Inaki Urdangarín, husband of one of the royal family's daughters, faces charges of misappropriation of funds and money laundering involving a non-profit he created, the Noos Institute, ThinkSpain reported Thursday.
He and his business partner, Diego Torres, who also was charged, are suspected of using Urdangarin's position as the Duke of Palma to heighten the institute's profile to receive grants from the central and regional governments.
Authorities say the men registered the institute as a charity rather than a business to hide that they were appropriating government money.
The Noos Institute was formed ostensibly to promote tourism and sporting events.
The duke's lawyers were unsuccessful in attempts to have his bond lowered.
If convicted, Urdangarin faces up to 20 years in prison and would have to pay back all the public funds they obtained illegally.