Prince Victor Emmanuel, the 69-year-old son of Italy's last king, was arrested today as part of an investigation into corruption and prostitution, Italian media reported.
Victor Emmanuel was among around 13 people arrested as part of a police operation focusing on the activities of a casino in northern Italy.
Among those detained was a top aide to the foreign minister in former Prime Minister Silvio Berlusconi's government which lost power in a national election in April.
Reports said investigators suspected Victor Emmanuel of having contacts with the Mafia and of helping procure prostitutes for clients of a casino in Campione d'Italia, an Italian enclave on Lake Lugano near the Swiss border.
The source confirmed reports by news agencies ANSA and AGI and state television RAI which said Victor Emmanuel was arrested near the northern city of Lecco as part of a two-year probe by magistrates based in the southern city of Potenza.
"I am absolutely shocked, they treated him like a bandit," Victor Emmanuel's son, Prince Emmanuel Filiberto, told a private Italian television network. "I hope they have their facts right."
Victor Emmanuel, who was nine years old when the royal family left Italy, was involved in what ANSA called "criminal association abetting prostitution".
A devout Roman Catholic, one of the first things Victor Emmanuel did when he returned to Italy was to attend a private mass with the late Pope John Paul at the Vatican.
ANSA said Salvatore Sottile, top aide and spokesman for former Foreign Minister Gianfranco Fini of the right-wing National Alliance party, had been put under house arrest as part of the same operation. King Umberto II and the rest of the Savoy royal family went into exile after World War Two when Italians rejected the monarchy in favour of a republic in a referendum.
Umberto died in Portugal in 1983. Victor Emmanuel was based in Switzerland with his family until 2003, returning soon after Italy lifted a ban on male heirs of the country's discredited throne from entering Italy.
Italians voted to abolish the monarchy in 1946, punishing the family for first collaborating with fascist dictator Benito Mussolini and then ignominiously fleeing Rome in 1944 to avoid an invading German army.