The county of Santa Cruz accuses Elizabeth Gutfahr of stealing funds totaling more than $39 million over the years.
PHOENIX — A southern Arizona county has filed suit against its former treasurer, who had a history of tax liens, accusing her of embezzling more than $39 million over a decade by diverting taxpayer funds to her own business accounts and personal bank accounts.
The alleged theft by former Santa Cruz County Treasurer Elizabeth Gutfahr was discovered in April after JPMorgan Chase, Santa Cruz County’s bank, alerted the county to 11 fraudulent transactions valued at $375,000, triggering investigations by the FBI, Department of Justice, Arizona Auditor General and Santa Cruz County.
“In summary, for more than a decade, Gutfahr used County funds as a piggy bank to finance an opulent and extravagant lifestyle – purchasing multiple ranches, vehicles and more,” prosecutors allege in a complaint filed in Pima County Superior Court.
Santa Cruz County is seeking multiple charges, including fraud, embezzlement, civil conspiracy, organized crime and breach of fiduciary duty. It is also seeking alternative charges of negligent misrepresentation and unjust enrichment if Gutfahr and the other defendants are not found guilty.
The county says it lost $1.35 million in interest as a result of the theft and is seeking compensation for the missing funds as well as control of all assets Gutfahr purchased with county funds in the form of a trust.
The alleged fraud in Arizona is the latest to sweep the country as local governments grapple with scammers in their own offices embezzling funds meant for schools, health services and fire departments. Since last month, officials in California, Alaska and Virginia have been convicted or found guilty of millions of dollars in embezzlement, with the alleged fraud in Santa Cruz County appearing to be one of the largest thefts ever reported.
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Companies owned by Gutfahr and her family involved in conspiracy
During the investigation into the missing money, it emerged that Gutfahr had allegedly diverted funds from the district’s savings account that were intended to be used as interest income for the district’s offices and institutions, such as school and fire departments.
Prosecutors allege in court documents that funds were diverted to one of her companies, Rio Rico Consulting, based in Oro Valley, a suburb about 10 miles north of Tucson, Arizona. The county alleges she has several other companies that either helped her embezzle public funds or owned the assets purchased with county funds.
The defendants include Gutfahr, her husband and her son, as well as several other unnamed individuals and companies who are accused of receiving county funds or aiding and abetting the theft.
The lawsuit alleges that Gutfahr managed to avoid detection by falsifying investment statements, misrepresenting total holdings in financial reports and diverting money in certain months. During the Arizona Auditor General’s annual audit, the state agency reviewed financial statements from June of the previous year, so Gutfahr avoided diverting funds to Rio Rico Consulting in June and July, prosecutors allege.
“Through accounting tricks and outright lies, Gutfahr was able to evade detection for so long,” the state court documents state.
Gutfahr, a Democrat, did not respond to requests for comment from The Arizona Republic, part of the USA TODAY Network. As of Thursday, no documents related to the allegations had been posted in the Arizona Superior Court database.
Gutfahr has a history of tax liens
According to court documents, Gutfahr and her husband have had tax liens filed against them in the past. The first, filed in 2011, was lifted. Prosecutors said the second was filed against them in 2013, and the third was filed in 2015 for $160,848 and lifted two years later.
Gutfahr was elected county treasurer in 2012 and re-elected in 2016 and 2020. Before the embezzlement allegations came to light, she ran unopposed in the 2024 election.
She previously worked in the real estate business in Santa Cruz County. Investigators found that although she had an independent broker license number issued to her in 2008, the employer associated with the license, Rio Rico Consulting & Real Estate, is not registered with the Arizona Corporation Commission.
GAO: At least $233 billion in taxpayer money is lost to fraud each year
While there is little data on the extent of embezzlement targeting local governments, federal charges point to a wide range of alleged schemes across the United States.
In California, a former public school district official was sentenced to 70 months in prison after being found guilty of embezzling more than $16 million over several years. Orange County prosecutors said they seized a Yorba Linda, California, home, a 2021 BMW, 57 luxury designer bags, jewelry, designer clothing and shoes, and eight bottles of luxury Clase Azul Ultra tequila.
Also in July, a man pleaded guilty to embezzling $4 million from the Virginia Department of Health while serving as deputy director of the city’s Office of Emergency Medicine. And a former treasurer for the city of Houston, Alaska, was sentenced to two and a half years in prison for embezzling more than $1 million from the city into his bank account.
Recent data shows that federal taxpayer money is also being stolen, while researchers are calling on the government to take stronger action to address the chronic problem.
In a report released in April, the first of its kind, the U.S. Government Accountability Office estimated that the federal government loses between $233 billion and $521 billion annually to fraud. The study concluded that federal agencies should develop policies to improve fraud-related data and called on the Treasury Department to figure out how to expand fraud estimates.
“Given the magnitude of this problem, a government-wide approach is needed to address it,” the researchers write.
Contributor: Max Hauptman, USA TODAY
The Arizona Republic’s coverage of Southern Arizona is funded in part by a donation from Report for America.
