Scandalous past of Lake Tahoe mayor who resigned after stealing $300,000 from church while claiming she had depression

The former mayor of South Lake Tahoe who resigned after admitting to stealing $300,000 from a church was previously accused of defrauding an insurance company.

Tamara Wallace had served as mayor of the California city since December 2024, and for one year in 2022, but resigned on Monday after admitting to the theft.

The scandal-plagued mayor sent a confessional letter to several local news outlets, blaming her struggles with mental health for stealing from the Presbyterian Church over several years.

But Wallace also previously faced a lawsuit from Federal Insurance Company, now a subsidiary of insurance firm Chubb, for ‘theft of funds’ totaling over $100,000, according to the San Francisco Chronicle.

The records reviewed by the outlet showed that Wallace agreed to repay the money after the alleged fraud was discovered in 2006, but then failed to repay the cash, prompting a second lawsuit from the firm in 2021.

The lawsuits reportedly did not give details over how Wallace allegedly stole from the insurance company, however the first lawsuit was dismissed months after it was filed.

The second lawsuit alleged that Wallace fraudulently received a payout of $122,193, but then failed to follow a payment plan that she had agreed to 15 years before when it was found to be erroneous.

The company said Wallace agreed to pay just $200-a-month until the balance was paid off, but she stopped paying around February 2017, despite an agreement that she would be liable for the full amount if she ceased her payments.

Tamara Wallace, former mayor of South Lake Tahoe who resigned this week after admitting to stealing $300,000 from a church, has also been accused of defrauding an insurance company before the scandal

Wallace, pictured with her husband Duane, faced a lawsuit from Federal Insurance Company for ‘theft of funds’ totaling over $120,000

After Wallace was allegedly caught in 2006, she signed a promissory note acknowledging she owed the money and insisted she would pay it back, the company said.

At the time she stopped paying, Wallace still owed more than $110,000, the Chronicle reported.

In June 2022 Wallace was ordered by a judge to repay the company, and she signed a second promissory note agreeing to make $400 monthly payments, on top of a $2500 initial payment.

The emergence of the alleged insurance fraud adds another layer to the political scandal which forced her to leave office earlier this month.

Dana Tibbitts, a member of the El Dorado County Government Watch group, told the Chronicle after the scandal emerged, ‘the most important thing is that (the theft from the church) was not her first rodeo.

‘She has been down this road a long time… and we probably don’t know the half of it.’

Wallace served as mayor of the California city since December 2024, and previously for one year in 2022, but resigned on Monday after admitting to stealing from a church where she previously worked

Wallace’s public admission over her embezzlement from the Presbyterian Church captured national headlines earlier this month.

She said she routinely stole funds from the church, and ‘because of this, on September 11, 2025, my birthday, I tried to end my life.’

Wallace said for her safety, she then spent 18 days in a mental health facility where she was being treated with medication as well as intense individual and group therapy sessions.

The mayor, who was a part-time administrator of the church, wrote that she turned herself in.

‘I had not been found out; in effect, I turned myself in. I had prepared a list of account numbers and passwords that I provided to the Church, while still in the hospital, so that my actions could be more easily discovered,’ she wrote.

Wallace said in the note that she justified the money she stole from the church because she used, ‘most of those funds to help others, such as my deceased son’s three children.’

She also stated that she suffered years of childhood sexual abuse, and her own health struggles contributed to her alleged crime.

Wallace’s public admission over her embezzlement from the Presbyterian Church captured national headlines earlier this month, as the mayor blamed her battles with mental health as a reason for the scandal

Her confession prompted a criminal investigation by the El Dorado County District Attorney’s Office, and Wallace said in her letter that she expected to face criminal charges as a result.

‘I must repay every cent and accept whatever punishment comes to me,’ she wrote.

Wallace is married to her husband, Duane, and has three sons and a daughter.

‘Sorry is not a strong enough word to explain the depths of my regret and shame. I do not think anyone can be as angry at me as I am at myself,’ Wallace said in her letter.

Sheree Juarez, a spokesperson for the City of South Lake Tahoe, said: ‘The El Dorado County District Attorney’s Office is handling this matter, and therefore we have limited information about the investigation.’

‘The City is in no fiscal harm from this situation and continues to provide essential services to our residents. We have no further comment at this time.’

The Chronicle reported that she declined to respond when contacted by the outlet.