More than $4 million has reportedly disappeared from Santa Cruz County bank accounts and the money was transferred to another account registered to a former county treasurer.
Angela Gervasi has been covering the case for Nogales International and has asked how the lost funds will affect local schools and fire departments. She spoke in more detail about the investigation on her show.
Complete conversation
Lauren Gilger: So let's start with this missing $4 million. What happened?
Angela Gervasi: Okay. So let's start from the beginning. Around April 11th, Santa Cruz County Treasurer Elizabeth “Liz” Gutfer officially resigned from her position, effective the next day, April 12th. Gutfer was elected to the position in 2012, and according to county records, she was up for re-election later this year. So the resignation seemed a bit abrupt. About six days later, on April 18th, the Santa Cruz County Board of Supervisors released a joint statement revealing that the county and the FBI were working together to investigate fraud in a county bank account, which Gutfer herself controlled.
Gilger: Ok, this didn't all happen at once, there were a few moves over the course of about 6 months.
Gervasi: Yes. What we know at this point is that there were approximately 11 wire transfers between approximately September 2023 and late March 2024. Each transfer was for approximately $375,000. That means a total of $4.125 million was slowly moved out of this county bank account and into another bank account registered under the name Elizabeth Gutfer called Rio Rico Consulting and Real Estate.
Gilger: Okay. Okay. So where are these funds coming from? Are they coming out of the county budget?
Gervasi: Well, one of the primary jobs of the County Treasurer's Office is to manage the cash flow of tax revenue from Santa Cruz County taxpayers and make sure that that revenue flows appropriately into the taxing districts. Taxing districts include the K-12 school district, the community college district, the local fire protection district, and so they had an account that held all of that money together, and that's where the money was drawn from.
Gilger: Okay. So tell me a bit more about this former county treasurer. Has she ever said anything about this?
Gervasi: Liz Gutfer has not responded to Nogales International's request for comment, and it's also worth noting that as of this morning she has not been formally charged with any crimes. [June 11, 2024]Federal court records, which I checked about an hour ago, say that county supervisors learned of these financial irregularities in early April and told Gutfer they would suspend him with pay for 120 days while they investigated. But Gutfer chose to step down, citing health and personal reasons in his formal resignation letter.
Gilger: So let's talk about the potential impact to county resources. You mentioned local schools, fire departments, etc. Are you concerned about the impact on your budget? It's significant.
Gervasi: Yes, Lauren, it certainly seems like there is a lot of concern here. Patagonia Public Schools Superintendent Kenny Hayes expressed anger and confusion, but said there are no layoffs or anything like that at this time. There seems to be a lot of unknowns. For example, Nogales Unified School District Superintendent Angel Canto said she was instructed by the county to review NUSD records going back to 2013, meaning school and fire officials seem to be being told these patterns may go back even further. Canto said in an email that she asked county officials how much the total amount of money lost was, and was not given a figure, other than “repeatedly stating it would be well over $4 million.”
Gilger: Okay. I don't know the amount, but it's over $4 million that's been documented so far. The school district and fire district are going back 10 years to look at financial records. Can you tell me how far along the federal investigation is? This is being investigated by the FBI, understand?
Gervasi: Yes. Around the time Liz Gutfer resigned, the newspaper received a number of calls from local residents who had seen federal agents near Gutfer's property. The Santa Cruz County Sheriff's Office has since confirmed that federal agents were saying they were executing a search warrant on the property. However, it appears that the FBI investigation is ongoing, and as I said, no arrests have been made, but they are working with the county to further investigate the matter. However, we still do not have the full amount or any further information on the amount of over $4.125 million.
We are attempting to make public records requests to gather and pull more information on this matter, but at this time, the situation appears to be ongoing. The County has also hired a forensic audit firm to conduct another audit of the Treasurer's office.
Gilger: Do they feel they will be able to get this money back once this investigation is completed?
Gervasi: This seems like a big unknown, too. I mean, if you look at other embezzlement cases involving governments, it seems like it would be very difficult to get that money back. So this seems like a big unknown.
A transcript of KJZZ's The Show will be produced by deadline. This text may not be in its final form. The official record of KJZZ's show is the audio recording.
