A monsignor suspended from his job as an accountant at the Vatican has been arrested, a papal spokesman said Friday.
Greg Burke, the senior Vatican communication adviser, confirmed Monsignor Nunzio Scarano had been detained.
Scarano normally works as an accountant for APSA, the body that manages the Vatican's real estate, but was suspended over alleged financial offenses.
The cleric’s lawyer Silverio Sica told The Associated Press that his client was arrested on Wednesday over separate allegations and was now accused of fraud, corruption and slander.
Sica laid out what the prosecutors claimed had happened in the interview with the AP:
He said Scarano was a middleman in the operation: Friends had asked him to intervene with a broker, Giovanni Carenzio, to return 20 million euros ($26 million) they had given him to invest.
Sica said Scarano persuaded Carenzio to return the money, and an Italian secret service agent, Giovanni Maria Zito, went to Switzerland to bring the cash back aboard an Italian government aircraft. Such a move would presumably prevent any reporting of the money coming into Italy.
The operation failed because Carenzio reneged on the deal, Sica said.
Zito, nevertheless, demanded his 400,000 euro commission. Scarano paid him an initial 200,000 euros by check, which Zito deposited, Sica said.
But in a bid to not have the second check deposited at the bank, Scarano filed a report for a missing 200,000 euro check, even though he knew Zito had it, Sica said.
Carenzio and Zito also were arrested Wednesday along with Scarano, Sica said.
Pope Francis this week set up a commission of inquiry into the Vatican bank, which is formally known as the Institute for Works of Religion, and has been hit by a number of scandals in the past decades.
The AP also described the alleged financial offenses that led to Scarano’s suspension, again citing Sica.
That investigation concerns transactions Scarano made in 2009 in which he took 560,000 euros ($729,000) in cash out of his personal IOR bank account and carried it out of the Vatican and into Italy to help pay off a mortgage on his Salerno home.
To deposit the money into an Italian bank account — and to prevent family members from finding out he had such a large chunk of cash — he asked 56 close friends to accept 10,000 euros apiece in cash in exchange for a check or money transfer in the same amount, Sica said earlier this week. Scarano was then able to deposit the amounts in his Italian account.
The original money came into Scarano's IOR account from donors who gave it to the prelate thinking they were funding a home for the terminally ill in Salerno, Sica said. He said the donors had "enormous" wealth and could offer such donations for his charitable efforts.
He said Scarano had given the names of the donors to prosecutors and insisted the origin of the money was clean, that the transactions didn't constitute money-laundering, and that he only took the money "temporarily" for his personal use.
The home for terminally ill hasn't been built, though the property has been identified, Sica said.
"He [Scarano] declares himself absolutely innocent," Sica said of the Salerno investigation.
The Associated Press contributed to this report.