Three Army Reserve officers and a U.S. contractor were formally indicted Wednesday as part of a kickback scheme that steered millions of dollars of Iraq reconstruction projects to a contractor in exchange for cash, cars, jewelry and other luxury goods.

The husband of one of the military officials also was charged with helping to smuggle at least $10,000 into the United States that the couple used to pay for improvements to their New Jersey house.

The scam was outlined in a 25-count indictment filed Wednesday in U.S. District Court in New Jersey. A press conference was to be held at 2 p.m. EST Wednesday.

The three Reserve officers were responsible for supervising how the U.S.-managed Coalition Provisional Authority spent an estimated $2.1 billion available for reconstruction projects in Iraq.

The indictment says the three officers — Col. Curtis G. Whiteford, Lt. Col. Debra M. Harrison and Lt. Col. Michael B. Wheeler — directed at least $8 million to a construction and services company. In return, they allegedly demanded cash, a Nissan sports car, a Cadillac sport utility vehicle, real estate, a Breitling watch, business-class plane tickets and other items.

"This indictment alleges that the defendants flagrantly enriched themselves at the expense of the Iraqi people — the very people they were there to help," Deputy Attorney General Paul McNulty said. "U.S. government officials working in Iraq are not for sale. We will prosecute anyone who attempts to exploit the reconstruction efforts in Iraq for their personal gain."

The contractor, identified in the indictment as Seymour Morris Jr., allegedly acted as a go-between for the military officers and the construction company by illegally wiring money and securing the goods. Morris is a U.S. citizen who lived in Romania, and owned and operated a Cyprus-based financial services business. He was arrested by Romanian authorities Tuesday night.

The United States is seeking to have him extradited to New Jersey on these charges.

Whiteford, once the second-most senior official at CPA-South Central (CPA-SC) Region in Hillah, Iraq, was charged with one count of conspiracy, one count of bribery, and 11 counts of honest services wire fraud.

Harrison of the Army Reserves was at one time the acting comptroller at CPA-SC who oversaw the expenditure of CPA funds for reconstruction projects. She was charged with conspiracy, bribery, wire fraud, interstate transport of stolen property, cash smuggling, money laundering, and preparing a false tax form.

Harrison had been living in Trenton, N.J., with her husband. She allegedly used her portion of the scam's proceeds on a rebuilding project on her home that consisted of adding new decks, hot tubs and other expensive improvements adding up to tens of thousands of dollars — all within plain sight, according to senior law enforcement officials. They are also charged with allegedly receiving a Cadillac Escalade as a bribe.

Harrison’s husband, William Driver, was charged with four counts of money laundering.

Wheeler of Amherst Junction, Wis., a lieutenant colonel in the U.S. Army Reserves who was an advisor for CPA projects for the reconstruction of Iraq, was charges in much the same way as Harrison.

Harrison and Wheeler, who were previously charged in criminal complaints, remain released on bond.

"It's incredible, what these people were doing," one federal source told FOX News.

The "incredible" the source was referring to not only includes conspicuous consumption but stolen and smuggled millions of U.S. dollars and the procurement of illegal weapons such as assault rifles and grenade launchers, all to be used by the conspirators.

According to the indictment, from December 2003 through December 2005, Whiteford, Harrison, Wheeler and Morris conspired with at least three others — Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and U.S. Army Lt. Colonel Bruce D. Hopfengardner — to rig the bids on contracts being awarded by the CPA-SC so that all of the contracts were awarded to Bloom.

Bloom received more than $8.6 million total in rigged contracts. The indictment alleges that Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with over $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom, and other valuable items.

The indictment alleges that Bloom laundered over $2 million that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that was for Iraq reconstruction projects. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send the stolen money to the defendants and other Army officials in return for them awarding contracts to Bloom and his companies.

Morris allegedly helped Bloom make the wire transfers and funnel the money.

Whiteford allegedly received at least $10,000 in cash, a $3,200 watch, a job offer from Bloom, and other valuables.

The indictment further alleges that Whiteford, Harrison, Wheeler, Stein and Hopfengardner used U.S. currency stolen from the CPA-SC to funnel funds to Bloom for weapons they converted to their own personal use in the United States, including machine guns, assault rifles, silencers and grenade launchers.

Stein was sentenced on Jan. 29 to nine years in prison. He previously pleaded guilty to conspiracy, bribery, money laundering, possession of machine guns, and being a felon in possession of a firearm to defrauding the CPA-SC.

On March 10, 2006, Bloom pleaded guilty to related charges of conspiracy, bribery, and money laundering in connection with the same scheme as Stein. He is scheduled to be sentenced on Feb. 16.

On Aug. 25, 2006, Hopfengardner pleaded guilty to charges of conspiracy to commit wire fraud and money laundering in connection with the same scheme as Bloom and Stein. Hopfengardner is scheduled for a status conference on March 23.

FOX News' Ian McCaleb and The Associated Press contributed to this report.