(Corrects when Marine pleaded guilty)

By Dan Whitcomb

LOS ANGELES (Reuters) - A U.S. Marine captain who last year pleaded guilty to skimming nearly $1.7 million from government contracts in Iraq was sentenced to six years in federal prison on Monday.

Eric Schmidt, who is assigned to the First Marine Division at Camp Pendleton in Southern California, pleaded guilty in May to conspiracy to commit wire fraud and filing a false tax return with the U.S. Internal Revenue Service.

His wife, Janet Schmidt, pleaded guilty to a tax offense in connection with the scheme and faces three years in prison when she is sentenced in March.

Prosecutors say Schmidt, 40, who was deployed to Iraq in 2008, used his position to steer business to an Iraqi contractor, Al-Methwad Company.

Once Al-Methwad had been awarded the contracts, prosecutors say, Janet Schmidt used money from Al-Methwad to purchase fewer or inferior goods than those required by the contract and arranged for their delivery to Marines in Iraq.

Prosecutors say the Schmidts caused the U.S. Defense Department to suffer losses of $1.69 million and the Internal Revenue Service to suffer losses of more than $450,000.

During the course of the investigation, government agents seized two California properties, two luxury vehicles and about $40,000 in cash from the couple.

"The Schmidts defrauded U.S. taxpayers, cheated the Iraqi people and betrayed the trust placed in them," said Stuart Bowen, attorney for the Special Inspector General for Iraq Reconstruction. "They will now pay a price for their criminal wrongdoing."

(Editing by Peter Bohan and Greg McCune)