In a meeting in Nogales on Monday with County Manager Jesus Valdez and other county officials, representatives from school districts and fire districts across Santa Cruz County were shocked to learn that funds being held by the county for their districts have disappeared under suspicious circumstances from a county account at Chase Bank.
According to Patagonia School Districts Superintendent Kenny Hayes, the group was informed that 11 transactions had taken place in the last year for $375,000 each, for a total of $4.125 million.
“We were told that business will continue as usual, so none of us are going to miss a paycheck or lose our jobs, but we will suffer a financial loss,” Hayes wrote to his staff.
This money had been allegedly misappropriated from an account overseen by the County Treasurer’s office that takes in property tax funds for these districts. (The account in question also contained monies from other sources.)
Former County Treasurer Liz Gutfahr, who had sole authority over this account, resigned from her position on April 12 after Chase Bank notified county officials of suspicious transactions. Gutfahr had held the elected office of County Treasurer for more than ten years.
No arrests related to this case have been made, according to the Santa Cruz County Sheriff’s office, nor have any formal charges been filed. The County has hired a forensic accounting firm to see if there is evidence of further misappropriations, and the case has been turned over to the FBI.
The districts can recover $1 million, according to Hayes, as the County Treasurer is required to hold a bond in that amount, but recovery of the remaining shortfall is questionable.
“Everybody is still in a fact-finding mode,” Hayes told the PRT.
“Currently I am angry and confused, however I have found that reacting in these situations rarely provides a positive outcome,” Hayes said. “What I am certain of is that the staff of Patagonia School Districts has the rare ability to overcome anything in order to provide a safe and enriching education for our students. We will continue to do this for our educational community regardless of the situation that is currently hindering our county government.”
The disappearance of funds also affects the Sonoita Elgin Fire District (SEFD).
SEFD Fire Chief Marc Meredith told the PRT, “After having been notified by the Santa Cruz County Manager that our district may be negatively impacted by the apparent misappropriation of funds by the former Treasurer, I notified our Board and we are undertaking a review of all tax money allocated versus actual money received between 2013 and 2024 to determine if there is any variance. Once that review is complete, we will report back to the County.
“In the meantime, while we remain well prepared to serve the needs of our community, it is extremely concerning that financial resources that could have helped us deliver those services were diverted for someone’s personal gain.”
The Patagonia Volunteer Fire and Rescue Department, which is a volunteer organization and not a fire district, is not affected by this turn of events.
June 7, 2024 update: The Santa Cruz County Board of Supervisors, the Sonoita-Elgin Fire District (SEFD) and the Elgin School/Sonoita Elementary School District have issued public statements in the last 24 hours regarding the size and potential impact of the financial irregularities in the County Treasurer’s Office that are currently under investigation. Read the complete statements here.