A group of Catholic clergymen including a bishop have been arrested in Brazil, accused of embezzling £426,000 of church donations, funeral fees and fundraising cash found hidden behind a false wall, the Daily Mail reported.

The Bishop of Formosa, Jose Ribeiro, alongside five priests and three lay people were detained in prison in Goiás charged with stealing over 2 million reais (£426,000) from church funds.

When police raided one of the priests' homes, officers prised open a false wall in to find some £19,200 stored in plastic bags and hidden away.

The money was allegedly stolen over a three-year period from tithes, donations, fundraising events and from fees collected for ceremonies such as baptisms and weddings.

The Daily Mail reported that according to state prosecutors, the bishop, who was appointed to the Formosa diocese in 2014, is suspected of leading a sophisticated scheme that diverted funds from church coffers.

Phone taps revealed how the group laundered the money by purchasing a cattle ranch, a lottery agency, mobile phones, luxury cars, designer watches and gold chains.

Large amounts of cash in foreign currencies were also reportedly found.

Prosecutor Fernanda Balbinot said: 'There were indications the money was used for personal expenses and that cars from the Formosa diocese were used for private purposes.

'Instead of presenting tax bills and expense receipts with the correct amount, documents were allegedly produced saying there was nothing to declare.'

The priests, involved in the scheme reportedly paid the bishop a monthly 'protection allowance' of between 7,000 to 10,000 reais (£1,500 to £2,100) to keep their jobs.

Prosecutor Douglas Chegyry told Brazilian media: 'The information we have obtained is that in order to remain in the more profitable parishes that generated more money, the priests paid a cash allowance to the bishop.'

In the raid on the home of one of the accused, Monsignor Epitácio Cardoso Pereira, officers used a pen-knife to cut open fake panels and discover 90,000 reais (£19,200) in plastic bags hidden in a secret storage space.

The agents also seized three iPhones and a Macbook and retrieved more money hidden in drawers around the home which the defendant claimed did not belong to him.

The investigation into the Formosa diocese accounts began last year after members of the congregation alleged irregularities and misuse of assets by the church.

According to the Daily Mail, churchgoers also claimed that the expenses of the episcopal house rose disproportionately, from 5,000 reais to 35,000 reais (£1,000 to £7,500) following the arrival of Bishop Ribeiro, who denied any wrongdoing at the time.

The defendants have been charged with misappropriation, money laundering, 'ideological falsehood' and criminal association.

Lawyers for the accused deny the charges and say that they will prove their clients' innocence.

Two days after the arrests, Pope Francis named Father Paulo Mendes, who is archbishop of Uberaba, as a temporary replacement in the Goiás diocese, which has 33 churches distributed over 20 parishes.