Arizona Auditor General's Investigation Uncovers $39.5 Million in Alleged Financial Misconduct in Santa Cruz County
STATE CAPITOL, PHOENIX – August 27, 2024 – Arizona State Representative Matt Gress, Chairman of the House Joint Legislative Audit Committee (JLAC), has responded to a groundbreaking financial investigation report released Monday by the Arizona Auditor General’s Office. The report exposes serious allegations of financial misconduct by a former Santa Cruz County Treasurer, detailing the misappropriation of nearly $40 million in public funds over the past decade.
The extensive investigation, covering transactions from March 2014 to March 2024, reveals that the former Treasurer may have conducted at least 182 unauthorized wire transfers from county accounts to business accounts associated with herself. This misconduct is alleged to have been carried out without proper recording in the County Treasurer’s accounting system and involved the submission of false reports to various entities, including the County Board of Supervisors, a financial consultant, and the Arizona Auditor General.
Allegations of Fabrication and Fraud
The report highlights that the former Treasurer may have falsified 121 monthly Treasurer’s Reports and even created counterfeit bank investment statements and a website domain to cover her tracks. These actions suggest a deliberate effort to deceive and evade detection.
Historical Context and Systemic Failures
Santa Cruz County initially reported these allegations to the Arizona Auditor General and the Federal Bureau of Investigation in April 2024. The report also brings to light longstanding deficiencies in the County’s internal IT-related controls, which have been a concern since 2009. The systemic failures in both financial and IT systems, compounded by newly uncovered issues such as the chief deputy treasurer sharing her bank login credentials and security token with the Treasurer, may have facilitated the misconduct, undermining the financial stability of several county entities, including school districts, fire districts, and the jail district.
Response from Representative Matt Gress
In reaction to the report, Representative Matt Gress expressed his alarm over the situation, stating:
“The actions detailed in the Arizona Auditor General’s report are deeply disturbing and represent a significant betrayal of public trust. This case would stand as one of the worst instances of county financial misconduct in Arizona’s history, underscoring the need for more stringent oversight and accountability in the management of public resources.”
Gress emphasized the need for reform, noting concerns that one of the County’s financial institutions may not have fully cooperated with the Auditor General’s investigation. This lack of cooperation, he argues, intensifies the gravity of the situation and highlights the necessity for increased transparency.
In response to the findings, Gress plans to introduce legislation aimed at expanding the authority of the Arizona Auditor General. His proposal includes granting the office direct access to financial institution records, bypassing potential obstructions from internal controls. Additionally, he is considering legislation that would impose specific training requirements for newly elected or appointed county treasurers and their deputies, aiming to enhance their capacity to manage public funds responsibly.
Commendations and Future Actions
Gress praised the efforts of the Auditor General’s Office and law enforcement agencies for their role in uncovering these issues. He stressed the importance of ongoing vigilance and reform to prevent such instances of financial misconduct in the future.
This investigation and the subsequent response highlight a critical moment for Arizona’s financial oversight systems, potentially leading to significant changes in how public resources are managed and monitored at the county level.
Original article:
Arizona Auditor General’s Investigation Report Reveals Details of Alleged $39.5 Million Financial Misconduct in Santa Cruz County STATE CAPITOL, PHOENIX (Tuesday, August 27, 2024) – Arizona State Representative Matt Gress, House Chairman of the Joint Legislative Audit Committee (JLAC), is responding to a comprehensive financial investigation report issued Monday by the Arizona Auditor General’s Office that details alleged significant financial misconduct by the former Santa Cruz County Treasurer. The report documents actions that may have been taken by the Treasurer over a decade to misappropriate nearly $40 million in public funds. Covering transactions from March 2014 through March 2024, the investigation reveals that the former Treasurer may have executed at least 182 unauthorized wire transfers from county accounts to business accounts connected to her. The report alleges that she failed to record these transactions in the County Treasurer’s accounting system and provided false reports to the County Board of Supervisors, a county financial consultant, and the Arizona Auditor General. Notably, the report indicates she may have falsified 121 monthly Treasurer’s Reports and even created fake bank investment statements and a website domain to support her alleged financial misconduct. Santa Cruz County first reported the alleged misconduct to the Arizona Auditor General and the Federal Bureau of Investigation in April 2024. The Auditor General’s report notes long-standing inadequacies in the County’s internal IT-related controls, which have been highlighted in audit reports since 2009. The systemic failures within the County’s financial and IT systems, and newly discovered failures, such as the chief deputy treasurer sharing her bank login credentials and security token with the Treasurer, may have enabled the Treasurer to carry out her alleged financial misconduct unchecked for years, potentially jeopardizing the financial stability of multiple governmental entities within the County, including school districts, fire districts, and the jail district. Statement from Representative Matt Gress: “The actions detailed in the Arizona Auditor General’s report are deeply disturbing and represent a significant betrayal of public trust. This case would stand as one of the worst instances of county financial misconduct in Arizona’s history, underscoring the need for more stringent oversight and accountability in the management of public resources. “It is particularly concerning that, despite the County’s authorization, one of the County’s financial institutions may not have fully cooperated with the Auditor General’s investigation. Any refusal to provide additional information only heightens the severity of the situation and underscores the need for greater transparency. “I intend to introduce legislation in the next session that will expand the authority of the Arizona Auditor General, giving the office independent access to financial institution records directly from the institutions themselves. This will ensure that auditors have more tools necessary to uncover and address financial misconduct, even when internal controls fail. Additionally, I am considering introducing legislation to require newly elected or appointed county treasurers and their deputies to meet specific training requirements, better equipping them to manage public funds responsibly. “I commend the diligence of the Auditor General’s Office and the law enforcement agencies involved in bringing these issues to light. Moving forward, it is imperative that the County implements the nine recommendations made by the Arizona Auditor General to establish stronger safeguards to prevent such abuses and ensure that public officials are held to the highest standards of integrity. We owe it to the citizens of Arizona to protect their hard-earned tax dollars from fraud and corruption by arming the Arizona Auditor General with additional tools to uncover financial misconduct.” The Arizona Auditor General’s report is available here: https://www.azauditor.gov/former-santa-cruz-county.... Matt Gress is a Republican member of the Arizona House of Representatives serving Legislative District 4 in Phoenix. Follow him on X/Twitter at @MatthewGress. ### https://bit.ly/473Urro Arizona House GOP
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