The Arena clan allegedly made a fortune by syphoning off money from the state destined for migrants.
The Arena clan, a family belonging to the powerful 'Ndrangheta crime syndicate, allegedly made a fortune by supplying services for the centre at Isola di Capo Rizzuto and syphoning off money from the state destined for the migrants.
"Over 500 agents overnight arrested 68 people... accused of mafia association, extortion, carrying illegal weapons, fraud, embezzlement to the detriment of the state, (and) theft," police in Catanzaro, a city in Calabria, said in statement.
Their investigation revealed "that the clan controlled, for profit, the management of the reception centre" at Isola di Capo Rizzuto -- which has held up to 1,500 migrants at a time -- for over a decade.
Police arrested Leonardo Sacco, the 35-year-old head of the Catholic Misericordia association which runs the centre, who has boasted of links to high-powered political figures.
Local priest Edoardo Scordio was also detained in the sting.
"Some 32 million euros ($35 million) went straight into the clan's pocket," assistant prosecutor Vincenzo Luberto said, adding that Scordio had received 150,000 euros for offering "spiritual guidance" to the migrants.
Police say the Arena clan, through Sacco, awarded contracts for services such as the centre's food supplies to associations it set up specifically for the purpose, as well as to other 'Ndrangheta families.
It also provided food services to the reception centre on Lampedusa, the Italian island which for several years was the frontline of the migrant humanitarian crisis, the biggest influx in Europe since World War II.
The head of the country's anti-mafia commission, Rosy Bindi, said the sting was "an important result in the fight against the 'Ndrangheta and the infiltration of mafia in the management of migrants".
About 175,000 people are currently living in reception centres, where the state provides food, clothing, Italian lessons, psychological support, health care and a small amount of pocket money.
Italy's finance ministry has estimated the 2017 budget for migrant reception at three billion euros, depending on how many people are rescued in the Mediterranean and brought to the country.
More than 45,000 people have arrived so far this year, a 44 percent increase from the same period in 2016.
Raffaele Cantone, Italy's anti-graft chief, said the mafia infiltration at Isola di Capo Rizzuto "is unfortunately, I believe, just the tip of the iceberg, and certainly not a one-off case".
The Calabrian centre had long been on the authorities' radar: In 2015 Italy's L'Espresso magazine published an investigative report alleging that managers at the camp were stealing funds earmarked for migrants and making money by starving them.
"If the organisation was supposed to provide 500 meals, it provided 300 and the rest went hungry," prosecutor Nicola Gratteri said.
The Crotone prefecture said in 2014 that it appeared the official number of people recorded at the centre was grossly inflated, with management pocketing funds from the state for "ghost" migrants.
A health inspection in 2013 revealed that asylum seekers were being given miserly portions of out-of-date food, and that the centre was illegally hosting 70 unaccompanied minors who went barefoot and slept in a hangar with only two toilets.
The Arena clan hit the headlines in 2012 after police seized assets from them worth 350 million euros, including one of Europe's largest wind farms.