63-year-old Michael Veit worked for the state for 35 years. He was recently fired from his job as Chief Procurement Officer for AHCCCS.
According to the Attorney Generals Office AHCCCS own inspector general noticed some irregularities and turned his findings over to investigators.
"There are bad people out there, that do bad things, and sometimes they work for the government, anytime those allegations are made to the AG's office we take immediate action," said Ryan Anderson.
Special Agents with the AG's Office served the search warrant at 4 locations, 3 in Phoenix and 1 in Surprise, including Veit's home near 7th Street and Thunderbird.
Investigators are not releasing details about how they believe he defrauded the state of up to $10 million, but they believe it all began back in 2006.
"Any amount is too much, and we have a responsibility as the Attorney General's office and the state government to hold these people accountable," said Anderson.
According to court documents, Veit would write checks to a company AHCCCS did business with, but at the same time, he would also send a portion of the money into another account.
To disguise this scheme, prosecutors say the bank account was in the same name as the legitimate business, but used as part of the alleged scheme.
After this, the money would be distributed to family members, and when investigators searched the home of Veit's children, they found $200,000 in cash and $17,000 inside a purse.
Prosecutors believe Veit was trying to leave the country, and therefore, his bail has been set at $1 million in cash.
In addition to the longtime state employee, investigators also arrested 67-year-old Michael Cameron. Cameron is not a state employee, but he was believed to be involved in the alleged scheme. In a statement Governor Doug Ducey said, "Let this be a wake-up call to any state employee who tries to cheat the system and exploit our taxpayers for personal gain: Not on our watch. Actions that violate the law, or the public's trust in their government, will not be tolerated."
Investigators say the case remains open and there could more arrests.