State Sen. Malcolm Smith and city Councilman Dan Halloran were arrested this morning on charges they were plotting to rig this year’s mayoral election through fraud and bribes.

The pols allegedly formed an alliance built on cash payments and fraud to get Smith — one of the state’s top Democrats — placed on the GOP mayoral ballot, sources said.

FBI agents arrested them both at their Queens homes shortly after 6 a.m.

“I have no idea,” Halloran, in handcuffs, told a Post reporter when asked if he knew why he was being arrested.

“I’m sure the truth will come out once I have an opportunity to find out what’s going on.”

Smith would not say anything as he was hauled off.

All six defendants were arraigned this afternoon, when they were ordered to surrender their passports and post $250,000 bond.

Everyone but Smith was restricted to stay in the five boroughs, Westchester, Rockland, Putnam, Orange, Dutchess, Sullivan, Nassau and Suffolk counties. As a sitting state senator, Smith is being allowed to access to all of New York state.

Halloran’s lawyer told US Magistrate Judge Lisa Smith that his client owns two shotguns, and one of them was confiscated by feds this morning.

“I want that [second shotgun] surrendered in 24 hours,” Smith said.

Halloran, meeting on Sept. 7 at a Manhattan restaurant with the government informant, allegedly made clear that it takes big bucks to bring government action in New York.

“That’s politics, that’s politics, it’s all about how much,” Halloran said, according to the criminal complaint.

“Not about whether or will, it’s about how much, and that’s our politicians in New York, they’re all like that, all like that.”

Halloran allegedly added: “You can’t get anything without the f–king money.”

The meeting ended with Halloran receiving $7,500 cash bribe from the feds’ cooperating witness, according to the complaint.

“Money is what greases the wheels — good, bad or indifferent,” Halloran allegedly remarked.

Smith insisted on seeing clear returns for his role in the scheme, according to prosecutors.

Smith allegedly met with the informant and undercover agent at his Albany office on March 21 and told them not to pay GOP co-conspirators “even a nickel more” until they publicly stated support for his mayoral candidacy,

“[He’d] have to stand on the Empire State Building and drop every person [he] endorsed and hold Malcolm up and say he’s the best thing since sliced bread,” Smith allegedly said. “Matter of fact, he’s better than sliced bread.”

During a meeting on Nov 16, Smith allegedly met with the agent and the cooperator — who are not named in the documents — at a Manhattan hotel. The senator allegedly was harping on his need to switch the allegiance of one particular borough GOP chief. After the cooperator said he thought he could influence the party leader, Smith was recorded as saying “If you can change him, call me. Seriously…If you can change him that would be huge.”

That same day, the feds recorded Smith pledged to the undercover agent at Grand Central he would be indebted to him if he could win the support of a borough GOP boss: “You pull this off,” Smith said, according to documents, “you can have the house … I’ll be the tenant.”

The agent asked Smith “is this worth going to the bank for?”

In response, Smith was emphatic: “I want him done. I want him done. I want him to say, ‘You know what, Malcolm, we did make a commitment to you early on…We’re going back to that.’ That’s what I want him to do.” Smith allegedly closed the discussion, saying “This is a big thing.”

Less than two months ago, on Feb. 8 Halloran met up with the informant and the undercover agent at a Manhattan hotel where the councilman told the pair that Bronx Republican Chairman Joseph Savino “wanted $25,000 ‘in an envelope,’ and Queens GOP Vice Chairman Vincent Tabone wanted $50,000 with half of the money before he signed the (ballot-support) certificate and the other half after.”

FBI officials confirmed the arrests to The Post.

“Elected officials are called public servants because they are supposed to serve the people. Public service is not supposed to be a shortcut to self-enrichment,” FBI Assistant Director George Venizelos said in a written statement today.

“People in New York, in Spring Valley — in any city or town in this country — rightly expect their elected or appointed representatives to hold themselves to a higher standard. At the very least, public officials should obey the law.

“As alleged, these defendants did not obey the law; they broke the law and the public trust. There is a price to pay for that kind of betrayal.”

