By David Ljunggren and Julie Gordon
(Reuters) - Montreal's new mayor, who pledged to stamp out corruption when he took office last November, was arrested and charged with fraud on Monday in another blow to the reputation of Canada's biggest cities.
Michael Applebaum, whose predecessor resigned under pressure, faces 14 charges linked to two real estate deals, police said during a morning news conference.
Applebaum's arrest is the latest in a string of municipal scandals that have undermined Canada's reputation as staid and law-abiding. Toronto Mayor Rob Ford is resisting calls to quit after two media outlets said they viewed a video that appeared to show him smoking crack cocaine.
Ford says he does not use crack cocaine, and Reuters has not been able to verify the existence of the video.
Applebaum, the first anglophone mayor in mostly French-speaking Montreal in more than a century, was appointed interim mayor last November after his predecessor, Gérald Tremblay, stepped down following allegations he had turned a blind eye to corruption and illegal spending by his political party. Tremblay denies wrongdoing.
Applebaum's spokesman, Jonathan Abecassis, did not immediately respond to messages left on his work and mobile phones.
Police said Applebaum was charged with fraud, breach of trust, conspiracy, municipal corruption and secret payments. The amounts of money allegedly involved run into several tens of thousands of dollars.
"The message is clear - all actions that compromise the integrity of the state are unacceptable to the public," Robert Lafreniere, head of the Quebec police's special anti-corruption squad, told a televised news conference in Montreal.
"No one is above the law and you can't hide from the law," he added, insisting that Quebec could "no longer tolerate... reprehensible acts" such as corruption and collusion.
Lafreniere said the squad, created in February 2011, has arrested 106 people so far.
The charges against Applebaum cover the period from 2006 to 2011, when he was mayor in Montreal's Côte-des-Neiges-Notre-Dame-de-Grâce borough.
The allegations are sure to reinforce the perception of widespread corruption in Quebec, particularly in the construction industry. A special inquiry in the province, Canada's second-most populous, has heard multiple allegations of municipal contract rigging, kickbacks to politicians and illegal financing of elections.
Montreal, with 1.7 million people, is Canada's second largest city after Toronto and is due to hold a mayoral election this November. The city declined to comment on the arrest.
Tremblay is not the first Quebec mayor to step down recently. Gilles Vaillancourt, the mayor of the Montreal suburb of Laval, resigned in 2012 but denied allegations of corruption. Vaillancourt was arrested last month and charged with gangsterism, fraud and corruption.
Laval has since been placed under trusteeship as it grapples with allegations of decades of corruption in local government.
Other Canadian mayors in trouble include Joe Fontana in London, a city near Toronto, who was charged last November with fraud, breach of trust and issuing forged documents. He denied wrongdoing and refused to quit as mayor.
Last Friday, a judge cleared 92-year-old Mississauga mayor Hazel McCallion of a conflict of interest charge that could have ended her 36-year reign over the Toronto suburb.
The charges stemmed from McCallion's failure to recuse herself from a 2007 vote that could have saved her son's development company millions in fees.
The judge found no willful wrongdoing by the mayor, but said she acted "contrary to common sense."
Toronto mayor Ford, a larger-than-life figure who has polarized opinion in the city, was previously found guilty of conflict of interest, but an appeals court reversed a lower court ruling that he step down because of this.
The alleged video has done little to hurt Ford's popularity, especially in the Toronto suburbs, where his promise to rein in municipal spending has remained popular.
(With additional reporting by Peter N. Henderson in Toronto; Editing by Janet Guttsman and Claudia Parsons)