The president made the fight against political corruption one of the core premises of his election campaign last year.
Mr Bolsonaro’s first reaction to the prosecutors’ detailed allegations concerning his son was to cast doubt on Rio courts and state government, run by his former ally and now right-wing rival governor Wilson Witzel.
“They’ve been investigating my son since last year and they still haven’t found anything,” Mr Bolsonaro said as he left his residence in Brasilia.
“Have you ever seen the Rio state prosecutors investigate any person, any corruption, any mistake, any public official from the state? And Rio is Brazil’s most corrupt state.”
His son, a Rio De Janeiro Senator, claims he is innocent of the charges, calling the probe a form of political vengeance from bad actors who want to take down his father’s presidency.
He also asked the Supreme Court to halt the investigation this week.
Rio prosecutors have accused Flavio Bolsonaro, who was a Rio state lawmaker until he became a federal senator in 2019, of running a phantom employee scheme while in office.
They say he diverted part of their salaries to buy two apartments in Rio’s Copacabana neighbourhood and a stake in a chocolate store franchise.
Prosecutors alleged the scheme was run by his former driver, Fabracio Queiroz, according to documents seen by Reuters.
On Wednesday, Rio authorities carried out 24 raids at properties of the former staff of Flavio Bolsonaro and relatives of the president’s ex-wife.
The raids took place after the courts unshelved an investigation that had been frozen by Brazil’s Supreme Court earlier this year.
The far-right president was sworn in on 1 January on a pledge to tackle corruption and crime in Brazil.