Santa Cruz County in southern Arizona has been rocked in recent months by the revelation that their former county treasurer allegedly embezzled $39 million from county coffers.
It happened over the course of a decade under the noses of both county supervisors and state auditors, and now, the political ramifications are playing out. The supervisors filed a lawsuit against the alleged embezzler, Elizabeth Gutfahr, last month, but Santa Cruz County voters are also not happy with them.
Tim Steller, columnist for The Arizona Daily Star, joined The Show to discuss the case.
Full conversation
TIM STELLER: So it was actually, I believe the day before, if not the day before two days before the primary election that there was an apparently unintentional leak of the amount, the full $39 million amount of apparently embezzled money. They left the, the livestream going on YouTube. And the Nogales International picked it up and heard the disclosure to, that was supposed to be secret, to the Board of Supervisors that it was $39 million.
Well, the next day, people went to the polls and, you know, I talked to Bruce Bracker, one of the long standing supervisors in Santa Cruz County, and he said he just got killed on election day because, you know, people were really upset about that huge amount, right?
LAUREN GILGER: So you saw the political ramifications almost right away. This is a heavily Democratic area, right? Are we seeing challengers from the other side of the aisle?
STELLER: Yeah, we are. There's challengers in all the, so there's only three supervisor races in, in these smaller counties. And yeah, there are Republican challengers and they're trying to push this as, as a primary reason to vote for them.
One of them told me that, you know, he is a retired state policeman. He knows how to investigate and not get the wall pulled over his eyes. But they have to run up against the fact that two out of the three incumbent Democrats were defeated in the primary election. And so it's not as if they, in those two races, the Republicans aren't running against the people who are theoretically responsible for missing this embezzlement.
GILGER: Interesting. What's the feeling ,Tim, that you get, at least from talking to folks down there about, about the electorate, like, like people are mad at the board for, for letting this happen under their watch? Do people feel like they should have been able to, to notice this kind of amount of money missing?
STELLER: Yes, I mean, there's some people who feel that way. Other people have said to me, “Well, I mean, it's just her fault, you know, the, the, the treasurer did it and she did it really sneakily.” And that's that, of course, an interesting dynamic within this, is that the supervisors have actually filed a legal claim against the auditor general of the state of Arizona, saying that the auditor general should have caught this during the 10 years in which they think it was going on.
The auditor general in turn issued a report saying that they think the supervisor should have caught it, right. So lots of finger pointing has been going on between the board and the state auditor general.
GILGER: Tell us about some of the details on that because there were some interesting things that came out in that claim filed against the auditor general by the board about why they think they should have noticed.
STELLER: Well, that they were only checking financial statements in June and July, that was one of the key details. And the treasurer knew this. And so she didn't move money out during June and July. And as a result, the auditor general was unable to catch some of the, the transfers that they otherwise would have caught. That's, that's what this Santa Cruz County board thinks.
GILGER: It's really interesting. And you also point out in the column that this is not the first time something like this has happened though. And that might be contributing to sort of a political backlash against the board.
STELLER: Yeah, I always find it funny about, you know, people think,, well, Nogales, it's, you know, Santa Cruz County is a border county. It's got, you know, drugs and all that stuff. None of this corruption that we're talking about here had anything to do really with the border at all.
So, the other case you're referring to is that of, Felipe Fuentes, the former Santa Cruz County assessor. He was convicted, he pleaded guilty to taking bribes from a large landowner and businessman in the Nogales area in order to reduce the assessed value of that man's properties. So that, that happened just two years ago. The, the man who allegedly bribed him is still facing, his case is unresolved, but he's been charged with felony bribery as well.
GILGER: So what have the members of the board, even those maybe who are about to be ousted here, like said about why they didn't see this happening, why they did not notice this amount of money being taken?
STELLER: Well, I mean, they relied to a certain extent on those who, you know, they're not, they're not professionals in finance. So they relied on those who were, which included the treasurer herself. There were checks and balances that were supposed to be in place in the treasurer's office, but they were overridden by the treasurer and her deputy and the auditor general, you know, audits them every year. I took a look and there was an audit from, I think it was July that was like a, “okey dokey, things going well.” So it's, they just say, hey, we, we don't have, we didn't have the wherewithal to, to catch these well hidden transfers.
GILGER: So, I mean, as we look forward here, like we're, we're talking about a couple of legal claims, lawsuits that have been filed by the board. We haven't seen any charges filed against the … former treasurer here yet. And also, I wonder if there are any other kind of layers of accountability we might expect to see so that something like this doesn't happen again.
STELLER: I mean, I think this election story truly is all about accountability. So there's a political layer of accountability, which is two people have already been ousted out of the three on the board. There's also the political level of the auditor general versus Board of Supervisors conflict that we spoke about. And then criminal charges must be forthcoming. I'm sitting here about two blocks from the Tucson FBI office and I, I just imagine them sitting over there typing away on their proposed indictment. In, in any case, there will be an indictment coming.
And then finally, there's this civil lawsuit and that's an interesting one in that it has moved extremely fast. Santa Cruz County filed Aug. 1 against the treasurer, and they're already, they, they have a receiver who was appointed, who is handling the allegedly ill gotten properties and other belongings of the former treasurer. They're already moving to liquidate those, I think 17 properties, 150 head of cattle, different things. They're trying to move to, to get the money back.
GILGER: Wow. Have we heard anything from Elizabeth Gutfahr, from this former county treasurer, or know where she is, what she's doing at this point?
STELLER: No, I mean, I haven't. Yeah, and I haven't been deep in this for a long time, but I imagine we will hear from her pretty soon as the civil case moves on or if criminal charges are filed.
