When a family-owned Pennsylvania trucking company announced plans early this year to build a New England distribution center in Johnston and create 120 well-paying jobs, Governor Carcieri and Mayor Joseph M. Polisena hailed it as an economic triumph.

But when tax-incentive legislation to help lure the company to Rhode Island went up to the State House, it ran into an unexpected roadblock — Sen. Stephen D. Alves, D-West Warwick, chairman of the powerful Senate Finance Committee.

Now, the FBI is investigating whether Alves killed the measure to punish Polisena for not investing Johnston pension funds with Alves, a stockbroker.

The federal investigation is part of a larger probe of the possible intersection of Alves’ private investment business with his public office — a probe that has reached into Johnston, Woonsocket, Cranston, Lincoln and Alves’ hometown of West Warwick, according to officials in those communities.

Polisena says that he was questioned recently by the FBI. People familiar with the investigation say that the FBI has also obtained records from the Rhode Island Economic Development Corporation regarding the ill-fated tax-incentive legislation.

A lobbyist for the trucking company, Jeffrey Britt, says Alves told him that he was angry with Polisena over Johnston’s pension-fund investments.

Alves did not respond to detailed messages seeking comment. Alves, who recently left his job at UBS Financial Services, has in the past denied any wrongdoing and declined to comment on the investigation.

A UBS spokeswoman in New York said Friday that the company is “cooperating fully” with the investigation, but declined to elaborate. She confirmed that Alves has left UBS, but would not say why.

Polisena, who took office in January, designated two other brokers at UBS last spring as the brokers of record for $29 million in Johnston pension funds.

“When the FBI questioned me, they asked, ‘Did you know that the [trucking company] legislation was killed because you wouldn’t give Alves a piece of the pension business?’ ” said Polisena. “I said, ‘I would hope not.’ ”

The trucking company, A. Duie Pyle, is still coming to Johnston, because it had already committed to the project before the legislation died, according to the company’s chairman, Peter A. Latta.

“It was disappointing,” said Latta, at a groundbreaking for the $9-million facility last week. “We had proceeded in good faith, thinking it was going to happen and that we met the criteria with the jobs we’re creating. We were surprised.”

LAST MARCH, Governor Carcieri visited Johnston Town Hall and joined Mayor Polisena in celebrating the news that Duie Pyle was coming to town.

Named for its founder, Alexander Duie Pyle, the company was formed in 1924 with a single truck hauling steel from a Pennsylvania steel mill, survived the Great Depression without a single layoff and has grown into a large Eastern transportation company with $212 million in revenue last year. Pyle, which boasts of being a “no-layoff” company, was expanding its New England operations and vowed to create 120 new jobs in Rhode Island in three years, two thirds of them paying between $50,000 and $60,000.

The company planned to invest $11.6 million in the project, including construction of a 47,000-square-foot distribution hub in a long-dormant Johnston industrial park just off Route 295 and adjacent to the state’s Central Landfill. An analysis by the Rhode Island Economic Development Corporation concluded that the jobs created would generate $500,000 in revenue from income taxes in the first three years, plus $121,000 in tax revenue from 113 construction workers expected to build the distribution center.

In return, state officials proposed granting Pyle an exemption from having to pay $336,000 in state sales tax on construction materials. The EDC has the authority to seek what is known as “project status” for development projects that will boost the Rhode Island economy, with the approval of the Rhode Island General Assembly.

Last spring, the EDC sent two proposals for project status to the State House — one for Pyle and another for HTP Med Inc., a medical-parts company that was moving to Charlestown from Connecticut. Another request for project status was submitted by the Rhode Island Industrial Facilities Corporation, for Shipwreck Falls, a proposed water park in West Warwick.

Robert Stolzman, a lawyer for the EDC, said he met with House and Senate fiscal advisers to work on a draft resolution. In May, he and an EDC official testified for the proposals at a House Finance Committee budget hearing. One legislator asked if Pyle transported hazardous waste. The company later said that it doesn’t. Stolzman said there was no opposition voiced at the hearing, and he assumed everything was on track.

Meanwhile, Joseph Rodio, the Providence lawyer for Pyle, said that as time passed and no project-status bill emerged from committee, he grew concerned. EDC officials assured him that there was no problem, but the question about hazardous waste added to Rodio’s worries. He asked Latta to draft a May 24 letter stating that the trucking company does not handle hazardous waste.

