After nearly three years, federal prosecutors are dropping charges that Niagara Falls developer Frank Parlato Jr. stole $1 million from two heirs to the Seagrams liquor fortune.
The allegations against Parlato, who also is a weekly newspaper publisher, are noticeably absent from a new grand jury indictment accusing him of fraud and illegal monetary transactions.
Parlato, in a statement, attributed the decision to drop some charges to his newspaper stories about the heirs, Sara and Claire Bronfman, and their ties to Keith Raniere and NXIVM, an Albany-based self-help group that some critics consider a cult.
The Bronfmans, who are daughters of the late Seagrams liquor heir Edgar M. Bronfman, were portrayed as victims in the earlier indictment against Parlato.
"The prosecution tried to gag me," Parlato said in a statement Thursday. "They did not want me to tell my side of the story and did not want me writing stories relating to their alleged 'victims.'"
Like the old indictment, the new one still charges Parlato with wire fraud and claims he orchestrated a scheme that involved shell companies and bank accounts.
Prosecutors also claim Parlato cheated the Internal Revenue Service and, as part of two forfeiture demands, are seeking $4 million from the developer.
The new criminal charges against Parlato are the result of a five-year FBI investigation into his business dealings in Niagara Falls and his ownership of One Niagara, the downtown office and retail center that many still remember as the Occidental Chemical building.
As part of the probe, the government seized $1 million that Parlato received from the Bronfmans.
Parlato has denied the allegations that he committed fraud or cheated the IRS. He insists the $1 million is money he earned for representing the Bronfmans in a dispute over a luxury housing development in Los Angeles.
The government's decision to drop charges tied to the Bronfmans followed months of news coverage about NXIVM and Raniere and allegations that he operated a secret society that forced women to have sex with him.
In covering the allegations, which include claims that women were branded with a cauterizing device, The New York Times, New York Post and others have credited Parlato with uncovering many of the allegations.
"I am glad to have played a part through my reporting," he said in a statement. "I have been credited by many organizations across the country with providing the information that led to the indictment against Raniere."
Raniere was arrested in March in Mexico, where he had been living for several months, and charged with sex trafficking. The criminal complaint by federal prosecutors in New York City also accuses Allison Mack, an actress in the "Smallville" TV series, of taking part in the trafficking.
From the start, Raniere has maintained his innocence, and NXIVM, in a statement, has denied the allegations.
“We are currently working with the authorities to demonstrate his innocence and true character," the group said. "We strongly believe the justice system will prevail in bringing the truth to light."
The new indictment against Parlato came more than a year after two federal judges rejected his claims that the FBI concocted evidence against him.
In recommending the prosecution continue, U.S. Magistrate Judge Jeremiah J. McCarthy pointed to Parlato's "laundry list" of alleged inaccuracies in an FBI affidavit – 38 in all – and said none of them supports a dismissal of the charges.
McCarthy's recommendations were eventually adopted by Chief U.S. District Judge Frank P. Geraci Jr.
Federal prosecutors in Buffalo said they could not comment on Parlato's comments.