A southern Arizona county is suing its former treasurer for allegedly embezzling more than $39 million over a decade and is demanding a jury trial.
Santa Cruz County filed a civil lawsuit Thursday in Pima Superior Court against former county Treasurer Elizabeth Gutfer, her husband and son, and other unnamed individuals and entities.
County officials said the investigation is ongoing, including by the FBI, the Department of Justice and local authorities.
“For over a decade, Gutphul used county funds as his own piggy bank, purchasing a ranch, vehicles and other items to support a lavish and extravagant lifestyle,” prosecutors alleged in court documents.
The county is pursuing more than a half-dozen charges, including fraud, embezzlement, civil conspiracy, organized crime and breach of fiduciary duties, and will also pursue alternative charges of negligent misrepresentation and unjust enrichment if Gutphul and the other defendants are not convicted.
The county claims the theft caused it to lose $1.35 million in profits.
The county is seeking compensation for lost funds and trusteeship over all of the properties Gutfer purchased with county funds.
“The County is suing Gutfer to recover the monies he wrongfully received, as well as his attorneys' fees and costs,” the county said in the lawsuit. “Because Gutfer's conduct is so egregious, the County is also seeking treble damages under Arizona's Anti-Organized Crime Act.”
The suit was filed in Pima County Superior Court because Gutfer's company, Rio Rico Consulting LLC, which received the allegedly embezzled funds, is headquartered in Pima County, where one of Gutfer's residences is also located, according to the complaint.
The alleged theft came to light in April when the county's bank, JPMorgan Chase, reported 11 fraudulent transactions totaling $375,000 to the county. The discovery prompted an investigation by the federal Department of Justice, the Department of Justice, the Arizona Office of the Auditor General and Santa Cruz County.
Guftar, a Democrat, did not respond to a request for comment, and no legal documents addressing the allegations were listed in an Arizona Superior Court database.
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 agencies, including the school district and fire district.
Prosecutors said in court documents that those funds were diverted to one of her companies, Oro Valley-based Rio Rico Consulting.
The county alleged that she had several other companies that helped embezzle public funds or owned property purchased with county funds.
Also named as defendants in the suit are unidentified individuals referred to as “John Doe and Jane Doe IX” who allegedly conspired and aided in the alleged embezzlement. The suit also names “John Doe Corporation IX,” an unidentified corporation that allegedly unlawfully received county funds or participated in the theft of funds.
The lawsuit alleges that Gutfer falsified documents and investment reports to conceal the misappropriation of funds.
The lawsuit accuses Gutfer of using three strategies to successfully evade detection for so long: misappropriating funds in certain months, falsifying financial statements by showing false total amounts and falsifying investment reports.
“Gutfer was able to evade detection for so long through accounting tricks and outright fabrications,” state court documents state.
During an annual audit by the Arizona Auditor General, state officials reviewed financial statements for the last June of the previous fiscal year, which allowed Gutfer to avoid diverting funds to Rio Rico Consulting in June and July.
Gutphard also allegedly misreported daily warrant items to a third-party consultant from 2018 through 2023 to avoid detection.
““Guttfer alleged that 'daily warrants' that were settled in bank accounts but not shown in the general ledger were far higher than they actually were,” the complaint states. This allowed her to make up shortfalls in her declining account balances and conceal transfers to Rio Rico Consulting LLC.
As the theft allegations increased throughout the decade, her methods of evading detection became more sophisticated, reportedly involving falsifying investment banking statements.
“She could no longer disguise her Rio Rico wires by merely falsely reporting the daily number of outstanding warrant adjustments,” the complaint states.
The county is still investigating the allegedly falsified statements, but found five statements made between 2021 and 2023.
As part of the audit cash reconciliation process, Gutfer provided a statement of his UBS investment account to the consultant in October or November 2021. According to court documents, the statement, dated June 2021, showed a balance of $14 million, but investigators found that Gutfer didn't open an account with investment bank UBS Financial Services until October 2021, months after the statement's date.
She then transferred $14 million from a county operating account to an investment account at UBS, according to court documents.
The lawsuit alleges that Gutphal used an actual UBS statement from October showing a balance of $14 million to create a backdated false document showing the same balance from June.
The alleged evidence points to a variety of approaches
Evidence of falsification on the five statements differed on each statement, including the use of her company's mailing address in Tumacacori and the Rio Rico address of UBS Financial Services Inc. instead of the bank's actual Phoenix address. Other changes were also made on the statements, including changing the name and phone number of the financial advisor assigned to the account.
A second set of falsified financial statements, provided to a third-party consultant in June 2022, had accurate fund balances but incorrect other information. One of the discrepancies included contact information for a UBS financial advisor associated with the account.
The county alleges that the phone number listed on the second statement belonged to a former employee of Gutphul's Rancho San Cayetano, and was intended to ensure that auditors would contact Gutphul or his associates rather than UBS.
The lawsuit alleges that Gutfer was able to avoid detection by waiting until after he received legitimate investment reports from UBS before submitting them to a third-party consultant.
“Mr. Gutfer was able to get away with this because he did not actually provide the investment reports to the third-party consultants until he received UBS's legitimate investment reports,” the lawsuit alleges.
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 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 found 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.
Contact the reporter sarah.lapidus@gannett.comThe Republic's coverage of Southern Arizona is funded in part by a grant from Report for America. Support Arizona news coverage with a tax-deductible donation. supportjournalism.azcentral.com.
