Former Humboldt County Fair Association bookkeeper Nina Tafarella was arrested by the FBI on a federal wire fraud warrant in Los Angeles County late last month and is free after posting $15,000 bail, according to court records.
Reached by the Journal on Nov. 29, a week after her arrest, Tafarella declined to comment for this story.
A federal grand jury indicted Tafarella on Oct. 11 on five counts of wire fraud stemming from an alleged “ghost payroll” embezzlement scheme that prosecutors allege saw her defraud the fair association of approximately $430,000 over the course of about 21 months. Magistrate Judge Thomas Hixson issued a warrant for Tafarella’s arrest Nov. 21, about three weeks after she failed to show up at a scheduled initial court appearance in San Francisco.
After her arrest — the circumstances of which were not clear as the Journal went to press — Tafarella went through the federal booking process, according to court records. That included filing a financial disclosure form under seal with the court, waived her right to a hearing at which prosecutors would have to prove her identity, agreed to travel restrictions, pledged not to use illegal drugs or “state-authorized marijuana” and to submit to drug testing, and agreed to participate in mental health treatment as directed by the agency supervising her release. After being appointed a deputy federal public defender, she then posted a $15,000 bond secured by her sister and promised to appear in the federal courthouse in San Francisco for a hearing at 10:30 a.m. on Dec. 6. She did not enter a plea in the case.
Tafarella, 48, oversaw the association’s financial records from February of 2021 until her Nov. 15, 2022, arrest at a local casino, also stands accused of embezzling $23,400 from a nonprofit dance studio in Eureka.
According to the indictment in the case, Tafarella’s scheme to defraud the fair association began by issuing fraudulent checks to herself, or her company Clean Books Now, and then manipulating QuickBooks entries to make it seem the payments were made to a different vendor. She then allegedly “continued her fraud … by devising and implementing a new ‘ghost payroll’ scheme to defraud (The Humboldt County Fair Association) out of more money and transfer the money to herself,” according to the indictment, which alleges Tafarella created fake employees in the association’s accounting software that she used to route payroll direct deposits to her own bank account.
“Tafarella often used fake employee names that were similar to real employee names by adding the middle initial of ‘J’ to an otherwise real employee name,” the indictment states, adding that the fake employees listed in QuickBooks — at least seven of them — were all linked to Tafarella’s bank account. “Towards the end of the scheme, Tafarella started entering fake payments under the name ‘Internal Revenue Service EFTPS,’ which was linked” to her bank and PayPal accounts. To conceal the fraud, in addition to making false entries into QuickBooks, the indictment alleges Tafarella altered the records to add fake Social Security numbers — “many of which were 111-22-333” — altered journal entries, reported fake payroll employees to the State of California and the IRS, and created fake financial reports. She also allegedly crafted fraudulent financial reports used to hide her ongoing theft from the association.
The indictment alleges Tafarella used the embezzled funds “on personal expenditures, including Amazon purchases, restaurants and gambling.”
News of Tafarella’s most recent arrest comes as the Humboldt County Fair Association continues to unravel the financial tangle her alleged embezzlement left behind. Having already revamped its fiscal controls, the board was informed at its Nov. 27 meeting that the association owes an estimated $33,000 in taxes and payments associated with its 2021 return due to filing delays caused by the alleged embezzlement.
Fair Association Board President Andy Titus has told the Journal previously he’s hopeful the nonprofit will be able to recover some of the stolen funds as a part of the criminal case against Tafarella. The U.S. Attorney’s Office has filed a forfeiture allegation against her.
Each of the federal counts Tafarella was indicted on carries a maximum sentence of 20 years in federal prison, a fine of up to $250,000 or both, if convicted. The U.S. Attorney’s Office is also seeking the forfeiture of all property “derived from the proceeds” of the fraud, or a forfeiture judgment of $456,911.
The judgment would allow prosecutors to seize “substitute property” in the event that the embezzled funds — or what was purchased with them — cannot be located, have been transferred to a third party or have been “substantially diminished in value.”
Editor’s note: This story originally appeared in The Ferndale Enterprise.
Thadeus Greenson (he/him) is the Journal’s news editor. Reach him at (707) 442-1400, extension 321.
Related Stories
This article appears in Corporate Abuse, Environmental Harm Dominate Project Censored.