Venizelos said today that federal undercover officers “did not have to twist any arms” to get the group to partake in the pay-to-play scheme.

When Tabone received on of his bribes, he promised that they money would surely lead to Smith’s name on the GOP line.

“’Nobody else runs the party, I run the party,’“ Tabone once boasted, according to Venizelos.

At one point, Tabone wanted to make sure this alleged chat wasn’t being recorded.

“Clearly aware the scheme was illegal, Tabone patted down the undercover [FBI agent] to see if he was wearing a recording device,” Venizelos said.

“Today’s charges demonstrate, once again, that a show-me-the-money culture seems to pervade every level of New York government. The complaint describes an unappetizing smorgasbord of graft and greed involving six officials who together built a corridor of corruption stretching from Queens and the Bronx to Rockland County and all the way up to Albany itself, ” US Attorney Preet Bharara said in a statement.

“As alleged, Senator Malcolm Smith tried to bribe his way to a shot at Gracie Mansion – Smith drew up the game plan and Councilman Halloran essentially quarterbacked that drive by finding party chairmen who were wide open to receiving bribes. After the string of public corruption scandals that we have brought to light, many may rightly resign themselves to the sad truth that perhaps the most powerful special interest in politics is self-interest.

“We will continue pursuing and punishing every corrupt official we find, but the public corruption crisis in New York is more than a prosecutor’s problem.”

Bharara showed reporters a chart, illustrating the co-conspirators and their ties to Smith, who allegedly tried to “bribe his way to City Hall.”

“You have all those people circling around — and then of course you have `Malcolm in the Middle,’ ” said straight-faced Bharara, in a deadpan homage to the long-running Fox comedy. “Not every state Legislature has this level of criminality exposed.”

“The culture has to change,” Bharara added, blasting the “lack of transparency” and “lack of self-policing.”

As agents took Smith and Halloran into custody, the feds raided the homes of Savino and Tabone, who were arrested on charges of wire fraud and bribery. They allegedly agreed to take bribes to get Smith on the ballot.

Savino last month endorsed Joe Lhota for mayor. He initially favored former Bronx Borough President Adolfo Carrion, a Democrat turned independent.

Also hauled in this morning were Noramie Jasmin, the mayor of Spring Valley in Rockland County, and her deputy mayor, Joseph Desmaret.

The Rockland pair is accused of taking bribes in return for approving the sale of village land to a private concern. In addition to cash bribes, Jasmin is accused by the feds of demanding a secret ownership stake in the company that bought the property from her community.

That scheme dates to August 2011, the feds charge.

All six are going to appear in White Plains federal court today.

At Smith’s home, two FBI agents led the grim-faced senator — in a business suit — from a back door to an unmarked car.

Three FBI agents spent more than 30 minutes inside the home before arresting the powerful pol. A woman inside the home refused to open the door for a reporter.

After the agents took off, a Smith neighbor said, “I’m glad he’s arrested.”

Ten miles away at Halloran’s home in northern Queens, agents drove up in four unmarked cars and spread out to cover front and back entrances before raiding the councilman’s place. Halloran’s dog could be heard barking throughout the episode.

After less than a half hour, Halloran emerged in custody, wearing blue jeans, a blue sweatshirt and a stunned look on his face.

Smith was trying to buy off Republican leaders because he needed the party’s support in at least three boroughs in order to run as a GOP candidate without even changing his own party affiliation, the sources said.

“It’s incredible,” a source said of the alleged plot.

To get on the GOP ballot, Smith allegedly enlisted Halloran, a Republican, to set up meetings with party leaders and negotiate thousands of dollars in bribes. The money was masked as payments for legal and accounting services, sources said.

Halloran allegedly collected thousands in bribes for himself along the way, the sources said.

He is separately charged with taking bribes from a consultant in return for up to $80,000 in City Council discretionary funding.

The feds were already investigating Halloran when they got wind of the alleged ballot-manipulating plan in November, the sources said. Smith met with his alleged co-conspirators as recently as February.

At the heart of the case against Smith and Halloran is a complex web of corruption schemes that unraveled because of a confidential informant working with the feds and an undercover FBI agent who posed as a real estate developer.

