WASHINGTON – Three former bankers with a General Electric unit that sold investment contracts to state and local governments have been indicted on charges of conspiring to profit at taxpayers’ expense by rigging bids. The indictment reflects the broadening scope of a Justice Department investigation of municipal finance.

Dominick Carollo, Steven Goldberg and Peter Grimm, all of whom once worked for finance units of General Electric, were charged with fraud and conspiracy, the Justice Department said. They allegedly paid kickbacks to local government brokers, who were hired to solicit competitive bids for investment deals, to win the bidding and increase their profits.

“The individuals charged today allegedly participated in complex fraud schemes and conspiracies to manipulate what was supposed to be a competitive process,” said Christine Varney, assistant attorney general in charge of the Justice Department’s Antitrust Division.

The charges are a result of an antitrust investigation, begun more than three years ago, into the $2.8 trillion municipal bond market. The probe has drawn in more than a dozen banks and financial services companies, including JPMorgan Chase, Bank of America and UBS, according to court records and regulatory filings.

The case centers on guaranteed investment contracts, known as GICs, that municipalities purchase with money raised by selling bonds, allowing them to earn a return until the funds are needed for schools, roads and other public works.

The Treasury Department encourages public bidding for GICs to ensure that localities are paid proper market rates. Prosecutors allege that bankers submitted sham bids and acted through the brokers to carve up the market for themselves, then compensated the brokers with kickbacks disguised as fees on derivative transactions.