Thailand's National Anti-Corruption Commission has found Yingluck Shinwatra guilty of negligence over a state rice-buying scheme and she now faces a ban from politics after a Senate hearing.
Thursday's decision came a day after Yingluck was removed as Thailand's prime minister by a judicial ruling in a case related to a civil servant's transfer.
"The committee has investigated and there is enough evidence to make a case ... We will now forward it to the Senate," Panthep Klanarong, president of the National Anti-Corruption Commission, was quoted as saying by the Reuters news agency reported.
The Associated Press news agency cited Vicha Mahakun, the commissioner, as saying: "The NACC had submitted letters to warn the defendant twice that the project would create problems and incur great losses, as well as allow corruption to take place throughout every step of the scheme.
"Yet the defendant did not consider suspending the project as soon as she learned about the country's great losses from running the project."
If found guilty by the Senate, Yingluck could be banned from politics for five years.
The anti-corruption commission, one of several independent state agencies with powers similar to those of a court, is also looking into possibly filing criminal charges against Yingluck.
Under the subsidy scheme, a flagship policy of Yingluck's administration, the state paid farmers way above market prices for their rice.
Yingluck was thrown out of office on Wednesday by the Constitutional Court for abuse of power over the transfer of the National Security Council chief in 2011 to another position.
It ruled that the transfer was carried out to benefit her politically powerful family and, therefore, violated the constitution - an accusation she has denied.
The ruling accomplished what anti-government demonstrators have sought to do for the past six months and further widened the country's sharp political divide.
Yingluck's supporters, known as the Red Shirts, have called for a huge rally on Saturday to show support for the government, which won a landslide victory in 2011 elections.
The rice-subsidy programme helped the government win the votes of millions of farmers. It accumulated losses of at least $4.4bn and has been dogged by corruption allegations.
Payments to farmers have also been delayed for many months.