Former HumCo Fair Bookkeeper Pleads Guilty in Embezzlement Case

The former bookkeeper accused of embezzling more than $400,000 from the Humboldt County Fair Association has pleaded guilty to five federal counts of wire fraud.

Tafarella, 49, faces a maximum sentence of 20 years in federal prison and a fine of up to $250,000 or both for each count when she’s sentenced at a hearing scheduled for April 30 at the federal courthouse in San Francisco.

After multiple delays in holding a change of plea hearing, Tafarella formally applied to enter pleas of guilty in the case Dec. 18, with the application signed by federal Judge Charles R. Breyer the same day.

Tafarella remains free after posting $15,000 bond in the case, which stems from an alleged “ghost payroll” scheme used to defraud the association and a Eureka nonprofit. She was arrested Nov. 15, 2022, by Ferndale police at a local casino after allegations surfaced that she’d embezzled from the two entities over the course of almost two years, channeling funds to her own bank accounts through fraudulent payroll entries to fictitious employees.

The U.S. Attorney’s Office, which is prosecuting the case, is also seeking the forfeiture of all property “derived from the proceeds” of the fraud, or a forfeiture judgement 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 “substantially diminished in value.”
Fair officials, who spent nearly two years working to untangle the fiscal mess left in the wake of Tafarella’s alleged theft, have voiced hope that a successful prosecution may result in the association recouping some of the embezzled funds. But that seems increasingly unlikely.

A court filing earlier this year described Tafarella as “indigent, or impoverished and unable to meet basic needs,” and more recent filings said U.S. Pretrial Services was working to place Tafarella in a residential living program for “unhoused defendants in pretrial proceedings,” later noting it had secured her housing at a Salvation Army facility in Santa Barbara.

Tafarella first came under suspicion when a Eureka nonprofit dance studio alerted the Eureka Police Department that it had found irregularities in its financial records. EPD then notified the fair association, where Tafarella also worked, and it began a review of its records, which quickly found discrepancies.

Tafarella’s indictment alleges she defrauded the association of approximately $430,000 over the course of 21 months after embezzling approximately $23,400 from the Eureka nonprofit.

“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 the fair association’s QuickBooks files — at least seven of them — were all linked to Tafarella’s bank account. “Toward 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.

The indictment alleges Tafarella used the embezzled funds “on personal expenditures, including Amazon purchases, restaurants and gambling.”

In the two years since Tafarella’s arrest, the fair association has revamped its financial policies and procedures, outsourcing its bookkeeping and payroll functions to third parties, while instituting new systems of checks and balances, conceding that a lack of such safeguards had enabled the embezzlement.