A third member of a Texas family has been arrested in connection with what a federal official says is the largest Army contract-rigging and bribery case to emerge from the Iraq reconstruction effort.

Carolyn Blake, a former schoolteacher, was charged Wednesday with laundering money and conspiring to accept $3.1 million in bribes from contractors.

Blake is accused of working with her brother, Maj. John L. Cockerham, a contracting and procurement officer assigned to Fort Sam Houston, who was arrested Monday on charges that allege he took $9.6 million in kickbacks and anticipated receiving $5.4 million more for rigging military supply contracts.

His wife, Melissa Cockerham, 40, was also arrested Monday on charges she accepted bribery payments for her husband and helped conceal them.

Investigators say the payments occurred in 2004 and 2005, with the money being deposited to banks in the Middle East and then moved to offshore banks in the Caribbean.

"This is the largest bribery case that's come out of the Iraq reconstruction experience," Stuart W. Bowen Jr., the Special Inspector General for Iraq Reconstruction, told the San Antonio Express-News.

Bowen's agency has referred about 30 cases of alleged fraud in military contracts to the Justice Department for prosecution. Before this week's arrests, the largest case involved $4 million in bribes, according to the agency.

Blake, 44, pleaded not guilty Wednesday in a Dallas federal court and was ordered held pending a bail hearing scheduled for Monday. A bail hearing for the Cockerhams is set for Tuesday.

Brent K. De La Paz, an attorney representing Melissa Cockerham, said the public shouldn't jump to conclusions about the allegations.

"There's a lot of things I would love to know where the government is getting their information from," De La Paz said. "Short of having something with a signature, I don't think there's anything there beyond an allegation."

As he was escorted back to jail on Wednesday, John Cockerham shouted to reporters that the American Civil Liberties Union should be notified.

"We're suffering injustice in the name of justice," Cockerham said. "I guess we can thank the Department of Justice for this."

Cockerham was stationed in Kuwait in 2004 and 2005, according to the military. He is accused or steering contracts for military support services, such as bottled water and laundry, during that time.

Investigators say eight contractors were involved in the graft, but the companies are not named.