In 2009, shortly after his re-election as mayor and several years after he embarked on a policy of welcoming migrants as a means of reversing depopulation in his town, Domenico Lucano was shot at through the window of a restaurant where he was eating with friends. As if to ram home their opposition to his plans, the local mafia also poisoned two of his dogs.

Unperturbed, Lucano responded by installing a billboard at the entrance of the town, saying: “Riace – a town of hospitality.” The sign remains today, as does one on the main square that lists the 20 countries people have come from – Eritrea, Somalia, Nigeria, Pakistan, to name a few.

Riace, a tiny hilltop town in Italy’s southern Calabria region, has become famous for its much-lauded model of integration, which began in the late 1990s and continues to this day. But last week, Lucano, the man credited with changing the lives of Italians and foreigners through an initiative that breathed new life into a dying economy, was put under house arrest for allegedly abetting illegal immigration. On Saturday, lending their support to a man dismissed by far-right politician Matteo Salvini as worth “zero”, hundreds of people turned out in support of the mayor and his leadership. Invariably described as altruistic and honest, they struggle to comprehend how Lucano, 60, can have his liberty stripped from him while people belonging to the mafia, a scourge of Italy’s south, roam free.

“Mafiosi kill, yet a mayor who does good is arrested? It doesn’t make any sense,” said Elisabetta, who asked for her surname not to be used.

The main accusation against Lucano, known locally as “Mimmo”, is that he organised “marriages of convenience” after it emerged that he helped arrange a wedding between a Nigerian woman and Italian man so that the woman, who had been forced into prostitution in Naples, could live and work in Italy legally.

“They arrested him for humanitarian acts,” his brother, Giuseppe, told the Observer. “For hours he was interviewed by the prosecutor – he has absolutely nothing to hide. He’s feeling confident and combative, but is a little angry.

“There was only one [marriage], not several,” added Giuseppe. “He did it to save the woman’s life.”

Lucano is also alleged to have flouted the public tender process by awarding waste collection contracts to two cooperatives that were set up to assist migrants in their search for work. The investigation against him began over a year ago, although the more serious allegations of embezzlement and fraud were dropped.

Lucano said in a statement last week: “I never earned anything, nor did I take money from anyone. Public money in Riace was only used for projects relating to migrants and to ease suffering, for job opportunities, integration and to give a better life to asylum seekers.”

People who know him well attest to his generosity, saying that any money won through prizes was given away.

Lucano greets the crowds protesting on Saturday against his arrest. Photograph: Marco Costantino/EPA

“Mimmo helped refugees and Italians,” said Yasmine, who arrived from Pakistan with her family two years ago. “But maybe others took advantage of his goodness.”

Lucano’s integration strategy helped to reignite the economy in an impoverished region long neglected by the government: Riace’s one bar reopened, as did a handful of shops, while the system helped generate jobs for locals – as teachers, translators or cultural mediators.

“It brought me prospects,” says Angela Cristodolu, who teaches migrants needlework. “There was nothing before.”

Houses in the town’s “Global Village” were turned into artisanal shops, with migrants working alongside locals to make and sell products including ceramics, hats and chocolate.

The model is meant to be sustained by a government funding system, but little money has filtered down since 2016, prompting several protests by Lucano, the most recent being a hunger strike in August. “We are reaching the point of no return,” he said at the time. “If the funds do not come, 165 refugees will end up on the street, 80 workers will lose their jobs and everything will collapse under a pile of rubble.”

However, his defiance, which included a call against “every form of racism, fascism and discrimination”, irked Matteo Salvini, the leader of the far-right League, who became interior minister in early June as part of a coalition government with the anti-establishment Five Star Movement. The minister has insulted Lucano and his integration method.

Lucano’s arrest came a week after Salvini unveiled a series of anti-immigration measures that included slashing funds for migrant reception and integration, leading many to suspect a political motive. The arrest also followed the suspension by the public broadcaster, Rai, of a TV show about Riace’s exemplary integration model.

Salvini welcomed news of Lucano’s arrest, writing on Twitter, “who knows what all the other do-gooders who want to fill Italy with immigrants will say now”.

As humanitarian deeds jar with the minister, there are now fears that the government will clamp down on dozens of other towns that have adopted similar initiatives. Nearby Camini faced a similar fate to Riace before it started to integrate migrants – a plan that boosted its current population to around 800, including 150 foreigners, enabled derelict homes to be restored and for the school and post office to reopen. As in Riace, friendships have been forged between locals and foreigners.

“Projects such as these for towns like ours have created opportunities for all,” said Camini’s mayor, Giuseppe Alfarano.

“I suggest the politicians come and see this small reality to understand what can work. And if Salvini wants to close everything down, then fine, but he must come up with an alternative plan for these towns to move forward.”