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SALT LAKE CITY (AP) - A federal grand jury indicted a former FBI special agent and a defense contractor Thursday in a federal fraud case involving U.S. Army contracts, marking the latest turn in what prosecutors have called a multimillion-dollar scheme to win military contracts in Afghanistan.
The indictment alleges that the defense contractor, 51-year-old Michael Taylor of Harvard, Mass., offered the FBI agent a $200,000 cash payment, additional money for medical expenses for the agent's child, and a share in the proceeds of several anticipated contracts worth millions of dollars in exchange for using his position to try to impede a criminal investigation into contract awards.
Robert G. Lustyik, 50, of Sleepy Hollow, N.Y., was an FBI special agent until September 2012, assigned to counterintelligence work.
A third person, Johannes W. Thaler, 49, of New Fairfield, Conn., is accused of acting as a conduit between the two men. Thaler is a childhood friend of Lustyik, according to the indictment.
Each was charged with 11 counts of conspiracy, wire fraud, obstructing justice and obstructing an agency proceeding, the U.S. Department of Justice announced in a statement Thursday.
Robert G. Lustyik
Johannes W. Thaler
Charges for each
11 counts of:
- Wire fraud
- Obstructing justice
- Obstructing an agency proceeding
Lustyik acted through Thaler to secure promises of cash, purported medical expenses and business proceeds in exchange for abusing his position as an FBI agent, Assistant Attorney General Lanny Breuer said.
"The alleged conduct is outrageous, and we will do everything we can to ensure that justice is done in this case."
According to the indictment, the three men had a business relationship to pursue contracts for security services, electric power and energy development in the Middle East, Africa and elsewhere.
But in September 2011, Taylor learned a federal criminal investigation had been launched in Utah in 2010 into whether he and others had committed fraud in the awarding of defense contracts, according to the indictment.
Taylor had formed the Boston-based firm American International Security Corp., which was awarded the military contracts.
Taylor allegedly gave Lustyik, through Thaler, cash and other benefits to impede the investigation. In return, Lustyik designated Taylor as an FBI confidential source, contacting Utah officials to dissuade them from charging Taylor and attempting to interview potential witnesses and targets of the investigation, the indictment claims.
Taylor had already been charged criminally in the case. In addition, an active Army Reservist who was a procurement official is accused of leaking bid information that allowed Taylor's company to win $54 million in contracts to supply Afghan troops with weapons and training.
The case broke in Utah when yet another business associate made a series of cash withdrawals from a St. George credit union just under the federal reporting limit of $10,000. Christopher Harris earlier pleaded not guilty to charges in the bid scheme.
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)