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Former Laval mayor Gilles Vaillancourt scrums with reporters outside a courtroom in Laval, Que. on Thursday May 9, 2013. The ex-mayor who once seemed unbeatable now faces one of the Criminal Code's most serious charges: directing a criminal organization.Andy Blatchford/The Canadian Press

The King of Laval, as the mayor was long known, stood handcuffed and accused of being a gangster in the "palace of justice" he helped inaugurate near the start of his reign.

Gilles Vaillancourt, the strongman former mayor of the sprawling suburb that is now Canada's 13th biggest city, was arrested by police just after dawn Thursday. The man who built Laval out of farmers' fields north of Montreal during his 23-year term joined 36 other accused at police headquarters, where they were questioned on charges of gangsterism, fraud, fraud against government, breach of trust, conspiracy, municipal corruption and money laundering.

While a number of corruption busts and allegations have rocked Quebec in recent years, including shocking testimony at the Charbonneau inquiry, the scope of Thursday's arrests dwarfs the rest. The charge of gangsterism is among the most serious in the Criminal Code and usually reserved for murderous bikers and mobsters. It is unprecedented in Quebec's current corruption scandal. Mr. Vaillancourt, the most important politician to fall, is the first hauled into court in cuffs to ask for bail.

On the long list of charges and accused, Mr. Vaillancourt stands out for another reason: He is specifically named as the alleged ringleader who operated a system of collusion and bribery from 1996 through 2010.

He appeared in court in the Laval courthouse – the Palais de Justice de Laval , where he helped cut the opening ribbon more than 20 years ago – with the longtime city manager and the director of the city's engineering department.

"One of the charges describes him as engaging certain people to work for a criminal organization," said prosecutor Mylène Grégoire, one of several law enforcement officials who spoke Thursday, but declined to reveal many details. "It's certainly an additional degree of gravity."

Mr. Vaillancourt turned in his passport and was released on a promise to pay $150,000 if he flees. He remained defiant as he left court. "I've pleaded not-guilty. I will put all my energy into proving my innocence," he said.

The arrests were greeted with disgust on the streets of Laval, where Mr. Vaillancourt usually ran unopposed in his six re-elections and was once hailed as a man who brought in business and kept taxes low.

"He should be punished and pay the money back," retiree Roger Pilon said as he walked through one of Laval's innumerable strip malls. "It's about time people got arrested. Our tax money was stolen from us, I want to see some of it back."

Claire Lachance, his wife, said the string of arrests and revelations before the Charbonneau Commission have shaken her faith in all Quebec's political class. "You don't know whom to trust any more. It's infuriating. They're enriching themselves on our backs."

Robert Lafrenière, the commissioner of Quebec's anti-corruption squad, said the three-year investigation found that there were three groups of people involved in the alleged scheme.

The largest group were construction bosses and engineers who, the Charbonneau corruption inquiry has heard, were allegedly sending 2.5 per cent of city construction contracts back to Mr. Vaillancourt and his acolytes. Two lawyers, a notary and a businessman were allegedly acting as facilitators between the construction bosses and the public officials, according to police. The accused were part of an "organized, structured network," Mr. Lafrenière told reporters.

Police seized $480,000 in cash during their investigation, he added. Allegations have circulated that cash has disappeared into Swiss bank accounts, something Mr. Lafrenière said his team is investigating. "The money trail is always an important part of our investigations. We'll do what we can to collect as much money as we can," he said.

Others named in the warrants included construction magnate Tony Accurso, who already faces criminal charges in two other corruption files and an RCMP income-tax fraud case.

Political opponents said the arrests were a long time coming and a welcome step in a city where Mr. Vaillancourt governed like a monarch and left little room for critics.

"Laval is the cradle of corruption in Quebec," said longtime, unelected opposition leader Robert Bordeleau of the Parti au service du citoyen. "I've been saying there is corruption in Laval for 20 years. Entrepreneurs were king. People said I was crazy but history is proving me right."

The Parti Québécois government applauded the sweeping arrests in Laval, saying they showed that when police forces work together they can bring down corruption and instill faith in the public's perception of their political system.

"I don't see it as a victory for our government. I see it as a victory for democracy," said Public Security Minister Stéphane Bergeron. "It proves in my view that the police forces are doing their job that the inquiry is giving results and that is quite satisfactory."

But the Coalition Avenir Quebec public security critic Jacques Duchesneau condemned the wall of secrecy that for too long protected municipal leaders in Laval from being prosecuted.

"There were police investigations in the past, yet they didn't go anywhere. How is it that this could happen? How is it that nothing was done on the part of so many people regardless of the political party involved?" Mr. Duchesneau said.

The Liberal MNA from Laval Guy Ouellet, a former police officer who specialized in investigating biker gang activities, said the charge of gangsterism was a significant development, and unprecedented.

"This is very important. What it means is that some of these people oversaw the criminal activities. The last one I remember (being charged with gangsterism) was (Hells Angels boss) Mom Boucher. This puts those arrested in Laval in the same category. " Mr. Ouellet said. "For elected officials this is a first."

In addition to the 37 suspects, five men were identified on the warrant as co-conspirators but were not charged, suggesting that some of them are now co-operating with the police.

Mr. Lafrenière said "citizens" had helped the investigation but wouldn't elaborate.

The five include former Laval city manager Gaétan Turbide and former assistant city manager Jean Roberge and engineering executive Marc Gendron.

Mr. Zambito testified last fall that he gave money to Mr. Gendron, who acted as a middleman between Mr. Vaillancourt and the entrepreneurs.

Mr. Vaillancourt resigned on Nov. 9, after police executed several search warrants at his residences, at Laval City Hall, the headquarters of his party, Parti Pro des Lavallois, and at engineering and construction firms.

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