The feds charge that Smith used the informant and the undercover agent to offer payoffs to county leaders to win him the ballot placement he sought. The feds also say Smith was working with the pair on a real estate deal in Rockland County, which is what connected the New York City plot to the mayor and deputy mayor in Spring Valley. Smith allegedly said he would use his Senate office to bring home $500,000 in state funds for road work that would benefit the development project.

Halloran, in addition to facilitating the alleged Smith bribes, allegedly agreed to use his council office to reel in up to $80,000 in city funds for a bogus company controlled by the undercover agent and the federal cooperator. In return, the feds said Halloran took $18,000 in cash bribes and $6,500 in contributions that were from so-called “straw donors” — people who use their own names to cover up illegal donations from others.

Smith and Halloran are facing a prosecution that will rely heavily on wiretaps and recorded conversations, typically the most damning kind of evidence in corruption cases.

Smith and Halloran, if convicted, could be looking at up to 45 years in prison. Tabone and Savino are facing 25 years each. And the Spring Valley duo are staring at a possible prison sentence of 20 years apiece.

Rockland County DA Thomas Zugibe said the corruption case that nailed Smith and city GOP leaders sprung from an unrelated scam he was investigating in the suburban county.

Smith’s arrest is a remarkable turn in what was once viewed as an ascendant bid to succeed Mayor Bloomberg.

Smith, 56, spent much of the summer trying to drum up support for a campaign, which was first reported by The Post. To bolster his effort, he met with officials around the state, including New York GOP chief Ed Cox.

At the time, he appeared to have more of a chance than the liberal group of candidates seeking the Democratic nomination.

Both Smith and Halloran are controversial figures.

Smith is facing heat for his ties to a shady Queens nonprofit, the New Direction Local Development Corp., which The Post found misused charitable funds intended for victims of Hurricane Katrina.

Smith, representing much of southeastern Queens, was also involved in an embarrassing Aqueduct casino bid-rigging scandal, which remains under investigation by the FBI.

Never missing a chance to make headlines, Smith last year stunned the state’s political establishment by joining forces with Republicans to form a first-of-its-kind coalition to run the fractured state Senate.

By joining the Independent Democratic Caucus — along with four other Democratic renegades — Smith allowed the state Republican Party to keep control of the Legislature’s upper house.

Smith also once served as the majority leader of the state Senate, after Democrats captured control of the chamber in 2008.

Chaos reigned during Smith’s tenure and, by June 2009, two members of his conference had joined with GOP senators to oust Smith and trigger another crisis at the Capitol.

His brief period of leadership was considered a flop, and his Democratic Party subsequently lost control of the chamber to the Republicans.

New York State Republican Chairman Ed Cox today said in a statement, “The arrest of elected and party officials this morning is deeply concerning. I urge federal and state law enforcement officials to do their jobs as thoroughly and expeditiously as possible to determine the guilt or innocence of those accused.

“The integrity of the electoral process for the voters of New York City must be preserved.”

Halloran, too, is no stranger to controversy.

During the Christmas blizzard of 2010, the first-term councilman from Bayside claimed he had evidence that Sanitation Department plow drivers were intentionally slowing down the cleanup as part of a wildcat job action.

But he refused to assist in the feds’ probe, citing attorney-client privilege.

The city’s Department of Investigation later released a report that found “no actual evidence about a possible slowdown.”

Halloran, a 42-year-old lawyer and former city cop, ran for Congress last year.

During that campaign, The Post reported the state Board of Elections had referred his campaign to the Albany DA for investigation and possible prosecution because he had not filed state campaign-finance reports for more than two years.

Halloran later filed the appropriate forms, but lost to then-Assemblywoman Grace Meng.

Today’s arrests stunned GOP mayoral candidate John Catsimatidis, who employed Tabone as a top campaign adviser.

Catsimatidis said he immediately took Tabone off the campaign and called the whole affair “very sad.”

Additional reporting by Carl Campanile, David K. Li and Rebecca Rosenberg

US vs Malcom Smith (complaint) by New York Post