By Ian Simpson

(Reuters) - A federal grand jury has indicted 80 people for drug trafficking at Maryland's biggest prison, officials said on Wednesday, in the third major case to target corruption in the state's prison system since 2009.

Guards at the medium-security Eastern Correctional Institution smuggled in narcotics, cell phones, pornographic videos and tobacco in exchange for money and sex with inmates, the two indictments said.

U.S. Attorney for Maryland Rod Rosenstein said the most shocking allegation involved a guard who arranged for prisoners to stab another inmate who appeared to have told authorities about the scheme. It was among two stabbings cited in the indictments.

"One of the most significant aspects of this indictment is that it illustrates what happens inside the prison when this kind of systemic corruption flourishes," he said at a news conference in Baltimore.

Charges against 18 guards, 35 inmates and 27 outside facilitators include racketeering, conspiracy to distribute drugs, aiding and abetting and deprivation of rights.

The nearly identical indictments were divided between the Westover, Maryland, prison's two compounds, which together hold more than 3,300 inmates.

The documents accuse correction officers of accepting cash, Western Union money orders and online payments through PayPal using illicit cell phones.

The going rate for a guard to smuggle in contraband was $500 a package. Smuggled drugs included marijuana, heroin, cocaine, MDMA or ecstasy, and the prescription opioid Suboxone, the indictments said.

Markups could be hefty, with indicted inmates buying strips of Suboxone for $3 and selling them for $50.

Governor Larry Hogan praised the indictments, calling them in a statement "a clear victory in the fight against corruption."

The number of suspects in the latest case dwarfs two earlier cases involving corruption at Maryland prisons.

Those cases - at Baltimore's jail in 2013, and a Baltimore prison in 2009 - detailed how the Black Guerrilla Family gang had corrupted prison officers.

Twenty-four people were charged in the 2009 case, and 44 were indicted in the 2013 case. Hogan ordered the scandal-plagued jail to be shut last year.

The American Federation of State, County and Municipal Employees, which represents prison guards, said in a statement: "No one wants correctional officers to be honest more than fellow correctional officers, who depend on their co-workers to have their backs."

Maryland officials have admitted the system was understaffed by more than 600 guards, it said.

(Reporting by Ian Simpson in Washington; Editing by Diane Craft and Lisa Shumaker)