The Mayor of Thunder Bay has been charged with extortion and obstruction of justice, along with his wife, the latest blow to a city facing a crisis of leadership after the deaths of Indigenous teenagers in the city's waterways and the arrest of the chief of police earlier this year.

Keith Hobbs, 65, who spent decades as a police officer before entering politics in 2010, and his wife, Marisa Hobbs, 53, are accused of trying to extort money from a wealthy lawyer and with subsequently interfering with a police investigation. Another woman, Mary Voss, 46, also a resident of Thunder Bay, is charged with extortion. The arrest of the Thunder Bay police chief, charged in May with obstruction of justice and breach of trust, is connected to these allegations, according to the Ontario Provincial Police.

The arrest of Thunder Bay's top politician casts a further shadow over this city of 110,000 in Northwestern Ontario. It has been beset by allegations of police incompetence and racism against its Indigenous population, and the growing controversy threatens to further undermine confidence in local institutions.

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Related: First Nations leaders question safety of youth in Thunder Bay

Mr. Hobbs told The Globe and Mail on Friday that he is taking a 90-day leave of absence, but plans to continue as mayor. His first court appearance is scheduled for September, and the legal process is likely to take much longer to reach a conclusion. A spokeswoman for the City of Thunder Bay said that after 90 days of paid leave it will be up to city council to determine what should happen with Mr. Hobbs. He has said that he will not seek re-election to a third term in 2018.

"There's so much to the story and I can't get into it," said Mr. Hobbs, appearing at his doorstep in a golf shirt and shorts. "I wish I could. I want to tell our story so bad."

"The truth will wash ashore," he said. "Leave it to the justice system. I believe in it. I worked in it for 34 years."

When asked about his sanguine demeanour in light of serious charges, he said, "I'm calm, very calm. That should tell you something."

"I'm still the mayor, I'm still in contact with my city manager and staff," he said. "I just think it's in the best interests of council and the city for me to step aside for a bit."

In a statement, the Mayor's legal team, led by well-known defence lawyer Brian Greenspan, expressed on their clients' behalf "their clear and emphatic denial of the allegations."

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OPP Detective Inspector Martin Graham brought the criminal charges to Thunder Bay court on Friday morning. In an interview with The Globe, Insp. Graham said the latest charges are related to those he laid against Thunder Bay police Chief J.P. Levesque in May as well as criminal charges of assault and sexual assault laid against prominent Thunder Bay lawyer Alexander (Sandy) Zaitzeff in December.

"It is all interlinked," said Insp. Graham, one of the force's most experienced investigators.

In the formal information the OPP filed with the court, Mr. Hobbs, Ms. Hobbs and Ms. Voss are accused of attempting to induce Mr. Zaitzeff to buy a house for Ms. Voss by threatening to disclose criminal allegations to police. The alleged extortion took place between late October and late November last year.

Mr. Hobbs and his wife are also accused of attempting to obstruct justice by interfering in a criminal investigation into an allegation of extortion that had been reported to the RCMP.

While the original complaint to police was made to the RCMP, the OPP took over the investigation for reasons of "transparency and independence," Insp. Graham said.

Mr. Hobbs spent much of his career in policing as head of the Thunder Bay police association, while Mr. Zaitzeff, in his legal practice, successfully fought a $100-million class-action lawsuit against the RCMP on behalf of female members of the force.

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"Any time an allegation is brought against the chief of police and mayor of a city the size of Thunder Bay, that necessitates the involvement of our senior staff," Insp. Graham said of why he was brought in to lead the investigation.

Mr. Hobbs and Mr. Zaitzeff were already connected by a defamation lawsuit launched by the Mayor after a video was posted to the Internet last year.

In the video, which was apparently filmed in the basement of one of Mr. Zaitzeff's homes in the Thunder Bay area last October, Mr. Zaitzeff asks the person holding the camera to record those present, including Mr. Hobbs. Mr. Zaitzeff, who takes off his shirt in the video, boasts of his wealth, mentions his trauma over his son's accidental death and then proposes to his former girlfriend.

Mr. Hobbs sued Mr. Zaitzeff for defamation in January after the video was made public (although it's not clear who posted it), saying its sole purpose was to impugn his credibility and reputation. In the lawsuit, the Mayor alleges that Mr. Zaitzeff warned him that he "would submarine and bury him" for saying he would contact police about "information concerning serious allegations of sexual impropriety." Mr. Zaitzeff also allegedly sent a text to Mr. Hobbs saying he would "regret the day that he was born," the lawsuit states.

None of the allegations have been tested in court and no statement of defence has been filed.

Mr. Zaitzeff's defence lawyer Scott Hutchison issued a statement on his client's behalf on Friday.

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"Sandy Zaitzeff has consistently asked the people of Thunder Bay to reserve judgment until all the evidence surrounding his case can be aired before the courts. Today is an important step towards that day. While this process has caused him significant stress, he looks forward to his trial and eventual vindication," Mr. Hutchison said.

Ontario's Municipal Affairs Minister, Bill Mauro, also represents Thunder Bay as an MPP. He was quick to dispel any suggestion Queen's Park might consider intervening in the city's operations while charges hang over two key municipal leaders.

"Effective local governance will still be there," Mr. Mauro said. "Most residents are just concerned that the community's reputation might be tarnished. This is not representative of Thunder Bay."

The Mayor is relinquishing his public duties, effective Monday, the city said. Councillor Trevor Giertuga will be the acting mayor, and the post will rotate among councillors on a monthly basis. A city spokeswoman said council convened Thursday night and received advice on the matter, but she would not say when the city first became aware of the allegations.

"It has a profound impact," Mr. Giertuga said of the Mayor's arrest. "But we are dealing with this. It's a personal matter and as a city we're dealing with city issues on a go-forward basis. So this is separate from running the city."

Mr. Levesque, the chief of police, has been on leave since he was charged in May. His charges stem from allegedly disclosing confidential information related to Mr. Hobbs, according to police, although what he's alleged to have said and to whom is not clear.

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That is just one in a long list of investigations. The Thunder Bay police service is currently under investigation by Ontario's Independent Police Review Director for the way it has investigated deaths involving Indigenous people.

Earlier this year, the chair of the police board, Jacqueline Dojack, was suspended for several days while she was investigated by the Ontario Civilian Police Commission. She was found to have committed an error in judgment in relation to some of the circumstances around the charges against the chief of police, but she did not breach the code of conduct and was allowed to resume her duties.

The commission is also investigating whether the board provides effective governance of police. In addition, a recent Statistics Canada report said the city had by far the highest level of hate crimes among Canada's larger cities.

Indigenous leaders first sounded an alarm about what they described as a "policing crisis" at a news conference at Queen's Park in May. Coming on the heels of a lengthy coroner's inquest into the death of seven Indigenous teenagers in Thunder Bay since 2000, Grand Chief Alvin Fiddler of the Nishnawbe Aski Nation was among those who called for the RCMP to be brought in to investigate the recent deaths of Tammy Keeash and Josiah Begg, two Indigenous teens found dead in the city's waterways in May, saying he had lost confidence in the ability of Thunder Bay police to conduct the investigations.

Ontario's chief coroner eventually called in York Regional Police to assist Thunder Bay with those investigations.

Selena Ross is a freelancer