Ken Livingstone has been accused of breaking company law over £40,000 loans reportedly made to him by his Brighton-based company.
The allegation follows his expulsion from the Labour Party, but party members denied any dirty tricks campaign against the mayoral frontunner.
Mr Livingstone told The Times that he had been advised by his accountant to take the loans because his company, Localaction, which receives fees from his after-dinner speaking, had made a surprise profit.
Several leading accountants were quoted in The Times saying that the payments could be illegal because generally companies were not allowed to make loans to their directors.
However, Mr Livingstone told the paper that he was unaware that such loans could be illegal.
He said the next set of accounts would show his latest reported loan of £19,900 would be translated into a personal dividend paid to him as owner of 99% of the firm's shares.
Earlier, Mr Livingstone put out a statement to the press headed: "Livingstone warns dirty tricks are likely" in which he warned Labour was considering "negative campaigning."
However, a Labour Party spokesman said: "There is no dirty tricks campaign against Ken. It was Ken who failed to declare his earnings (to Parliament).
"It was Ken who faces serious charges of breaking company law. Now it's time for him to come clean."