The former mayor of Moscow suburb Khimki, a city infamous for corruption, violence and public dissent, was charged on Tuesday with fraud and abuse of office.
Shakhov, 45, is accused of having swindled 21 million rubles ($450,000) from the state by way of a 2008 natural gas pipeline contract, the Investigative Committee said on its website.
The embattled former official authorized a deal to move gas pipes from the Khimki forest that the committee described as "impossible to carry out."
Shakhov, who was spared custody, dismissed the charges, which could land him in prison for up to 10 years.
But he stepped down Monday, and the ruling United Russia party suspended his membership, the TASS news agency wrote.
Khimki, the Moscow region's second-biggest city with a population of 225,000, repeatedly made headlines in the 2000s because of a controversial Kremlin-endorsed construction project in the area.
The problem was the Khimki forest, slated for partial demolition to make way for an $8 billion highway from Moscow to St. Petersburg, developed — among others — by a company owned by Arkady Rotenberg, a Western sanctions-hit affiliate of President Vladimir Putin.
Opponents of the construction were repeatedly assaulted by thugs, one of them, journalist Mikhail Beketov, was beaten so badly he became disabled in 2008. The attack was later traced to subordinates of Shakhov's predecessor Vladimir Strelchenko.
Khimki also hosted an early mass protest in 2010, a harbinger of massive anti-Putin rallies between 2011 and 2013. But the protest, which united activists across the spectrum from the neo-Nazis to the radical left, was ignored by the Kremlin.
Shakhov, a road construction expert in state employ since 2003, was elected after Strelchenko's removal in 2012. He trounced his main rival, forest protector Yevgenia Chirikova, on a platform of bringing stability to the city and amid persistent, but unconfirmed, rumors of vote fraud.
Khimki will not get to elect another mayor: The regional legislature abolished direct mayoral elections in the city in September, leaving the matter up to city lawmakers.