RIO DE JANEIRO (Reuters) - Police on Wednesday arrested a controversial former governor in Rio de Janeiro as part of an ongoing investigation into voter fraud during recent municipal elections.

The arrest of former Governor Anthony Garotinho came just hours before demonstrators, in an unrelated event, stormed barricades around the Rio state assembly house, calling on legislators to reject an austerity package meant to restore order to the state's troubled finances.

The demonstration was far smaller than the mass protests that have rocked Brazil in recent years as a near-decade long economic boom fizzled.

But the unrest, coupled with the former governor's detention, are a reminder of ongoing problems, from rising crime to overdrawn state finances, that are roiling Brazil's second-biggest city and the surrounding state of the same name less than three months after hosting the Olympics.

Garotinho has been serving as municipal secretary in Campos dos Goytacazes, a city north of Rio where his wife, Rosinha Matheus, another former governor, is serving as mayor. Both, despite repeated denials of wrongdoing by each, have been frequent targets of corruption allegations.

Brazil's federal police, which arrested Garotinho at his home in the Flamengo neighborhood of Rio, confirmed his detention in a brief statement. In a separate statement, Garotinho's office criticized the arrest, saying it was "arbitrary" and "based on facts that did not occur."

Although Garotinho and Matheus are no longer as prominent as they were in recent decades in Brazilian politics, the couple once enjoyed strong support in the sprawling suburbs of Rio state and many other blue-collar areas across the country, particularly among some Evangelical Christians.

Garotinho in 2002 surprised many when he made a strong showing in the first round of Brazil's presidential elections. One of their nine children, Clarissa, now serves in Congress.

In recent years, however, Garotinho and Matheus, each as governor and as municipal officials in Campos, have been known as much for controversy and investigations into corruption and voter fraud as for their past electoral success.

An electoral court recently found fraud related to Matheus' 2012 election as mayor of Campos. It ordered her to step down, but she remains in the office, pending an appeal, according to a spokesman at Campos city hall.

Garotinho's arrest followed detentions of a handful of other suspects in the more recent fraud investigation, related to municipal elections carried out last month.

(Reporting by Paulo Prada; Editing by Meredith Mazzilli and Alan Crosby)