Alessandro (Sandro) Lisi, 35, was taken into custody at around 8 p.m. ET Tuesday after officers in plainclothes and unmarked cruisers arrived at the Richview Cleaners, located at Eglinton Avenue and Wincott Drive, according to the Toronto Star and the Globe and Mail.
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Police taped off the area around the business, CBC's Tony Smyth tweeted from the scene early Wednesday morning. Plainclothes police entered and searched the premises around 3 a.m.
Police left carrying one plastic bin, Smyth said, but it was unclear whether any items were in it.
A short time later, police entered and searched the house where Lisi lives. It is believed to be owned by his parents, Smyth reported.
Police were inside the house and garage around 4 a.m. A police dog accompanied an officer inside the house twice.
Officers in six cars left the residence shortly before 5 a.m. It was unclear whether any residents were home at the time.
Toronto police have not commented and are directing all questions to Chief Bill Blair's spokesperson.
Lisi’s lawyer Domenic Basile had no comment when contacted by CBC News Wednesday morning.
The Star previously reported that Lisi had been searching for a video that allegedly showed the mayor smoking what appeared to be crack cocaine.
The scandal broke in May, when reporters from the Star and the U.S. website Gawker reported they were shown such a video.
Ford said "I do not use crack cocaine" and denied being addicted, and he called the allegations related to the video "ridiculous."
CBC News has not seen the video and cannot verify its contents or existence.