Kristin Davis, the former madam and current candidate for New York City comptroller, was arrested for allegedly selling hundreds of prescription pills, including drugs containing oxycodone and amphetamine.
Prosecutors said Davis was arrested in Manhattan on Monday.
She is charged with four counts of distributing and possessing with intent to distribute a controlled substance. Each count carries a maximum sentence of 20 years in prison.
"As alleged, Kristin Davis sold dangerous and highly addictive prescription pills to a known drug dealer on repeated occasions in exchange for cash," Manhattan U.S. Attorney Preet Bharara said in a press release.
She allegedly sold prescription pills four times to an FBI cooperating witness between January and March 2013.
In a January text message to the cooperating witness Davis allegedly says, "If u run low let me kno!!! Ur the best!"
(Read more: Spitzer's 'madam': I'm running against you, Eliot)
Davis once ran an escort service and claims she supplied her opponent for comptroller, former Gov. Eliot Spitzer, with call girls. That scandal forced him from office in 2008, while Davis spent time in prison.
Spitzer's run for city comptroller is his first attempt to return to elected office.
—By CNBC's Justin Menza. Follow him on Twitter at @JustinMenza.