The scheme dates back more than 10 years and involved inflated invoices and work that was paid for but never performed, prosecutors said.
Anjan Dutta-Gupta, 58, of Roswell, Ga., and Ralph Mariano, 52, of Arlington, Va., are charged in a criminal complaint with bribery of a public official. They were both released on bond following court appearances Monday.
Dutta-Gupta is founder and president of Georgia-based Advanced Solutions for Tomorrow, or ASFT, which has an office in Middletown. Mariano is a civilian program manager and senior systems engineer for the Naval Sea Systems Command, which prosecutors say accounts for nearly one-fourth of the Navy's entire budget.
Prosecutors say Dutta-Gupta funneled about $10 million through his company's subcontractors to Mariano and his relatives, including his brother, father and girlfriend, and other associates in return for Navy funding on ASFT contracts. No one else was charged, but prosecutors say the investigation is continuing.
"Taxpayer money should never be wasted, let alone stolen, as is alleged here," said Peter Neronha, the U.S. attorney for Rhode Island.
Dutta-Gupta is a generous donor to Democratic officials in Rhode Island, and his company's website shows him standing next to then-House Speaker Nancy Pelosi and former Rep. Patrick Kennedy at an event he held.
Dutta-Gupta was arrested Sunday as he returned to Atlanta from a trip to Georgia. He was released on $25,000 bond and is due next week in federal court in Rhode Island. Court records don't list a lawyer for him, and phone messages left at ASFT offices were not immediately returned.
Mariano surrendered Monday and was released on $50,000 unsecured bond. His lawyer, Paul Mastrocola, declined to comment.