Read the full indictment here
Hastert is well-respected and admired his hometown of Plano, Ill., and neighboring Yorkville, where he spent time as a high school teacher and wrestling coach before launching his political career. That's when the alleged sexual misconduct took place, ABC News sources said.
Hastert has not commented publicly on the charges, but his friend Dallas Ingemunson, a former Kendall County GOP chairman, said he spoke to Hastert Friday.
"Under the circumstances he's doing okay. He's a little baffled by it," Ingemunson said. "There's no question he's been blackmailed and I hope it becomes exposed, and he's vindicated."
Hastert taught at Yorkville High School from 1965 to 1981. The school district released a statement Friday that it has no knowledge of alleged misconduct when Hastert was a coach and educator there.
Investigators allege Hastert, 73, agreed to pay $3.5 million in hush money to someone, referred to only as "Individual A" in the indictment, to keep quiet on "prior misconduct" by the Illinois Republican. While the indictment doesn't specify the type of misconduct, sources close to the case tell ABC News it was sexual in nature involving a male individual and dates back to when Hastert was a high school teacher.
VIDEO: Former student calls Hastert a "role model, a second father"
Since 2010, Hastert has allegedly withdrawn about half of the $3.5 million from his bank accounts in transactions of less than $10,000 at a time, which is just below the amount that has to be reported bank officials. Prosecutors said Hastert made 106 transactions of that size. Investigators said he lied about the purpose of the withdrawals, claiming he didn't trust the banks.
"It's a lot of withdrawals of cash and it's a lot of effort to go into preventing the government from learning that you're withdrawing large sums of cash," said Gil Soffer, ABC7 legal analyst.
The I-Team has learned that it wasn't leftover campaign money. Hastert's final federal election commission report was in 2008 and showed only $4,800 in the bank.
Hastert likely made his millions from controversial Kendall County land deals, a Washington D.C. lobbying business and speeches at $25,000 per appearance, the I-Team found.
Individual A is only identified as a person from Yorkville who has known Hastert most of his life.
"It clearly involved something relating to a relationship that he had with another person. It's only a surmise what that might be. But it does appear whatever it was in fact inappropriate and it further appears that the victim of the misconduct may have also been playing an extortion game," Soffer said.
Born in Aurora, Ill., Hastert graduated from Wheaton College, where the school of economics and government is named after him. On Friday, Wheaton College said it had accepted Hastert's resignation from that school's board of advisors.
His small-town roots are part of the Hastert charm and seen as a salve for a GOP wounded by ethics charges.
"One of the reasons he was chosen as speaker, it was a time in the Republican Party where there was a lot of dissension, a lot of controversy. They wanted a good guy who could bring people together," said Laura Washington, ABC7 political analyst.
In 1999 amid the turmoil in the Republican Party, the GOP picked Hastert to be Speaker of the House because of his small-town roots and reputation. He was remarkable for being a little-known state lawmaker from suburban Chicago who eventually rose to the third-highest office in the land.
Hastert was the longest-serving Republican Speaker of the House in history.
"I'm saddened by this news. Nobody wants to see a person's career in public service have this as their capstone," Chicago Mayor Rahm Emanuel, wo served with Hastert in Congress, said. While they had political differences, Emanuel said Hastert always served with distinction.
Hastert has not been seen or heard from publicly since his indictment. On Thursday, Hastert resigned from his job at a lobbying firm in Washington and his position on the board of the CME Group in Chicago. He has not returned phone calls or answered the door at his Plano estate.
"I am shocked, completely shocked what happened with this indictment. I feel responsible about it because I asked Zak Fardon to go hard on public corruption and he certainly has done that," U.S. Senator Mark Kirk said.
"I've known Denny for years as a coach, later as speaker. It's unfortunate to see what has come of all this. We have yet a lot to learn," former Illinois Treasurer Dan Rutherford said.
"It is human tragedy," Pat Brady, former Illinois Republican Party chairman, said.
Hastert left Congress eight years ago. His time as a wrestling coach was never far from his narrative. His autobiography includes the quote: "There's no one to blame but yourself if you get pinned."
A court date has not been set, according to the U.S. Attorney's Office. Federal Judge Thomas Durkin, the brother of House Republican Leader Jim Durkin of Western Springs, Ill., was assigned the case. The judge has not sent an order for arraignment as of Friday morning.