Jan.25, 2010, 9:49 P.M. ET

Alfonso Portillo, the former president of Guatemala, was indicted on money-laundering charges by a federal grand jury in New York City, U.S. prosecutors said Monday.

Preet Bharara, the top federal prosecutor in Manhattan, accused Mr. Portillo of embezzling "tens of millions of dollars" of public money during his presidency, which lasted from 2000 to 2004. The funds allegedly were laundered through bank accounts in the U.S. and Europe, according to the indictment.

Mr. Portillo, 58 years old, remains at large, prosecutors said, adding that they are "working closely" with Guatemalan authorities.

A conviction in the U.S. would bring down a colorful politician who political observers say has escaped justice in Guatemala.

Mr. Portillo went to Mexico after his term ended amid Guatemalan investigators' allegations of financial misconduct during his presidency. Authorities there extradited Mr. Portillo back to Guatemala in 2008. He was promptly released on bail.

Prosecutors in Guatemala have been unable to convict Mr. Portillo on the criminal misappropriation charges. The country's judicial system has been unable to keep track of several key witnesses in the misppropriation case that have disappeared before appearing to testify, analysts say.

Jose Quinto, a Guatemalan lawyer who has known Mr. Portillo's family for years, said he received a call from the former president early Sunday morning, asking him to go to his property and monitor raids that were being conducted in relation to the U.S. indictment. Mr. Portillo called back a few hours later, he said, but gave no indication of his plans, whereabouts, or intentions regarding counsel in the U.S., Mr. Quinto said. Both calls came from a blocked number and lasted less than two minutes, he added.

U.S. prosecutors said Mr. Portillo used one of the country's national banks over which he had direct oversight to perpetrate his financial crimes. He allegedly installed a co-conspirator as the bank's president in 2000, they said.

Mr. Portillo allegedly diverted funds meant for public projects in Guatemala to accounts held by his former wife and daughter in Paris, London and other places, according to the indictment, filed in Manhattan federal court. Mr. Portillo also allegedly embezzled nearly $4 million from Guatemala's ministry of defense in 2001 with help from two unnamed co-conspirators from the army, the indictment said.

The indictment also alleged that Mr. Portillo and the Credito bank president stole money from the bank's publicly financed reserves.

If Mr. Portillo is brought to the U.S., he would be arraigned on money-laundering charges that carries a maximum of 20 years in prison.

David Abbott, a defense attorney in Guatemala City who has defended Mr. Portillo against corruption charges, said he hasn't seen or heard from him in recent days. He said Mr. Portillo has complied with local bail requirements since his extradition.