The Arizona Auditor General’s financial investigation report on the missing funds from the Santa Cruz County Treasury, released on August 26, sheds light on how former County Treasurer Liz Gutfahr allegedly moved $39.4 million from county funds into her personal business accounts in at least 182 unauthorized wire transfers over the past 11 years.
Included in the 15-page document is an explanation of how she was able to move these funds by circumventing the internal control process. According to the report, “The treasurer and the chief deputy treasurer shared their passwords with each other and kept their token authentication devices accessible to each other. By overriding this internal control, the treasurer created a way to repeatedly make unauthorized wire transfers from the County Treasurer’s Office accounts by herself without detection.”
The report notes that [Gufahr] was allegedly able “to perpetrate her actions without detection by any of the six employees she managed: a chief deputy treasurer, a senior secretary, and four tax clerks.” The report listed gifts and loans Gutfahr had given her staff, including a $6,000 “loan,” a car, a personal cell phone plan, and cash gifts to her deputy treasurer and the deputy treasurer’s children. Gutfahr’s secretary received a $1,500 cash gift. A tax clerk reported that her son received a “generous gift” when he got married, and that Gutfahr had taken her on a vacation in San Carlos, Mexico.
Gutfahr allegedly created false investment statements from the investment banking company UBS, reflecting a “nonexistent $14,000,000 balance” in 2021, in 2022 showing a $17,200,000 balance, and in 2023 a $26,561,000 balance. “Newly obtained records show that the Treasurer may have used a fake UBS ShareFile account,” the report states, “which was associated with a deceptive ‘ubsfinancialplanning.com’ domain name to electronically send [the Auditor General’s office] a fake UBS investment statement.”
Emails obtained by the auditor between Gutfahr and her financial advisor at UBS indicate that he may have been considering resigning from her accounts in February 2023. Gutfahr emailed him, writing, “I’m not asking for anything. I’ll take care of it. Please don’t resign from my account.” According to the report, this exchange took place in the same month when Gutfahr offered the financial advisor one of her homes to stay in.
According to the report, when asked about this exchange by the Auditor General’s investigators, the financial adviser stated “that he remembered that, but could not discuss it without permission. Still, even with the newly appointed County Treasurer’s subsequent permission and his participation with [the Auditor General’s office] trying to obtain an explanation for these emails, the UBS financial advisor declined to provide information, and UBS legal counsel later restricted us from speaking with him.”
The report also provides insight into flaws and weaknesses in the oversight of the treasurer’s office by the County Board of Supervisors and by the state auditing process.
“The County has allowed the County Treasurer’s Office to use an inadequate accounting system that did not automatically capture or record the Treasurer’s alleged unauthorized wire transfers at any time and the system automatically deleted data and detailed transactions at the end of each month,” the report states.
Although the Board of Supervisors are responsible for overseeing the Treasurer, “Some County Board of Supervisors members told us they were not sure how County departments submitted monthly reports to the County Board of Supervisors, were not sure of report purposes, and had not actually seen the February 2024 cash reconciliation report (for example) until we emailed them a copy. The County Board of Supervisors Chairman [Manny Ruiz] told [the Auditor General’s office] that the meeting minutes might state that the County Board of Supervisors approve the monthly reports, but the approval does not connote that the Supervisors have done anything to verify the contents, and he did not know when or to whom the monthly reports might be distributed.”
The County Clerk stated that she received the monthly Treasurer’s reports, acknowledged receipt of them and then returned them to the Treasurer’s office “without presenting it to the County Board of Supervisors.” She did state that she provides a link to County department reports to the Supervisors.
If the Supervisors had seen the reports, they might have noticed that Gutfahr did not even bother to change some of the figures on the value of certain investments and checking accounts from month to month. The report states, “Despite the inherent nature of true investment balances fluctuating from month to month, an irregular investment balance was presented as exactly $16,204,072.45 for at least 14 months, apparently without being noticed by any County officials or employees.”
The report also flags a weakness in the state auditing process. Because the Auditor General does not have the authority to access financial information directly from financial institutions, auditing depends on the information a county treasurer provides. The report recommends that the state legislature revise existing statutes to give the Auditor General the authority to directly access financial institution records.
The FBI’s criminal investigation into Gutfahr’s actions is ongoing. Gutfahr appeared in court on August 14 as part of the County’s civil lawsuit against her and members of her family. The next civil court date is Sept. 20 in Pima County Superior Court.