MONTREAL—When Montreal’s mayor resigned in crisis last fall Michael Applebaum was tapped by city council colleagues to guide Quebec’s largest city through the choppy waters of corruption until the municipal election in November 2013.

But just seven months after taking on the post Applebaum, along with former city councillor Saul Zajdel and Jean-Yves Bisson, a municipal bureaucrat in charge of issuing permits, have instead been swept up in the mess.

Applebaum the lawmaker — after being picked up by police at his home Monday morning — was fingered by police as a lawbreaker. He is alleged to have committed fraud, conspiracy and corruption related to two suspicious real estate deals in the west-end borough of Côte-des-Neiges—Notre-Dame-de-Grâce, where he had previously served as borough mayor since 2002.

“We can no longer tolerate these reprehensible acts committed against the management of our public institutions,” said Robert Lafreniere, commissioner of the provincial anti-corruption force.

He added that the arrest should send a clear message: “No one is above the law and you can’t hide from the law.”

Applebaum is alleged to have engaged in two separate criminal conspiracies, according to an arrest warrant filed in court. The first involves a relationship with real estate developers Robert Stein and Anthony Keeler that was carried on between January 2006 and December 2010, when Applebaum was the borough mayor in N.D.G.

Also implicated in the court documents is Hugo Tremblay, whose online profile identifies him as a political aide in Applebaum’s home district.

Police did not disclose the specific real estate deals at the heart of their three-month, 200-officer probe, but Radio-Canada reported that the allegations connected to Stein and Keeler, who were not charged with any crimes, involved the demolition of a residential building and the construction of condominiums.

Keeler could not be reached for comment Monday and calls to Stein’s office were not returned.

In an undated online posting that identified Stein as president of Eagle Investments, a real estate firm, Stein says he got into business when his father became gravely ill and later died, leaving his company deeply in debt.

“I’m proud to say that in the three and a half years that I have been running the business, not only have I managed to get us out of debt entirely, but I have increased the value of our business by almost 2x,” he wrote in the posting. One photograph that the Star found online shows Stein posing with Conservative cabinet minister Maxime Bernier, though no other public links to the governing party in Ottawa could be identified.

The second batch of charges against Applebaum link him to Rosaire Sauriol, Patrice Laporte and Claude Asselin, three principal figures at Dessau, a Laval-based engineering firm that has been central to the municipal corruption testimony being heard at the Charbonneau commission. The alleged activities were carried out between January 2009 and December 2011.

Radio-Canada reported that the charges relate to the management of a sports centre in N.D.G that is being operated by a subsidiary of the firm, Sogep Inc. Municipal documents show that Sogep won a three-and-a-half-year contract in June 2010 to manage the building, reception desk, concession stand and pool facilities that was worth more than $1 million annually between 2011 and 2013.

In addition, Radio-Canada’s chief investigative journalist, Alain Gravel, citing police sources, said the police were investigating a $50,000 payment to Applebaum as well as a $15,000 payment made to a former elected official, Saul Zajdel.

Zajdel, a longtime city councillor, was selected by the federal Conservative party to run in the 2011 election against former Liberal cabinet minister Irwin Cotler. After losing that race, Zajdel was hired in October 2011 by Conservative Heritage Minister James Moore to work as a “liaison” between the Tories in Ottawa and Jewish community in Montreal, prompting accusations that the Harper government had put in place a “shadow MP” and paid him with taxpayer money.

Zajdel resigned his post in March 2012 and he found no defenders Monday in Ottawa.

“Our government firmly believes that anyone proven to be involved in corruption in Quebec will have to face the consequences,” said Sebastien Gariepy, a spokesman for Moore.

Though the charges against Applebaum Monday came as a shock to Montrealers, Applebaum has been under increasing scrutiny over the last few months with reports that he had been questioned by Quebec’s anti-corruption force and a massive raid last February of several municipal offices, including the N.D.G. council offices. Applebaum has always maintained that he was not under investigation.

In his former post running the borough, Applebaum had business and community dealings with a controversial developer from the area named Tony Magi, who police have said has “tight links with the Italian Mafia in Montreal” and was the target of an attempted murder in a gangland-type shooting in 2008.

Magi’s lawyer told Star last January his client was “a businessman . . . whose personal and professional life concerns only him.”

Applebaum insisted that once Magi’s criminal connections became a matter of public speculation, he ended any contact.

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“I did not meet Magi since I learned of his ties to the mafia, since the attempted murder, I did not meet Mr. Magi,” Applebaum said in response to a joint Radio-Canada/Toronto Star investigation last January.

Bisson, the bureaucrat who was arrested Monday, admitted that he met on several occasions with Magi about a multi-million-dollar condo construction project, including on two occasions where Nick Rizzuto Jr., the son of Mafia godfather Vito Rizzuto, was present.

Those are not Magi’s only connections to those implicated in the charges against Applebaum. Stein and Keeler, the real estate developers allegedly involved in the conspiracy with Applebaum, filed a lawsuit in 2008 against a construction firm owned by the Magi family.

In the suit before the Quebec Superior Court, they claimed that a $340,000 loan as part of “Joint Venture Development Deal” was never repaid. The suit was settled in 2010 when a judge ordered that the money be repaid.