The former president of the US private security firm, Blackwater Worldwide, and four other former workers have been indicted on federal weapons charges.
Gary Jackson, who resigned last year, denies conspiracy to violate firearms laws, making false statements and possession of an unregistered firearm.
Also indicted were the former general counsel and executive vice-president.
The charges are partially the result of a raid in 2008 by federal agents who seized 22 weapons, including 17 AK-47s.
Blackwater changed its name to Xe Services in 2009, two years after its guards were involved in a shooting incident in Baghdad that left 17 Iraqi civilians dead. They had been protecting US diplomats there.
Their actions outraged the Iraqi government and led to charges being filed in the US against several guards - accusations later thrown out of court after a judge found prosecutors had mishandled evidence.
In addition to Mr Jackson, Blackwater's former general counsel Andrew Howell, former executive vice-president Bill Mathews, former procurement vice-president Ana Bundy, and former weapons manager Ronald Slezak were indicted on Friday.
They are charged with using "straw purchases" to stockpile automatic weapons at the company's headquarters in Moyock, North Carolina, and filing false documents to cover up gifts given to the king of Jordan.
Prosecutors said the company signed agreements in 2005, through which it financed the purchase of 34 automatic weapons for the Camden County sheriff's office but was allowed to keep most of them at its armoury.
Federal law prohibits licensed firearms dealers to have more than two of the same style of weapon - the raid on Blackwater found 17 AK-47s. Law enforcement agencies are also allowed to have fully automatic weapons.
According to the Associated Press, the 2005 agreements between Blackwater and the sheriff's office said the weapons would be kept under "lock and key".
Sheriff Tony Perry said at the time that his department only used the AK-47s in shooting practice at Blackwater, while Mr Jackson said it had offered it a place to store the weapons as a gesture of "professional courtesy".
The indictment also alleges that Blackwater officials, hoping to win a lucrative overseas contract for building and running a training centre, presented King Abdullah of Jordan with five firearms "to gain favour".
However, they then realised they could not account for where the weapons had gone and falsified four federal documents "to give the appearance that the weapons had been purchased by them as individuals", it adds.
Mr Jackson's lawyer, Kenneth Bell, said the former Navy Seal was a true American hero and insisted the charges were false.
"He will defend himself, as he defended this country, in what he calls the greatest justice system in the world," he told AP.
Xe spokesman Mark Corallo said it had fully co-operated with the federal investigation and declined to give further comment.
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