State Rep. Derrick Smith (D-10th) was arrested Tuesday on bribery charges for allegedly taking $7,000 in cash in exchange for writing an official letter of support for a local business seeking a state grant, according to a criminal complaint filed by the U.S. Attorney’s office.

Smith, 48, was charged with one count of accepting a bribe. He was arrested by federal agents and was released on $4,500 bond after appearing in federal court Tuesday. Smith was not required to enter a plea. His next court date has not been set. The bribery charge carries a maximum penalty of 10 years in prison and a $250,000 fine.

Smith’s arrest came after an undercover operation by the Federal Bureau of Investigation (FBI) that began in December with the help of an undercover informant who was working on Smith’s election campaign.

According to the criminal complaint, Smith allegedly sought $7,000 from a fictional owner of daycare business in exchange for an official letter of support to help the owner get a $50,000 construction grant from the state. The campaign worker, unbeknownst to Smith, was working with the FBI since December 2011. The informant recorded a meeting where Smith was given $7,000 cash from the fictional daycare owner, the complaint alleges.

According to the complaint, Smith discussed the need to raise campaign funds. Smith allegedly told the informant that he needed donations ranging between $5,000 and $7,000. The informant said Smith was willing to accommodate “reasonable” requests from donors. The informant then told Smith he allegedly knew a woman who owned a daycare center and would be willing to donate to Smith’s campaign. The informant told Smith that the owner was looking for a grant to make repair to her center.

Smith allegedly told the informant that he would help the daycare owner with obtaining a state grant in return for a $7,000 political contribution. On March 2, Smith provided a letter of support on his official letterhead. According to the complaint, the daycare owner was, in fact, fictional, and the daycare center, while a real business, was not applying for a state grant, nor was it seeking to bribe Smith.

According to the complaint, Smith rejected payment by cashier’s check because he didn’t “want any trace of the money.” Smith told the informant he wanted the $7,000 in cash, and agreed to give the informant a $2,000 finder’s fee for arranging the deal. On March 10 Smith met with the informant in an alley to receive the money, the complaint states.

Smith could not be reached for comment.

The arrest comes a week before the March 20 primary election where Smith faces challenger Tom Swiss. Swiss, the former head of the Cook County Republican Party, is running as a Democrat. Swiss is now calling for Smith to drop out of the race.

A protégé of Secretary of State Jesse White, Smith served four years as deputy director of accounting revenue with the Secretary of State’s Office. In a press statement, White expressed his disappointment in Smith, saying: “I am very disappointed with the conduct alleged in the charges. I am confident this case will be handled fairly and justly by the judicial system.”

Smith was appointed 10th District state rep with the backing of White in March 2011. Smith replaced Annazette Collins, who was elevated to state senator of the 5th District after Rickey Hendon abruptly quit his job that same year.

The Chicago Sun-Times reported that Smith was fired in 2005 from his job as 27th Ward Superintendent for allegedly using streets and sanitation workers and city equipment to do private landscaping work.

Smith, the Sun-Times reported, got the ward superintendent job with the help of a childhood friend, 27th Ward Alderman Walter Burnett. Both Smith and Burnett grew up Cabrini Green. Smith also served as precinct captain for 27th Ward Democratic Organization where White is the committeeman.