The local priest of Borja in Spain's Zaragoza region was taken into custody on Friday charged with offences including sexual abuse, embezzlement and money laundering.
Seventy-year-old Florencio Garcés is one of six men who have been arrested as part of a fraud investigation police have dubbed Operation Thorn Tree, Spain's El Mundo reported on Monday.
But a lawyer for the priest said the case had "absolutely" nothing to do with the infamous 'restoration' of the Ecce Homo (Behold The Man) fresco.
The village of Borja came to international attention in 2012 after local parishioner Cecilia Giménez touched up the 19th century image of Jesus. She carried after the work after fearing that parts of the fresco were flaking off due to damp on the church walls.
The amateur results captured international attention, inspiring ridicule but have also brought many tourists to the town.
Entrance to the church costs €1 ($1.30) and all the money goes to the renovation of the building. So far visitors have contributed €50,000 to church coffers.
The lawyer for Garcés said, however, that the current charges did not relate to money earned though visitors to see the Ecce Homo.
Locals on Saturday demonstrated in support of the priest saying they "in disbelief" after his arrest, Spain's La Nueva España newpaper reported.
Garcés has been released from custody and his passport has been confiscated. He is set to appear before a judge on Monday.