(CNN) -- Four Virginia men were arrested Tuesday on allegations of bribery and kickbacks in what prosecutors describe as an elaborate scheme thought to involve hundreds of millions of dollars in contracts connected to the U.S. Army Corps of Engineers.





The suspects include two long-time Corps employees charged in an alleged conspiracy involving more than $20 million in bribes and kickbacks, as well as a plan to try to steer a $780 million contract to a favored contractor, the U.S. Justice Department reported. Another of the defendants is director of contracts for a company that did business with the federal government, the Justice Department said.





Corps employees Michael Alexander, 55, and Kerry Khan, 53, as well as Khan's son, Lee, 30, and Harold Babb, 60, were all indicted on charges of conspiracy to commit bribery and wire fraud, conspiracy to commit money laundering, and aiding and abetting, according to a Justice Department statement.





Both Kerry Khan and Alexander also face one count each of receipt of a bribe by a public official. If convicted, both men could each face a maximum 40-year sentence behind bars.





Babb, meanwhile, also was handed a charge related to unlawful kickbacks, and could face up to 35 years in prison. He was director of contracts at Eyak Tek, an Alaska Native-owned small business based in Dulles, Virginia.





Lee Khan, who controlled a consulting company with his father, faces a sentence of up to 25 years if convicted, according to the Justice Department.





All four men pleaded not guilty in federal court in Washington Tuesday afternoon.





Thought to have used their positions within the Corps, the elder Khan and his colleague Alexander are suspected of having funneled more than $45 million in payments by way of a federal contract that they oversaw, according to the indictment.





About $20 million in fraudulent expenses were built into those invoices, which were then diverted to all four defendants, prosecutors say..





Authorities are in the process of seizing funds in 29 bank accounts, as well as three luxury vehicles and seven high-end watches, and are pursing a forfeiture allegation against 16 real properties financed in whole or in part with proceeds from the alleged crimes, the Justice Department said..





It was not clear Tuesday whether the suspects have retained legal counsel.
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