Indictments have been returned against 18 individuals, including four merchants, involved in defrauding the government of about $700,000 in food stamp benefits.
The charges, announced Thursday by state officials, involve a scheme where legitimate food stamp recipients were selling their electronic benefit cards for cash, mostly to retailers. The buyers would give the sellers one half the value on the card and pocket the balance.
Three of the stores involved are in Phoenix, with one in Mesa. State officials declined to identify any of those involved as the investigation is ongoing.
According to the governor's office, the investigation started after Phoenix police officers noted an increase in crime around certain retail shops. That resulted in an undercover operation.
That inquiry, the governor's office said, led to the conclusion that the illegal sale of food stamp benefits was at the root of the problem.
Steve Meissner, spokesman for the state Department of Economic Security, said a typical action would involve a food stamp recipient going to a store and buying a small amount of eligible groceries, then handing the merchant the debit card that is now used instead of the old "food stamp" coupons.
But the retailer would deduct the full balance on the card, giving the recipient half of that, with the other half being credited to the retailer's account.
Both the act of selling a food stamp card for cash and buying one are felonies, he said.
Meissner said the investigation was broader than that, involving not only local police and state investigators but even the U.S. Department of Agriculture, which administers the program.