(Adds Cockerhams' lawyer, paragraph 8)

WASHINGTON, Aug 22 (Reuters) - A U.S. Army major, his wife and sister were indicted on Wednesday in a suspected scheme to accept millions of dollars in bribes for Defense Department contracts in Iraq and Kuwait.

The indictment returned by a federal grand jury in Texas charges John Cockerham, his wife, Melissa, and his sister Carolyn Blake, with conspiracy to defraud the U.S. government, commit bribery and obstruct justice while Cockerham was a contracting officer in Kuwait in 2004 and 2005.

All three were also indicted on money-laundering conspiracy charges. Cockerham was additionally charged with three counts of bribery.

The Justice Department said that Cockerham, his wife, Blake, and unidentified co-conspirators accepted payments totaling $9.6 million in exchange for contracts for bottled water and other goods and services for U.S. troops in Iraq and Kuwait.

Cockerham guaranteed that a contractor would receive a contract in return for a payment, according to the Justice Department. It added that his wife and sister collected millions of dollars on his behalf and deposited the money in bank accounts and safe deposit boxes in Kuwait and Dubai.

If convicted on all the conspiracy charges, all three could face up to 20 years in prison and fines totaling $750,000 each.

Cockerham could receive an additional sentence of up to 15 years in prison and a $250,000 fine if found guilty of bribery.

The Cockerhams' attorney, Jimmy Parks, could not be immediately reached for comment. Parks said last month that Cockerham was a decorated Army veteran and the charges against them "just don't compute."

Cockerham and his wife have been held since July 22 when they were arrested at their home at Fort Sam Houston in San Antonio. Blake was arrested three days later in Dallas.

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