Just days after news that Italian automaker DeTomaso had filed for bankruptcy comes word that its chairman, Gian Mario Rossignolo, was arrested on allegations that some $9.2 million in public funds were used inappropriately in a botched turnaround effort. Rossignolo purchased the rights to the De Tomaso name in 2009, after the company's 2004 liquidation.

Reuters reports that Rossignolo was arrested with two others, including the former head of De Tomaso’s human resource department and a man described as a “financial intermediary.” Investigators are looking into whether a fraudulent bank guarantee was used to obtain public funding, and whether or not a portion of the money was diverted to their private bank accounts.

While the probe was initially launched by the Turin prosecutor’s office, it appears that the investigation has been turned over to Italy’s feared “tax police.” The public funds in question were originally granted to repurpose the former Pininfarina factory near Turin, Italy, to build a range of De Tomaso branded vehicles.

Though best known for the Ford-marketed De Tomaso Pantera (which was sold in the U.S. through Lincoln Mercury dealers from 1971 to 1973), the company also produced numerous sports and luxury models over the years. A plan to build SUVs with Russian partner UAZ was halted by De Tomaso’s liquidation in 2004.

De Tomaso’s current bankruptcy and subsequent collapse leaves some 1,000 workers unemployed, which makes the news of possible misappropriation of funds that much more dramatic. Until the investigation reaches a finding, Rossignolo (a former Fiat exec who also briefly headed Telecom Italia) remains under house arrest.