According to SkyNews, the group allegedly bought a cattle ranch and a lottery ticket shop with the money.
Complaints filed in 2015 against Jose Ronaldo from the city of Formosa led to an investigation that found the bishop and the six priests had misused church donations collected in three cities close to the capital, Brasilia.
Ronaldo claims the funds were properly used to restore church buildings, and pay for the maintenance of priest quarters.
Police expect to make more arrests.
