Chechen businessman Bulat Chagaev, the owner of the bankrupt Swiss football club Neuchatel Xamax, will be kept in custody for at least a month on suspicion of fraud.

Chagaev, who stands accused of "dishonest management," was detained on Thursday hours after Xamax declared bankruptcy and will remain in custody until February 27. Under the Swiss law, dishonest management carries punishment ranging from fines to a five-year prison sentence depending on the severity of the offense. Chagaev denies all charges.

His lawyer Jacques Barillon requested to release the defendant from custody, citing his previous cooperation with Swiss authorities. He also proposed house arrest, seizing Chagaev’s passport or putting an electronic bracelet on him as possible restraint measures.

Prosecutors, in their turn, demanded a bail of 5 million Swiss francs ($5.5 million) as an additional guarantee.

Chagaev refused to pay the bail, saying he has to pay salaries to Xamax. He is entitled to request the court to review his case at any time.

Barillon said the defendant was calm about the ruling, saying he was “not afraid of prison.”

“He is ready to fight for his cause and against his enemies,” the lawyer said.

Speaking to journalists after the court session, Barillon denied charges of misappropriation and said Chagaev had invested about $13 million in Xamax.

Investigators from Neuchatel will meet to discuss further procedures early next week.

The 51-year-old Russian citizen bought Xamax in May 2011. The Swiss league revoked the club's playing license earlier this month after Chagaev was accused of providing fraudulent documents that he claimed proved the club's solvency. Chagaev declared the club bankrupt after courts threw out his appeal to regain the playing license, dismissing the club's players and staff.

Prosecutors allege that Chagaev could have submitted false evidence of having $35 million on his account in the bank in order to avoid Xamax's bankruptcy procedure.

Since he bought the team, Chagaev has dismissed five coaches and sacked some players after just one appearance for the club. He also dropped all the club’s sponsors.

During the summer break in the 2011 season, the club unveiled a new crest featuring Chechen symbols and submitted an application to the SFL to change its name to include a reference to the Vainakh people of the Caucasus, which was rejected.

Some reports in Swiss media claimed Chagaev even threatened the players with violence.