Edilson Pereira de Carvalho, who is a FIFA referee was arrested by federal police in Jacarei, Sao Paulo following allegations of accepting bribes from an illigal Internet gambling ring in order to fix football matches.
Along with Paulo Jose Danelon, Carvalho was suspended by the Brazilian Football Confederation (CBF), Brazils answer to the Football Association (FA) after allegations which were published in a weekly Brazilian magazine called Veja.
Carvalho has so far refereed 11 matches in this years Brazilian Championship.
"In view of the serious allegations published by the media ... Edilson Pereira de Carvalho and Paulo Jose Danelon, mentioned in the reports as part of an alleged scheme for manipulating results in the Brazilian championship, have been removed from the list of national referees," said a CBF statement.
The CBF who plans to set up an investigation added that Ricardo Teixeira (CBF President) will travel to Zurich, Switzerland where the headquarters of FIFA (footballs governing body) on Monday to request a international referee banning order be placed on Carvalho.
However public prosecutors said a second man, businessman Nagib Feyad was also arrested last Saturday. Fayad has been accused of being part of a gambling ring based in Sao Paulo.
Roberto Porto, of the public prosecutors' office in Sao Paulo, said Carvalho sometimes negotiated with the gambling ring minutes before kickoff; "Sometimes, they settled on the price before the game with the referee in the dressing-room," he told a media conference.
Porto added that before kick-off on match day the gambling ring would receive between $87,300 and $174,600 while Carvalho got around $4,366 per game.
A match involving Vasco and Figueirense (Vasco won 2-1) on 9 August 2005 is one of eleven matches suspected of being fixed by referee Carvalho.
"From the start of the championship, we suspected something different was happening." said Figueirense president Norton Flors Doppre.
Despite speculation that all eleven games refereed by Carvalho will eventually have to be replayed the Championship still continued as normal last Saturday.