• With: Tom Horne

    This is a rush transcript from "Your World," August 30, 2013. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: All right, to Arizona right now, where police just busted up a massive food stamp fraud ring. This was weird, police officers seizing more than half-a-million dollars and arresting these three guys.

    Tom Horne is Arizona's attorney.

    Tell me what this is all about, Attorney.

    TOM HORNE, ARIZONA ATTORNEY GENERAL: Well, there are certain convenience stores -- and it's known on the streets which ones -- where you can go with your food stamp card, get some cash, they get most of the value, the customer uses the cash for alcohol, drugs, whatever, and the store in effect steels the value of the food stamp.

    It's done in two ways. One way is a small purchase, say, a bag of potato chip, treated as though it were a very large purchase, and then they will give the customer some cash in addition to the potato chips, or they will just give them their card, the -- let's say there's $300 on the card. They will give them $100, and then they have $200 left on the card, and they will keep ringing up as though they're sales during the day, and they will end up with that $200.

    And it ended up they had $550,000 of cash in a safety deposit box.

    CAVUTO: Oh, my God.

    HORNE: Another -- you know, another $80,000 of cash. It was -- and then some cards. It was a total of about $700,000 that was seized.

    CAVUTO: Attorney General, what worries me is, I now know that we -- food stamps are at the highest level they have ever been, 40-some-odd million receive them and 100 million Americans get some sort of food assistance.

    So if this is happening in your neck of the woods, I would imagine the potential is ripe for this happening in a lot of places. That kind of scares me.

    HORNE: It happens quite a bit, Neil, actually.

    This is our -- we have had five busts this year alone of this type, although this is by far the largest we have ever had. We have had five busts in convenience stores of this type.

    CAVUTO: You know, it's a tempting target because there's so many of these things being handed out, but apparently it's very easily done.

    Now, you were on top of this, started to crack down on this, but it's sort of like Whac-A-Mole. Every time you get one bad group doing it, there's another bad group doing it. What is it about -- I mean, is it because it's so easy, because there are ways to get around authorities? What?

    HORNE: Well, you know, there's some people who get food stamps who would rather not get food, but get alcohol or drugs, and so some convenience stores become known that they're willing to do this kind of thing, and so they go to those stores and they trade most of the value on their card for cash.

    And then they go out and buy their drugs or their alcohol. This investigation went on about a year. We have been working with the U.S. Department of Agriculture, with local law enforcement, in this case the Phoenix Police Department and other partners. One of the things that is done is to look at the volume of business.

    You may find a certain convenience store has a great volume of food stamp business, 10 times what another similar store might have, and then you know it's likely a fraud is going on, and then you send in undercover officers to make the case.

    CAVUTO: I always worry about the convenience store part of it, where it tries to legitimatize this behavior or appears to be legitimate, and then that gets me thinking about other so-called legitimate establishments or those that appear that way that could be pulling crime after crime.

    HORNE: Yes. The convenience -- the convenience stores that are willing to do this are the ones that are the really major criminals, although we have also arrested 22 of the customers who do it.

    CAVUTO: Wow.

    HORNE: But the convenience stores -- and we -- in this case, we have got three people, a father and two sons. We're hitting them with a lot of felonies that they have been charged with, and we're trying to make examples to try to let people know they can't be doing this because they are going to end up in prison.

    CAVUTO: Well, good for you, Attorney General. We don't see a lot of that going on. We see a lot of abuses in government, but rarely do we see people trying to stop it.

    HORNE: Yes.

    CAVUTO: Thank you very much.

    HORNE: We're -- we're -- we're determined to crack down. Thanks, Neil.

    CAVUTO: Good for you.

    Tom Horne, he is the attorney general of the fine state of Arizona.

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