Former Fugees rapper Pras Michel was indicted on charges of funneling millions of dollars in foreign money to then President Obama’s 2012 re-election effort, amid widening fallout of the multibillion-dollar fraud scandal at a Malaysian government fund.

The scandal has toppled Malaysia’s prime minister, threatened Goldman Sachs Group Inc. with criminal charges, and ensnared both Republican and Democratic fundraisers.

An indictment charging Mr. Michel with four counts including conspiracy to defraud the U.S. and making foreign campaign contributions was unsealed Friday.

The founding member of the Fugees hip-hop group was accused of taking money from a Malaysian businessman, who is the alleged mastermind of the fraud at Malaysia’s 1MDB fund, and using around $2 million to support Mr. Obama’s campaign.

The businessman, Jho Low, who was indicted last year on conspiracy charges, faces additional charges alongside Mr. Michel for his alleged role in the contributions. Mr. Low has denied those allegations and remains at large.