More than three years ago, Mayor Vince Anello accepted a series of no-interest loans from Joseph "Smokin' Joe" Anderson, a prominent cigarette merchant who was developing projects in the city.
FBI agents and the U.S. attorney's office began investigating the $40,000 in loans around May 2004, and Anello and Anderson hired high-profile defense lawyers to represent them. Since then, there have been no indictments or charges. There also have been no statements from law enforcement officials announcing that the investigation is over or that the government has decided against charging anyone.
Now, like many other people in Niagara Falls, Anello still wonders where the investigation is heading.
"I have cooperated with all requests for information. No additional information has been requested of me in 17 months," Anello told The Buffalo News last week. "I have discussed this matter publicly many times."
The region's lead attorney for the Justice Department, U.S. Attorney Terrance P. Flynn, said the investigation is continuing.
No decision has been made yet on whether to file charges against Anello, Anderson or anyone else, Flynn said.
"It's our job to take the time and make sure that we don't accuse somebody [of] a crime until we have all the sufficient, admissible information we need," Flynn said. "We're dealing with a public official who is well-known."
According to several law enforcement officials, some members of the FBI-led Public Corruption Task Force have been upset with Flynn's office over what they see as exceedingly slow movement on the Anello case.
More than a month ago, the officials said, one of the lead FBI agents in the Anello probe resigned from the task force in disgust, requesting and receiving a new work assignment in the Buffalo area.
"[The agent] felt that he turned up some important information, but the U.S. attorney wasn't moving on it," said one source close to the case. "[The agent] felt like this and other cases involving politicians were dead in the water."
Flynn and Buffalo FBI spokesman Paul M. Moskal declined to comment, except in general terms.
"The decision on whether to prosecute rests with the U.S. attorney," Moskal said. "There is give and take in any relationship between investigators and prosecutors. Sometimes, there are disagreements on the best avenues to take, but that doesn't mean that the public isn't being served."
Flynn said any personnel changes among investigators should remain internal.
"That's [the FBI's] business as to why an agent comes or goes. I don't know anything about that," Flynn said. "If they have a case to present to us, our door is always open . . . There's not one bit of reluctance in this office to prosecute public corruption cases."
Flynn and the FBI say investigations into government corruption are a high priority in Western New York. But no significant government corruption indictments have been announced in Buffalo since November 2005, when the FBI held a news conference to announce the creation of its task force.
>Debating the probe
Anello, 60, has been mayor since 2004, and his term runs to the end of this year. Many Falls residents wonder if he will seek re-election. Campaigning for the job is likely to begin in April, and Anello has not yet disclosed his plans.
At Gadawski's tavern on Falls Street, a popular watering hole for politicians and city workers, the 86-year-old proprietor, Edward Gadawski, said patrons often debate the FBI probe and Anello.
"I think Vince will run again, [but] I'm sure he's had some sleepless nights over this thing," said Art Garabedian, a businessman who has been a friend of Anello for nearly 40 years.
"A lot of people have been questioning why doesn't the FBI either step up to the plate or drop the issue altogether? If there's nothing there, clear the man," Garabedian said.
Garabedian said the loans Anderson gave Anello "might have just been loans between friends."
At the same time, he said, he understands how the arrangement could sound "kind of fishy" to the FBI.
Councilman Robert Anderson Jr. said he is concerned that publicity about the long-standing investigation -- including a 2005 story in the New York Times -- has hurt the image of Niagara Falls and its leaders.
"They stereotype Niagara Falls as being corrupt, and people mention that all the time," said Anderson, who was appointed the Council's new chairman this month. "They talk about Niagara Falls and say, 'I'm not going to go up there to do any business.' They have fear."
Anderson said he and other Council members would have liked to have known all about Anello's private business dealings with Joseph Anderson when they voted on some of his development projects before the Anello investigation was made public.
The councilman is not related to Joseph Anderson.
"We were blindfolded when we first came in and when we voted the first three months [of 2004] on a lot of things that happened with Smokin' Joe Anderson and others," Robert Anderson said. "And then we find out that they were done underhanded or maybe during shady conditions."
Frank Smith, owner of Third Street Liquors, says he thinks the investigation has hurt downtown development.
He's surprised that recent improvements haven't brought in any chain restaurants or much new development over the last couple of years.
"When comments are made that developers are playing a wait-and-see game, I think that's true," said Smith.
Mary Jo Zacher, president of the Pine Avenue Business Association, paints a different picture of the business climate in another area of the city.
"I don't think the mayor being investigated has affected anyone's business, especially on Pine Avenue," she said. "In the beginning, maybe people were in an uproar about it, but people aren't talking about it anymore."
>Denies special treatment
Anello has admitted that in 2003, Joseph Anderson gave him $40,000 in a series of interest-free loans. Anello said he needed cash to pay off some business debts for an electrical contracting company he ran.
But he also said Anderson stepped in to help as an old friend and never received any special treatment for his businesses in the city. Those businesses include two hotels, a bar, a pedestrian mall and an indoor playground known as Smokin' Joe's Family Fun Center.
"I haven't done anything wrong, and I haven't been charged with anything," the mayor said.
The mayor's critics say Anderson did receive benefits, including a 30-year, no-bid lease to operate the pedestrian mall on prime downtown land, a government grant to renovate his bar and a low-interest business loan.
But in building a criminal case against the mayor or Anderson, authorities said, prosecutors would have to prove that benefits given to Anderson were the paybacks from his loans to Anello. That kind of evidence can be difficult to obtain.
Joseph Anderson's attorney, Terrence M. Connors, said authorities have never told him Anderson is a target of their investigation.
"Early on, well over a year ago, [Anderson] was interviewed. He provided the information he had to the best of his knowledge," Connors said. "We haven't heard anything since."
Anello's attorney, Joel L. Daniels, could not be reached.
Has Anello repaid any of the $40,000 that Anderson lent him more than three years ago? The mayor declined to answer.
"It's a matter of my business," he said.
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