Grand jury indicts former FBI agent for fraud

A federal grand jury has indicted a former FBI agent who prosecutors claim tried to derail a criminal investigation into a key figure in an alleged military fraud scheme.

The grand jury in Salt Lake City on Thursday returned an 11-count indictment charging former FBI special agent Robert G. Lustyik Jr., and two alleged accomplices, each with one count of conspiracy, eight counts of wire fraud, one count of obstructing justice and one count of obstructing an agency proceeding.

Prosecutors suspect that Lustyik, 50, used his position as an FBI agent to try to thwart an investigation into Michael L. Taylor, 51, with whom he had formed what promised to be a lucrative business relationship that would land them security and alternative energy contracts throughout the world.

An investigation began in Utah in 2010 into whether Taylor, his company and others committed fraud involving a U.S. Department of Defense contract. The indictment alleges that Taylor learned of the investigation in September 2011 and, soon after, began giving and offering valuable items to Lustyik in exchange that he use his FBI position to impede it.

The indictment also alleges that Johannes W. Thaler, 49, a childhood friend of Lustyik's, served as a middle man between Taylor and Lustyik, passing information and the valuable items between the two. Thaler is expected to surrender to authorities Friday, according to a news release from the U.S. Department of Justice.

Taylor and Lustyik were arrested on prior criminal complaints in the case. Taylor is being detained pending trial and Lustyik was held on a $2 million bond, according to the department.

Lustyik's attorney Raymond Mansolillo said previously that his client's interactions with Taylor, whom he described as a high-level source for federal agencies, had been reviewed and approved by superiors. He said Lustyik's and Taylor's efforts were aimed at protecting his status as a source and shielding classified information, and that comments the government used to paint Lustyik as a threat were taken out of context.

If convicted, each man faces a maximum of five years in prison on the conspiracy charge, five years on the obstruction of an agency proceeding charge, 10 years on the obstruction of justice charge and 20 years on each wire fraud charge. Each charge also carries a maximum $250,000 fine.

The indictment also seeks forfeiture of any proceeds that can be traced to the conspiracy.