The former vice-president of Guatemala, Roxana Baldetti, has been arrested on corruption charges three months after she was forced to leave office.
She is accused of taking part in a customs agency bribery scheme.
Prosecutors now say they have enough evidence to open an investigation against President Otto Perez Molina, who also denies wrongdoing.
The scandal has outraged Guatemalans, who live in one of the poorest and most violent countries in Latin America.
Ms Baldetti was arrested in hospital in Guatemala City after being admitted with an unspecified health issue.
The prosecutor's office said prosecutor Francisco Sandoval informed Ms Baldetti of her detention at the hospital.
Nearly 30 other people have been detained, accused of taking millions of dollars from businessmen who paid bribes in order to avoid higher import duties.
Mr Perez Molina, who leaves office in January, has so far avoided attempts to have his immunity lifted.
But Prosecutor General Thelma Aldana has called for an impeachment process to be opened against the president.
Prosecutors say Ms Baldetti's aide, Juan Carlos Monzon Rojas, masterminded a corruption ring known as "La Linea," or "The Line".
"Above Juan Carlos Monson in the [power] structure of 'The Line' we found President Perez Molina and Roxana Baldetti," said Ms Aldana.
Ms Baldetti resigned on 8 May after a joint investigation between Guatemalan prosecutors and the UN led to arrests of several government officials.
UN investigators presented wiretapped conversations in which participants mention "the R", "the No. 2" and "the lady" - suspected references to the vice-president.
The investigation looked into some 6,000 emails and intercepted 66,000 phone calls.
Guatemala has seen large protests over the scandal and another corruption investigation that rocked the nation's social security institute.