The former minister has been accused of taking Rs 6 lakh from Rakesh Prajapati, a resident of Partpur in Meerut, after promising to secure a government job for his relative in 2015.
A first information report (FIR) on charges of cheating has been lodged against Gayatri Prajapati at Gautampalli police station here, a police officer said.
"When I reached the then minister to ask him to return the money, he misbehaved and refused to give back the amount", Rakesh Prajapati told Press Trust of India.
Gayatri Prajapati, arrested on Wednesday morning in Lucknow, has been sent to judicial custody for 14 days.
The 49-year-old Samajwadi Party (SP) leader had been absconding for over two weeks. He went missing in the middle of UP assembly campaign, after the Supreme Court ordered the state police to file a case against him on the allegation of a woman that the minister had, along with six other men, gang-raped her and attempted to rape her teenage daughter. Six persons named in the rape FIR against the SP leader have also been arrested.
Gayatri Prajapati lost the state assembly election from Amethi, the constituency he had won last time. The BJP, along with its allies, swept the UP assembly elections winning 325 of the state's 403 seats. Akhilesh Yadav's Samajwadi Party could win only 47 seats and his campaign is seen to have been severely impacted in the latter rounds of the elections by the Gayatri Prajapati controversy.