So why didn't the members of the board, including perhaps the people who are about to be ousted here, see this happening and why is this amount of money being taken? What do you say about not noticing?

Stella: In other words, they relied to some extent on people who were not financial experts. So they turned to real people, including the treasurers themselves. There were supposed to be checks and balances in the Treasurer's Office, but they were overridden by the Treasurer and his deputy, and as you know, the Auditor General conducts an annual audit. I looked and there was an audit, I think it was in July, and I was like, “Okay, we're on track.” So they just say, “Hey, we didn't have the means to catch these well-hidden transfers, and we didn't have the means to do so.”

Gilger: So what we're looking forward to here is we're talking about some of the legal claims, the lawsuits, that have been brought by the board, just like us. I have yet to see any charges against the former treasurer here. I also wonder if there are other types of accountability that we can expect to ensure that something like this never happens again.

Stella: So I think the story of this election is really about accountability. So there's a political layer to accountability, and two out of three board members have already been removed. There's also the issue on a political level, the Auditor General vs. Supervisory Board conflict that we talked about. And after that, criminal charges should be filed. I'm sitting about two blocks away from the FBI office in Tucson, and I imagine them sitting there typing out the indictment. In either case, charges will be filed.

And finally, there's the civil case, which is interesting because it moved very quickly. Santa Cruz County filed a lawsuit against the treasurer on Aug. 1, and they have already appointed a receiver to manage the former treasurer's allegedly fraudulently obtained property and other belongings. . I think they're already moving to liquidate those, 17 properties, 150 head of cattle, various things. They are trying to emigrate to get their money back.

Gilger: Wow. Elizabeth Gutfahr, have you heard anything from this former county treasurer or do you know where she is or what she's doing now?

Stella: No, I mean, it's not. Well, I haven't been very involved in this for a long time, but I think we'll hear from her very soon if the civil case moves forward or criminal charges are filed.