An 83-year-old aspiring politician is caught in the midst of a sex scandal after being arrested on a prostitution charge and a charge of intent to commit sexual abuse.

Ben Clifford Dawson, 83, is running unopposed for a city council seat in the Nov. 8 election in the small town of Centerville, Iowa.

“We had three previous reports of activity like this on him in years past,” said Tom Demry, Centerville police chief.  “This is just the first time we had enough to charge him.”

Dawson, who Demry said is well-known in the town where “everyone knows everyone,” told ABCNews.com that the charges were all a lie perpetrated by the alleged victim who owed him money.

“This gal borrowed some money off me and my wife. We trusted her implicitly,” Dawson said.

The woman, who the police report identified as Melissa Drew, met Dawson 10 years ago when she purchased a home from him in Mystic, Iowa.

Drew allegedly owed Dawson $6,500, an amount she had slowly racked up over the past few years by requesting money “to visit her sick mom” or to “get new tires,” Dawson said.

“I was gullible and believed everything,” Dawson said.

Drew did not immediately respond to a message from ABCNews.com.

The two had a written contract of the debts, according to Dawson, but Drew kept reneging when it came time to pay, instead presenting Dawson with another sob story.

It was only after he “wised up” and threatened to sue Drew that she went to the Centerville Police Department, claiming he offered to let her pay him in sex acts instead of cash.

She told police Dawson kissed her neck and made unwanted advances, a claim he denies.

“In my 10 years of knowing this woman, I have never once touched her,” he said.

After a 10 day investigation by the Centerville Police Department, Dawson was arrested on Wednesday.

“They called me when I was at the casino and asked when I would be coming home. I came home and they were waiting for me and cuffed me,” he said. “I couldn’t believe it.”

Dawson was released on $2,000 bail and will appear in court next month to answer to two aggravated misdemeanor charges of prostitution and intent to commit sexual abuse.

“I have done nothing wrong,” he said. “This is just a pure attempt by her to keep from giving me my money.”