Eddie Perez was arrested Tuesday, The Hartford Courant reported Wednesday. The state charges include bribery, falsifying evidence and conspiring to falsify evidence.
Perez claims that failing to pay contractor Carlos Costa was an oversight because he was distracted by his wife being sick.
Investigators say that in 2007 Perez falsely said that he had paid Costa for $20,000 in work and said he could give them the canceled check. He allegedly applied to the Hartford Federal Credit Union for a loan that afternoon.
An arrest warrant quotes Costa as saying that he did $40,000 in work for Perez and was paid for half of it. He said that he was planning to do the work for free, believing it was "the cost of me doing business with the city."
Costa said that the mayor came to his rescue after city employees appeared to be ready to remove him from a major municipal project.