NIAGARA FALLS — A Hong Kong investor involved in the failed project to build an underground aquarium downtown still has ownership in the site and is now involved in a legal dispute over the operation of a nine-story glass building on the Rainbow Boulevard South parcel.

A lawsuit filed in State Supreme Court last week revealed that investor David Ho is the director in a company that owns half of the former Occidental Chemical office building.

The building, which sits just outside Niagara Falls State Park at 360 Rainbow Blvd. South, is currently operating as a souvenir and food site catering to summer tourists.

Ho was part of a group of investors that purchased the building in 1999 and announced plans to build the underground aquarium known as AquaFalls. A 40-foot hole was dug on the site, but the project never moved forward and instead became a symbol of failed development in the Falls.

The building changed ownership in 2004 during a foreclosure sale, and developer Frank Parlato Jr. has managed the site since, as a member of a limited liability company known as One Niagara.
Now, Parlato has filed a lawsuit against Ho’s company, Incredible Investments Limited, over a dispute about who should manage the building. Parlato claims members of Incredible Investments incorrectly removed him as manager of the building, demoted him to superintendent of building and grounds and sought to change its locks.

Parlato has never publicly disclosed that Ho still was involved in the building and told The Buffalo News in April 2005 that neither Ho nor another former owner, Gilles Assouline, had a financial interest in One Niagara.

In an affidavit filed with his lawsuit, Parlato said his firm, Whitestar Development Corp., owns half of One Niagara, while Incredible Investments owns half. Ho is the director of Incredible Investments Limited, according to Parlato’s complaint.

Parlato’s attorney, Michael B. Powers, said a State Supreme Court judge issued a temporary restraining order stopping Incredible Investments from replacing Parlato.

The lawsuit was filed shortly after an attorney for Ho circulated a notice to vendors at One Niagara on Aug. 17 that stated Shmuel “Sam” Shmueli was the manager of the building and directed all payments to be made by check directly to One Niagara.

“We’re trying to resolve our differences internally,” Ho’s attorney, Steven M. Cohen, said last month. He was in court Thursday and not available to comment.

According to an affidavit, Parlato struck a deal with Incredible Investments in late 2004 to obtain the building as it was to go to foreclosure. Although Ho remained involved in the building, Parlato was to be appointed manager of the building.

The building has been at the center of a series of controversial incidents since the foreclosure. As of August, One Niagara still owed back property taxes for two years that totaled more than $600,000. Code violations filed against the building for outdoor vendors and the property’s condition in the summer of 2005 have not yet been resolved.

djewell@buffnews.com