There is more than $39 million missing from Santa Cruz County coffers — a massive figure that eclipses the $4 million originally reported last month in the Nogales International.
Angela Gervasi has been reporting the story, which started when she uncovered county emails reporting the missing $4 million that was transferred into a bank account registered to the former county treasurer.
Gervasi joined The Show to talk more about it.
Full conversation
LAUREN GILGER: OK, so we had you on The Show last month to talk about this $4 million missing in Santa Cruz County. Now it's more than $39 million. This was disclosed in a closed door executive session, right? How did you find out about it?
ANGELA GERVASI: Yeah. So one of the most interesting and frankly bizarre things about this story is how the information was disclosed. On Monday, the Santa Cruz County, county supervisors had scheduled an executive session with a financial firm called B Riley Advisory Services. And you know, typically an executive session is closed off to members of the media and the public in general.
However, for reasons that still remain totally unclear, the session was broadcast on Youtube and it was left up for several hours and eventually taken down on Monday afternoon
But it had accumulated the last time I looked at it more than 50 views.
GILGER: Wow. OK. So let's talk about this $39 million. Where did the money go? Like this is tied, as we said to the former county treasurer. How?
GERVASI: Yeah. So, you know, a lot of the money, according to this presentation given by B Riley Advisory Services, about three quarters of this $39 million figure came from school districts in Santa Cruz County and a lot of the money was transferred to an account known as Rio Rico Consulting and Real Estate, which is registered under the name Liz Gutfahr and Liz Guar was the Santa Cruz County treasurer for about 11 years before her resignation in April.
GILGER: Has she said anything about this at this point, Angela?
GERVASI: She has not, she didn't return, you know, calls and voicemails from the Nogales International and we have not really heard a statement. And what's also really interesting is that Santa Cruz County has yet to really acknowledge the fact that this video was published, that people saw it, that school districts saw it and you know, the general public now knows about this figure.
I spoke with County Manager Jesus Valdez yesterday afternoon and he said they were unable to provide a comment for the time being.
GILGER: Wow. OK. So tell us more about what we learned about this money during this executive session. When did it go missing, all at once? I'm guessing not.
GERVASI: Yeah. Yeah. It's a really interesting progression. So Liz Gutfahr was elected in 2012. Her first term began January of 2013. And according to this presentation, money started, you know, essentially vanishing in Gutfahr’s second year in office. So 2014. And, you know, there was even a graph presented where you could just see this sort of steady progression where more and more money was siphoned from county funds. In her final full year in office, 2023, more than $11 million went missing from Santa Cruz County, which was the largest chunk of money to go missing, you know, before her resignation.
GILGER: OK. So then I have to ask, how did this happen? Like, aren't there checks and balances to make sure this kind of thing doesn't happen? Like, have there been audits?
GERVASI: Yes. So the Auditor General, Arizona Auditor General, does perform an annual routine single audit of Santa Cruz County just like it does with every county in Arizona. And for, I think the first five years of Gutfahr’s time in office, the Auditor General did flag some operational issues, talked about funds that had not been reconciled.
However, in the last few years of her office, the Auditor General did not flag operational issues. There's also been a lot of, you know, our new county treasurer, who was appointed to replace Gutfahr, has described a lot of new checks and balances, for instance. Now, according to Treasurer Alejandro Paz, five people are reconciling the funds whereas it used to be just one person reconciling the funds at Santa Cruz County.
GILGER: OK. So then let's talk about who has been impacted here, $39 million is a lot of money. Where was it supposed to go that it isn't?
GERVASI: Yes. So one thing that has a lot of community members just really frustrated and frankly angry is the fact that three quarters of this money came from local school districts. So for instance, yeah, the Nogales Unified School District has a deficit of more than $11.3 million and the Santa Cruz Valley Unified School District is missing more than $14 million, according to B Riley Advisory Services.
And three superintendents I spoke with this week, you know, as you might imagine, they're incredibly frustrated and they're also just citing a general lack of communication from Santa Cruz County. They did not know about these missing figures until this video was published on Monday.
GILGER: So, yeah, what are the schools having to say about this? I mean, could it affect students? That's a lot of money.
GERVASI: It is a lot of money. Schools are saying they're still determining the impact. It's the timing of it is of course kind of frantic for these schools because they're starting a new school year, I believe next week, but they're still determining the impact.
You know, one superintendent I spoke with, David Lugo of Santa Cruz Valley Unified, said that everything was reconciled on the district's end. So he's wondering now if there was something manufactured on the county's end and we're going to keep monitoring, you know how this happened as the story continues to develop.
GILGER: Last question for you then Angela, have there been charges filed here? Do we know next steps? Criminal charges filed against Liz Gutfahr?
GERVASI: I checked about 30 minutes ago [on Thursday, Aug. 1, 2024] and still nothing is showing up in federal court documents. You know, I spoke with a former IRS special agent, Brian Watson, who said that it, that's really typical in white collar crimes. It can really take time to build a case. However, community members here are incredibly frustrated and a lot of people have voiced concerns that, you know, some of this money just might not be recovered.
