A senior government attorney and five other officials were arrested on charges they demanded $50,000 from a U.S. man who has spent 18 months in a Bolivian jail, the Andean nation's interior minister said Tuesday.
Carlos Romero told a press conference the six people in custody were part of a wider corruption ring.
Seven other people are wanted in connection with the alleged extortion, the minister said.
Jacob Ostreicher, a 53-year-old flooring contractor from New York, came to Bolivia in 2008 to start a rice plantation in the eastern province of Santa Cruz.
He was arrested in January 2011 on suspicion of money laundering after his Bolivian agent purchased land from two Brazilian nationals suspected of ties to drug trafficking.
Prosecutor Fernando Rivera Tardio, detained Tuesday in the southern city of Tarija, was the ringleader of the effort to extort Ostreicher, Romero said.
The American's defense attorneys told authorities that Rivera demanded $50,000 to arrange Ostreicher's release.
When the money failed to materialize, Rivera pressured a judge to overturn his own Sept. 23 decision granting Ostreicher pre-trial release, the interior minister said.
Ostreicher's situation is being followed closely by the State Department and U.S. lawmakers and actor Sean Penn took time during a trip to Bolivia to visit the businessman behind bars.
The American, who suffers from Parkinson's disease, is currently at a clinic in Santa Cruz city.
While the charges against Ostreicher must be addressed, Romero said the case will be expedited. EFE