The indictment has not been seen by a judge, who could dismiss it.
The grand jury in Willacy County, in the Rio Grande Valley near the U.S.-Mexico border, said Cheney is "profiteering from depriving human beings of their liberty," according to a copy of the indictment obtained by Reuters.
The indictment cites a "money trail" of Cheney's ownership in prison-related enterprises including the Vanguard Group, which owns an interest in private prisons in south Texas.
Former attorney general Gonzales used his position to "stop the investigations as to the wrong doings" into assaults in county prisons, the indictment said.
Cheney's office declined comment. "We have not received any indictments. I can't comment on something we have not received," said Cheney's spokeswoman Megan Mitchell.
The indictment, overseen by county District Attorney Juan Guerra, cites the case of Gregorio De La Rosa, who died on April 26, 2001, inside a private prison in Willacy County.
The grand jury wrote it made its decision "with great sadness," but said they had no other choice but to indict Cheney and Gonzales "because we love our country."
Texas is the home state of U.S. President George W. Bush.
Bush and his Republican administration, which first took office in January 2001, leave the White House on January 20 after the November presidential elections won by Democrat Barack Obama. Gonzales was attorney general from 2005 to 2007.
(Reporting by Chris Baltimore and JoAnne Allen, Editing by Frances Kerry)
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