A Russian court has placed prominent director Kirill Serebrennikov under house arrest in connection with fraud charges he dismissed as "incredibly absurd."

The Basmanny district court issued the ruling on August 23, at a hearing held as hundreds of people demonstrated outside in support of the embattled director and famous cultural figures came to his defense in a case Kremlin critics say is part of a clampdown on dissent ahead of a March 2018 presidential election.

The court supported investigators' recommendation of house arrest pending further investigation and trial despite impassioned words from Serebrennikov, who called the charges against him "incredibly absurd and impossible."

"I am an honest person -- this is confirmed by my years of work and by the motions you have received," he said, referring to appeals from actors, artists, and TV hosts who submitted letters bearing witness to his character.

Explaining that he is making a film about Soviet rock musician Viktor Tsoi and is also involved in a stage production for which tickets have already been sold, Serebrennikov said: "I will not run from the investigation. I will work."

A few hundred supporters gathered outside the courthouse, chanting Serebrennikov's name and applauding him. Chants of "Freedom!" and "Shame!" could be heard in the courtroom from the crowd in the street.

A theater and film director who has protested against President Vladimir Putin's government and staged controversial productions, Serebrennikov is artistic director of the Gogol Center theater in Moscow and founded a dramatic collective called Seventh Studio.

He is known for taking aim at what Kremlin critics say are high-level lies and corruption and a turn toward hard-line conservatism in Putin's current presidential term.

Serebrennikov, 47, was detained in St. Petersburg on August 22 and driven to the Investigative Committee headquarters in Moscow. He is charged with large-scale fraud and could be sentenced to 10 years in prison if convicted.

Investigators claim he organized the embezzlement of at least 68 million rubles ($1.1 million) in state arts funding that was provided to Seventh Studio by the Culture Ministry between 2011 and 2014 for a project called Platform.

Emerging from the courthouse after the ruling, a lawyer for Serebrennikov said he would appeal.

"We do not agree with the court's ruling. We consider it excessive," lawyer Dmitry Kharitonov said. "Unfortunately, all our demands and those by many artists of theater and culture were ignored by the court."

Kharitonov had urged the court to release Serebrennikov on bail.

Many Russian artists have come to the director's defense. Critics of the charges against him also include Putin's longtime former Finance Minister Aleksei Kudrin and Vladimir Solovyov, a prominent TV host who is generally loyal to the Kremlin.

Opposition politician Aleksei Navalny said that the prosecution of Serebrennikov was intended by the government to send a signal to Russia's cultural elites to toe the line ahead of the presidential election, in which Putin is expected to seek and win a fourth term.

"The main reason for the high-profile detention of Serebrennikov is to ensure that the remaining 'masters of culture' do not play hard to get but instead run quickly to sign up to represent Putin," Navalny wrote on his website on August 22. "The election is just around the corner."

Culture Minister Vladimir Medinsky became the first senior government official to comment on Serebrennikov's case late on August 23, telling journalists in Moscow that "I know for sure this isn't a frame-up. I have a source." He did not elaborate.

With reporting by RFE/RL's Russian Service, Rapsinews.ru, RIA, Meduza, Vedomosti, and AFP