By Brad Haynes and Eduardo Simões
SAO PAULO (Reuters) - Former Brazilian President Luiz Inacio Lula da Silva faces charges of money laundering and identity fraud for concealing ownership of a beachfront apartment, state prosecutors in Sao Paulo said on Thursday.
The charges reinforce suspicions raised in a separate federal investigation that detained Lula for questioning in police custody last week, fanning a political crisis that has rattled his successor, President Dilma Rousseff.
State prosecutor Cassio Roberto Conserino told reporters that two dozen witnesses said that the former president was the owner of a luxury condo in the city of Guarujá, benefiting from real estate projects financed by a state bankers' cooperative.
Lula has disavowed ownership of the apartment and denied any wrongdoing. His attorney has asked the Supreme Court to decide if the case is under the jurisdiction of state prosecutors or a separate federal probe tackling graft at state-run oil company Petrobras.
That two-year-old federal investigation has already rocked Brazil's political and business establishment with high-profile arrests and convictions, while deepening the worst recession in decades in Latin America's biggest economy.
The investigations now threaten to tarnish the legacy of Brazil's most powerful politician, whose humble roots and anti-poverty programs made him a folk hero, by putting a spotlight on how members of his left-leaning Workers' Party consolidated wealth and power since he rose to the presidency 13 years ago.
Lula's lawyer, Cristiano Zanin Martins, said the prosecutors' news conference on Thursday was further evidence of a "media campaign" against the former president.
"The owner of a property is the person listed in the registry. It doesn't matter who some people think it belongs to," he said.
Martins reiterated the former president's account that he had invested in the real estate project, visited the unfinished apartment twice and then asked for his money back rather than receiving property.
(Reporting by Brad Haynes and Eduardo Simoes; Editing by Andrew Hay)