News release from Santa Cruz County:
Claims by State and Auditor General Dismissed in Favor of Santa Cruz County
December 10, 2025
Santa Cruz County secured a series of decisive courtroom victories in its lawsuit against the Auditor General and State of Arizona arising from the multi‑year embezzlement of public funds by the County’s former treasurer. In an under‑advisement ruling issued December 8, 2025, the Maricopa County Superior Court granted the County’s motions to dismiss the Auditor General’s counterclaim and to strike and dismiss the Auditor General’s third‑party pleadings, including a supplemental third‑party complaint.
The Court agreed with the County that the Auditor General’s counterclaim—framed as negligence and related theories—was “tantamount to an affirmative defense of comparative fault masquerading as a counterclaim,” and did not state a direct, standalone claim against the County. The Court gave the Auditor General until January 9, 2026, to revise the counterclaim, but emphasized it can’t simply restate the existing defense as a separate request for damages.
In addition, the Court held that the Auditor General’s third‑party complaints were procedurally improper. The Court dismissed both the initial third‑party complaint and the supplemental third‑party complaint, and barred the state from amending the improper pleadings, noting that the amendment would be futile. The Court further found the supplemental third‑party pleading was improperly filed without leave of court and was not a proper supplemental pleading.
“This is a strong step forward for the County’s case. The Court’s rulings keep the focus where it belongs: on our claims against the Auditor General, and on accountability for the systemic failures that allowed a decade of theft to go undetected despite the Auditor General’s yearly audits of the County finances.” —Statement from the Santa Cruz County Board of Supervisors
The case is pending before the Honorable Dewain D. Fox in Maricopa County Superior Court, Cause No. CV2024‑032742.