Israel's fraud squad recommended Tuesday that former Ashkenazi chief rabbi Yona Metzger be charged with taking bribes, money laundering and other crimes.
Metzger stepped down on July 24 after 10 years in office. He had been arrested the previous month and questioned in connection with the investigation, but was released without charge.
The National Fraud Squad believes the amount of money involved in the various scams runs to millions of shekels, a police statement said.
The case has been handed to the Jerusalem District Attorney's office which will examine it before passing it to Attorney General Yehuda Weinstein, who will have the final say on whether to press charges, it said.
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Israel has two chief rabbis, one Ashkenazi and one Sephardi, whose responsibilities include running the rabbinical courts and regulating the food supervision industry.
Metzger was voted into the prestigious position in 2003 thanks to the support of the senior ultra-Orthodox rabbinical authority at the time.
In 2005, he was questioned on suspicion of receiving benefits from a hotel in Jerusalem in return for favours, and police recommended he be tried for fraud and breach of trust.
But the attorney general at the time, fearing an unsuccessful prosecution, decided against indicting him.
Instead, he wrote a scathing report about Metzger, accusing him of lying to police and recommending that he resign immediately.