The eight officers and 13 enlisted men and women, including the colonel and former commander of the 214 Reconnaissance Group, falsified their records and used fake home addresses in order to receive money meant for those traveling outside of their home regions for duty assignments, Arizona Attorney General Tom Horne said.
"In this case, all of these people lived in Tucson and put down fraudulent homes of record in other states" to qualify for the extra pay, Horne added.
The indictment announced today comes after an 18-month investigation by state and federal agencies.
Only eight of those charged remain members of the National Guard, said Brig Gen Michael T McGuire, adjutant general of the Arizona National Guard.
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The indictment will be unsealed then.
The suspects worked out of Davis-Monthan Air Force Base in Tucson and were part of an elite military unit tasked with flying drones over Iraq and Afghanistan aimed at providing vital information to troops on the ground.
The charges include conspiracy, conducting an illegal enterprise, fraud, theft and money laundering. Authorities said, if convicted, some of the defendants could be sentenced to up to 12 1/2 years in prison with the commander facing more serious charges for using his position of power to help facilitate the scam.