Las Palmas president Miguel Angel Ramirez was arrested on Tuesday on suspicion of social security fraud.
The Gran Canarian businessman was detained by national police on landing in Madrid, it was confirmed by Spanish daily Marca.
He has been detained on charges of social security fraud by paying workers below agreements made, thus avoiding to pay thousands of pounds.
Ramirez is now set to testify before the Spanish judge on Thursday, according to various other media outlets.
It is not the first time the 49-year-old has been brushed with the law, having been arrested in 2011 for similar convictions.
Ramirez’s arrest comes after a dismal week for the club, having been relegated to the La Liga 123, despite hope that Paco Jemez would turn things around and change performances.
Las Palmas sit 19th in the La Liga table, having only won five games this season and whilst many would expect them to come back up next season – finances at the club, mixed with a poor atmosphere at present, could halt such a thought.
Coach Paco Jemez is expected to leave the club this summer following relegation, although that is not yet confirmed.
The Island club have four remaining league games, starting with the trip to Catalonia where they face Espanyol.