The district attorney's office said the suspect, 47-year-old Bobby McMullin, tried to blackmail Unser with claims of a "compromising" videotape in February and March 2004.
Prosecutor Mark Drebing said on Friday the video was not related to the prostitution ring and Unser was not a client.
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"I don't think Little Al did anything wrong," Drebing said. "For our purposes, he is listed as a victim. He was extorted."
It wasn't clear why Unser was involved with McMullin and Unser couldn't be reached for immediate comment. He has no listed telephone number and didn't return messages left at the Unser Racing Museum.
McMullin allegedly asked Unser for $750,000 and, if payment wasn't received, threatened to release the tape to the public, according to one charge outlined in a 137-count indictment.
"During execution of a search warrant, documents were found that included what amounts to an extortion note he (Unser) had signed, agreeing to pay Bobby McMullin to keep the tape confidential," Drebing said.
Drebing said it appears Unser made some payments to McMullin but didn't know how much money was handed over.
Unser's name turned up as police investigated an online escort service run by McMullin, who was arrested in May. The company, Private Ice, was tied to a downtown strip club and alleged prostitution ring.
Drebing said Unser wasn't summoned to testify for the grand jury. Instead, the extortion charge was returned based on police reports filed by vice detectives. Drebing said a second man also was identified as a victim.
Unser told the detectives he was concerned about McMullin's alleged threat because of a morals clause in an endorsement contract.
"Mr. Unser expressed concern that the tape could possibly compromise that," he said. "That's the basis for the extortion charge."