Poinbank Exchange|Ex-Arizona county treasurer embezzled $39M for over a decade, lawsuit says

PHOENIX — A southern Arizona county has filed a lawsuit against its former treasurer with a history of tax liens,Poinbank Exchange alleging she embezzled more than $39 million for over a decade by siphoning taxpayer dollars into her own companies and personal bank accounts.

The alleged theft by former Santa Cruz County Treasurer Elizabeth Gutfahr was discovered in April after JPMorgan Chase, Santa Cruz County's bank, alerted the county to 11 fraudulent transactions for $375,000, prompting investigations by the FBI, Department of Justice, Arizona Auditor General’s Office, and Santa Cruz County.

"The sum of it all is this: for more than a decade, Gutfahr used County funds as her piggy bank to fund an opulent and extravagant lifestyle — purchasing several ranches, vehicles, and more," prosecutors allege in a complaint filed in Pima County Superior Court.

Santa Cruz County is pursuing several charges including fraud, conversion, civil conspiracy, racketeering, and breach of fiduciary duty. It also seeks negligent misrepresentation and unjust enrichment as alternative charges if Gutfahr and the other defendants are not found guilty.

The county claims it has suffered $1.35 million in lost interest from the theft and is requesting compensation for the missing funds, as well as control of a constructed trust over all assets Gutfahr purchased with the county funds.   

The alleged scheme in Arizona is the latest to sweep the nation as local governments grapple with fraudsters from within their offices siphoning funds intended for schools, health services, and fire departments. Since last month, public servants in California, Alaska, and Virginia have been sentenced or pleaded guilty to million-dollar embezzlement schemes, though the alleged fraud in Santa Cruz County appears to be one of the largest reported thefts.

'Luxury home, car, and designer clothes'California school official convicted of embezzling over $16M concealed cash in fridge

Companies owned by Gutfahr, her family implicated in scheme

Investigation into the missing money found Gutfahr allegedly diverted funds from the county’s savings account meant to generate interest for county departments and county entities, such as school and fire districts.

Prosecutors allege in court records that funds were diverted to one of her businesses, Rio Rico Consulting, based in Oro Valley, a suburb roughly ten miles north of Tucson, Arizona. The county alleged she has several other companies that either helped her embezzle public funds or own assets purchased with the county funds.

Defendants include Gutfahr, her husband and son, and several other unnamed individuals and corporate entities accused of receiving county funds or aiding in their theft.

The lawsuit accuses Gutfahr of successfully avoiding detection by fabricating investment statements, misrepresenting the total balance of funds in finance reports, and diverting money in certain months. During the annual audit by the Arizona Auditor General, the state agency reviewed June year-end financial statements from the preceding year, so Gutfahr avoided diverting funds to Rio Rico Consulting in June and July, prosecutors allege.

“Gutfahr was able to evade detection for so long through accounting tricks and outright fabrications,” state court documents.

Gutfahr, a Democrat, did not respond to requests for comment from the Arizona Republic, part of the USA TODAY Network. No documents responding to the allegations had been posted on the Arizona Superior Court database as of Thursday.

Gutfahr has a history of tax liens

Gutfahr and her husband have a history of tax liens filed against them, according to court documents. The first, filed in 2011, was released. Prosecutors said the second was filed against them in 2013, and the third was filed in 2015 for $160,848 and released two years later.

Gutfahr was elected county treasurer in 2012 and then reelected in 2016 and 2020. Before the embezzlement allegations came to light, she was running unopposed in the 2024 election.  

She previously worked in real estate in Santa Cruz County. Investigators found while she had a self-employed broker’s license number, which was issued in 2008, the employer associated with the license, Rio Rico Consulting & Real Estate is not registered with the Arizona Corporation Commission.

GAO: At least $233 billion in taxpayer dollars lost to fraud every year

While there is little data on the breadth of embezzlements targeting local governments, federal lawsuits point to a host of alleged schemes across the U.S.

In California, a former public school district official was sentenced to 70 months in prison after he was convicted of embezzling more than $16 million over several years. Orange County prosecutors said they seized a home in Yorba Linda, California, a 2021 BMW automobile, 57 luxury designer bags, jewelry, designer clothes and shoes, and eight bottles of Clase Azul Ultra luxury tequila.

Also in July, a man pleaded guilty to embezzling $4 million from the Virginia Department of Health while working as associate director of the agency's Office of Emergency Medical Services. And a former treasurer for the city of Houston, Alaska, was sentenced to two and a half years in prison for embezzling more than $1 million from the city into his bank account.

Federal taxpayer dollars are also being pilfered, emerging data shows, as researchers urge more government action to address the chronic issue.

In a first-of-its-kind report released in April, the U.S. Government Accountability Office estimated the federal government loses between $233 to $521 billion yearly to fraud. The study concluded federal authorities should develop guidance to improve fraud-related data and urged the Treasury to identify how to expand fraud estimates.

“Given the scope of this problem, a government-wide approach is required to address it,” researchers wrote.

Contributing: Max Hauptman, USA TODAY

The Arizona Republic's coverage of southern Arizona is funded, in part, with a grant from Report for America.