BUFFALO — Four years after grand jury subpoenas were first served on the owners of the iconic One Niagara, the building’s former owner and a business associate have been indicted by a federal grand jury.
Late Friday afternoon, U.S. Attorney for the Western District of New York William J. Hochul Jr. announced that the grand jury had handed up a 19-count indictment charging Frank R. Parlato, Jr., 60, and Chitra Selvaraj, 41, with a conspiracy “to defraud the United States and certain members of the public, to obstruct the function of the Internal Revenue Service, wire fraud and wire fraud conspiracy, money laundering, and corrupt interference with the administration of the IRS laws.”
The charges carry a maximum penalty of 20 years in prison and a $250,000 fine.
Parlato, a former managing partner at the One Niagara building, a local real estate developer and publisher of the Niagara Falls Reporter, and Selvaraj are scheduled to be arraigned on the charges in U.S. District Court in Buffalo on Monday.
Over the past several months, federal law enforcement sources have said that Parlato was the subject of an “active investigation” but declined to speak about the details of the probe.
The indictment charges Parlato and Selvaraj with orchestrating a scheme to defraud the Internal Revenue Service and others through the use of more than 15 shell companies, 50 bank accounts, and multiple attorney trust accounts. Sources said the investigation took years to complete because of the complexity of the scheme which involved the movement of large sums of cash through multiple accounts.
“It was like Whack-A-Mole,” one high-ranking law enforcement source said.
Reached by reporters after the indictment was announced, a spokesman for Parlato said, “These charges are based on the allegations of people who conspired against me locally for their self-interest and from a cult leader who turned on me after I regained more than $25 million in property for his group in Los Angeles.”
Parlato identified the so-called “cult leader” as Keith Raniere. Raniere is a Colonie, N.Y., businessman who has been described as “a marketing and self-improvement guru.”
The grand jury heard testimony from dozens of witnesses, including the current owner of One Niagara, Falls attorney Paul Grenga. Grenga’s attorney, former federal prosecutor Rodney Personius, declined to comment on what, if any, role his client played in the probe.
“The matter is before the grand jury and it would be inappropriate for me to say anything about that,” Personius said.
Sources have said that Parlato has been in “negotiations” with federal prosecutors in an effort to avoid an indictment. One of Parlato’s business lawyers, Ralph Lorigo, took issue with that description, saying “We’ve been presenting information to the United States attorney to show (him) that no crime has been done.”
A virtual who’s who of local lawyers, including former United States Magistrate Judge Carol Heckman and former New York State Attorney General Dennis Vacco, reportedly met with federal prosecutors to press Parlato’s claim that he did no wrong.
Lorigo said Parlato turned down plea offers with the feds.
“He wouldn’t plead to something he didn’t do,” Lorigo said. “Frank is prepared to go forward and defend each and every one of these counts.”
In his own statement, Parlato said he would fight the charges to the end.
“I am innocent of any crimes,” the statement read, “and will fight these charges to my last breath. May the truth be my ultimate savior.”