Saunders signed with the Colts last October and played in 11 games (four starts), making two receptions for 15 yards. He served a four-game suspension for violating the same policy earlier in 2012 while with the Steelers, who subsequently released him.
While at South Carolina, he was questioned by NCAA investigators about possible contact with an agent and was later suspended by Gamecocks coach Steve Spurrier for violations the coach said were not related to the NCAA probe. Less than a month after first announcing the suspension, in August 2010, Spurrier kicked Saunders off the team.
Instead of transferring, Saunders wound up forgoing his final year of eligibility to enter the NFL draft. Saunders went undrafted and signed with the Steelers as a free agent.
Indianapolis also signed outside linebacker Daniel Adongo on Thursday.
Adongo is a 6-foot-5, 257-pound Kenyan rugby player who has played for national youth teams.
"We are excited as an organization with the acquisition of Daniel Adongo," said general manager Ryan Grigson. "He is not only an elite athlete and rising international rugby player, but he is an exceptional competitor and human being that has the right makeup for our sport. We all look forward to watching his growth and development in the ensuing weeks."