It may not have been their intent, but when FBI agents armed with subpoenas descended on Niagara Falls City Hall on March 8, they effectively killed a pending deal between the administration of Mayor Vince Anello and local developer Frank Parlato, the Reporter has learned.

That was the day the agenda for City Council's March 13 meeting was released, containing a pair of resolutions authorizing the mayor to begin negotiations with Parlato for a public-private partnership to demolish the former Occidental Building, fill in the pit left by developers of the failed AquaFalls project and open a parking lot on the site. A $2.1 million bond issue floated by the city and loaned to Parlato would have funded the project.

But the resolutions were pulled before the meeting began. And Council Chairman Charles Walker, who was listed as the sponsor of the measure authorizing the bond issue, said he'd never even seen it before it appeared on the agenda, and didn't know how his name got on it. City attorneys told him that the resolution came from the Anello administration, he said.

Although Anello referred to the deal publicly as a "win-win situation," he has denied ever speaking to Parlato about it and said the spending resolution did not originate from his administration.

Federal investigators are turning up the heat in their wide-ranging official corruption probe, which began last May after the Reporter revealed Anello accepted $40,000 in under-the-table payments from downtown developer "Smokin'" Joe Anderson shortly before and just after he was elected mayor in 2003.

Council agendas, resolutions and the process by which measures come before Council for a vote were the focus of the FBI's recent interest, said Council Secretary Geri Mondi, who was subpoenaed in the case. Agents are eying numerous no-bid contracts awarded by the city, irregularities in contracts that were put out to bid, the process that led to the adoption of the 2006 city budget, and possible hiring and personnel irregularities, law enforcement sources said.

Agents followed up on their first City Hall visit in months with a second just last week, again poring over records in the City Council chambers. Sources said they seemed particularly interested in the circumstances surrounding the controversial employment of Louis Cheff as director of parking and former city risk manager Renae Kimble. Council was able to dismiss Kimble from her high-paying patronage position during the recent budget process, but Anello has thus far stymied attempts to jettison Cheff.

The FBI is looking into allegations that supporters of Kimble and Cheff attempted to intimidate Council members into keeping them on the city payroll. The allegations concerning Kimble first surfaced in a Dec. 13 Reporter exclusive. Lobbying for Cheff reached a fever pitch in January, after newly elected Councilmen Sam Fruscione and Chris Robins were sworn in. While no questions were asked relating specifically to the proposed Parlato deal, the timing of the March 8 raid caused Council members to balk.

Councilman Babe Rotella, who sponsored the aborted resolution that would have authorized Anello to negotiate with Parlato, said he originally thought the plan was a good one. But the apparent interest of the FBI, along with some other aspects of the deal, made him reconsider.

Rotella said one of those other aspects was the involvement of local attorney Paul Grenga, who represented Parlato in the negotiations. Grenga has been a business partner and attorney for Joe Anderson, and is a lifelong friend of City Administrator Daniel Bristol. These connections, along with his minor roles in the Hyde Park Golf Course giveaway and the highly questionable process surrounding the bidding for the city's Main Street courthouse project, have caused the FBI to interview him on several occasions.

Since buying the Occidental Building in December 2004, Parlato has also briefly employed convicted felon Michael Gawel and Republican political consultant Rick Winter, both of whom were involved in some of the deals now under FBI scrutiny. As of last week, Parlato owed $419,791 in back taxes on the property.

The recent shift in focus would indicate that the legality of Anello's controversial acceptance of $40,000 from Anderson -- and an additional $5,000 from the sister of one of the principals in the failed golf course deal -- is largely settled, law enforcement officials told the Reporter.

"They either have a case against him or they don't, and now they're looking at these other things to tie it all up," one veteran lawman said. "It's not like he's going anywhere."

While he's publicly admitted to taking the money, Anello has strenuously denied that it had anything to do with a series of highly favorable deals Anderson and the golf course developers received after he took office.

Under the most recent subpoena, Mondi has been ordered to produce all Council agendas, minutes and voting records going back to Oct. 1, along with any internal memos, letters or e-mails relating to them.

Aside from Rotella, Mondi and Grenga, others who have been interviewed by the FBI or subpoenaed to testify before the federal grand jury sitting in Buffalo include City Comptroller Maria Brown, Law Department Clerk Donna Winstanley, NFC Development Corp. Director Ralph Aversa, Anderson's ex-wife and former business partner, Gail Anderson, former council member Candra Thomason, former Anderson associate John Caputo, county Elections Commissioners Scott Kiedrowski and Nancy Smith and members of the Niagara Falls Reporter staff.

Maintaining his innocence of any wrongdoing, Anello has laid responsibility for the investigation on what he says are lies told about him by his political enemies. In particular, he has charged that the Reporter is involved in a shadowy conspiracy designed to keep city property values low by besmirching his good name.

But law enforcement sources said it is doubtful that the feds would publicly announce a criminal investigation at a press conference, form a task force involving everyone from the FBI, the IRS, the U.S. Postal Service and other federal agencies to the state police and state Attorney General's office, seat a grand jury to hear evidence and still be conducting interviews and issuing subpoenas 10 months later unless they thought they were on to something.

In the meantime, development in the city has ground to a virtual standstill. Parlato was the first entrepreneur of note to approach the city since news of the federal investigation broke last May and, whether his proposal had merit or not, the climate of suspicion at City Hall simply proved too much to overcome.

Likewise, state officials are loath to give the time of day to a mayor who has been named by The New York Times, the Buffalo News and the Associated Press as the target of a criminal investigation. On a recent visit to Albany, Anello found himself unable to get past the secretaries of the power brokers he'd hoped to meet with.

And city workers, particularly those who toil at City Hall, are forced to go to work each day to face not only the difficulties presented by their jobs, but the fear of possible questioning by the FBI and maybe a subpoena to appear before the grand jury. Taxpayers bear the cost of missed work time, and every citizen of Niagara Falls lives with the stigma brought about by press scrutiny of the highly publicized case.

The mayor appeared on Sal Paonessa's popular WJJL "Niagara at Nine" radio program last week to come out foursquare against sex offenders. Pretty much everyone's against sex offenders, so it was a safe topic. Pretty much everyone's against crooked politicians, too, but the always gracious Paonessa didn't bring it up.

Babe Rotella has said repeatedly and publicly that, for the good of the city, Anello should step down until the probe is resolved one way or another. But if the mayor cared even a little about what's good for the city, he'd have done so a long time ago.