Fifteen suspects -- including senior police investigators, an FSB officer, a prosecutor and a high-ranking Emergency Situations Ministry official -- were detained in more than 40 raids around Moscow, ministry officials said.
The police seized at least $3 million in the crackdown, spearheaded by the Interior Ministry's internal affairs department.
"The Interior Ministry officials, after several months of work, have put an end to a gang of werewolves wearing police epaulets," Gryzlov said in televised remarks. "The backbone of the gang were Moscow police officers, several military servicemen and representatives of other law enforcement agencies."
An internal affairs spokesman said most of the detainees are officers in the Moscow police's elite investigative directorate, known by the acronym MUR.
He said the highest-ranking official detained was the head of the Emergency Situations Ministry's security directorate, Lieutenant General Vladimir Ganeyev, but the ringleaders are thought to be the deputy head of a MUR department, Yury Samolkin, and two senior MUR investigators, brothers Nikolai and Valery Dyomins.
The spokesman, who spoke on condition of anonymity, said about 30 officials are believed to belong to the ring and more arrests are expected soon.
MUR and Emergency Situations Ministry officials confirmed the detentions Monday but refused to comment further.
The Interior Ministry said more than 100 people were blackmailed over four years.
"Investigators have established that officers in a department of the Moscow police investigative directorate planted handguns, ammunition and drugs on citizens with the aim to blackmail them later," Gryzlov said. "They organized searches of these citizens, opened criminal investigations and then closed them for money."
Gryzlov said several victims ended up being sentenced in court to time in prison. "We hope to work through all instances of false criminal cases in the near future. The victims will be rehabilitated in the eyes of the law," he told Interfax. "We will not give the traitors a chance to escape responsibility."
The internal affairs spokesman said the ring also is suspected of working with criminal groups in a protection racket targeting local businesses.
"Using their relations with Moscow's organized criminal groups, they organized shakedowns at prosperous businesses, mostly casinos and restaurants, and then offered protection," he said.
Protection was provided through a private security service set up by the ring, he said.
He said the ring is suspected of ordering and carrying out the murders of several businessmen who refused to accept protection.
The spokesman said money made in the protection and blackmailing rackets apparently was laundered through a MUR charity, the Foundation of Social Protection of MUR Veterans.
"It total, we seized about $3 million in cash and froze several bank accounts today, and we expect more money will be seized soon," he said.
NTV television showed investigators pulling up bathroom tiles and dismantling the cover of a radiator in a recently renovated apartment in their hunt for hidden cash.
One suspect barricaded himself in his downtown apartment, and police had to break down the door, news agencies reported.
None of the detainees had been charged as of Monday afternoon. Police opened a criminal investigation into extortion, fabricating evidence in criminal cases and abuse of office.
The crackdown has delivered a strong blow to the reputation of the MUR and could destroy the careers of top MUR officials, Nikolai Kulikov, City Hall's law enforcement liaison, said on NTV.
"I feel pity for MUR leaders," he said. "They should have kept an eye on what their people were doing and on their incomes. How could they overlook 100 incidences of fabricated evidence?"
Some observers questioned whether the crackdown was part of a deep-rooted desire to clean up the police force or little more than a publicity stunt.
Ivan Melnikov, a senior Communist Party official, said the operation was "first of all a PR move before parliamentary elections," Interfax reported.
Gryzlov heads the pro-Kremlin United Russia party, which has the most seats of any party in the State Duma going into December elections.
Vladimir Pribylovsky, political analyst with the Panorama think tank, said interior ministers tend to start major anti-corruption drives ahead of Duma elections.
"Ahead of the previous parliamentary elections, Anatoly Kulikov did the same thing," he said. "These efforts help, considering the public's attitude toward the police."
However, Duma Deputy Nikolai Kovalyov, a former head of the Federal Security Service, insisted that any link with the elections was "absolutely impossible."
"Such operations are prepared seriously and over a long period of time, and it would be wrong to suggest they are a public relations ploy," he told Interfax.
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