Rodio also recommended that Pyle hire a lobbyist, Jeff Britt, who was paid $10,000, according to state lobbying records.

Britt says he spoke with House Majority Leader Gordon Fox, D-Providence, who was unaware of the Pyle proposal but said that it “sounds fantastic,” according to Britt.

A few days later, however, Fox called Britt and reported that “there was an issue on the Senate side, and I should focus there,” said Britt.

Britt then went to Alves, D-West Warwick, chairman of the Senate Finance Committee.

“He said that he didn’t think it was good legislation,” said Britt. “He wasn’t supportive. He said that he had a problem with it.”

As they discussed the legislation, Britt said, Alves said he wasn’t happy with Polisena, the Johnston mayor, over Polisena’s recent decision to deal with another UBS broker regarding Johnston pension funds.

“I tried to keep the focus on the legislation,” said Britt. “I told him that this bill wasn’t going to affect [Polisena], that if he had a problem with him this wasn’t the best way to solve it. But that clearly fell on deaf ears.”

Britt says Alves seemed angry, saying that “Polisena screwed me” on the pension-fund business. Alves also mentioned that another UBS broker, James Quattrocchi, had been put in charge of the account, according to Britt.

IN AN INTERVIEW, Polisena said that when he took office in January, he started looking at how to improve the performance of the town’s pension fund. For advice he turned to two UBS brokers he knew from Johnston, local resident Ronald Capraro Jr. and local commercial property owner James Quattrocchi.

In May, the town designated Capraro and Quattrocchi as the brokers of record for about $29 million in police and fire pension funds. But any investments, or commissions, for the brokers have been put on hold as the town considers whether to put the money into the state pension system, according to Polisena.

The decision to designate the two UBS brokers did not sit well with Alves, according to Rodio, the Pyle lawyer who also represents Johnston on pension-fund matters.

On June 21, Rodio says, he attended a meeting at Johnston Town Hall with representatives from UBS. He recalls one of the UBS people saying that Alves was unhappy that he wasn’t involved in the Johnston pension-fund business.

“He said that Alves was upset, that he felt the work should have gone to him,” said Rodio.

Karina Byrne, a UBS spokeswoman in New York, declined to comment.

As part of Operation Dollar Bill, the wide-ranging probe of State House corruption, federal investigators have been probing the pension fund in West Warwick, where Alves used to chair the town pension board and UBS Financial had business, according to town officials and the pension board’s lawyer.

Authorities are also investigating why Alves and Sen. Daniel DaPonte, D-East Providence, who also worked at UBS, were reported to have received a $100,000 commission for helping Prudential Financial land work with a union pension fund for Rhode Island electrical workers. The union fund’s lawyer and financial consultant were unaware of the commission, and said that Alves and DaPonte played no role in Prudential’s selection. UBS said that Alves and DaPonte were paid for helping Prudential, and that some of the $100,000 went to UBS, not just Alves and DaPonte.

Investigators have asked questions about whether Alves was involved in business that UBS has with the Lincoln town pension fund, according to officials there, who said they were unaware of any role by Alves. And investigators have asked officials in Woonsocket about any business that Alves or UBS had with that city’s pension funds.

Rodio, who is also the lawyer for the Woonsocket pension fund, said federal authorities last year subpoenaed city records. After the city rejected UBS Financial’s bid to serve as its investment adviser four years ago, Rodio says, he, Mayor Susan Menard and the pension-board chairman received angry, expletive-laced phone calls from Alves. Earlier this year, Alves and Menard clashed over the Senate’s reluctance to approve bonds to finance improvements at Woonsocket’s middle school; Menard accused Alves of seeking payback over the lost pension business.

In Cranston, the city’s former finance director, Jerome I. Baron, says that he was questioned a year or so ago regarding Alves’ role in that city’s $50-million pension fund. UBS was hired as the city’s investment consultant in 2004, but while Alves had no involvement in the business, as far as Cranston officials were aware, his name appeared on the city’s account statements.

Corsino Delgado, the new Cranston finance director under first-year Mayor Michael T. Napolitano, said he also questioned why Alves’ name appeared on the account, and that the city had it removed in May.

“The question came up why his name appeared on the account, because we aren’t serviced by the Providence office,” said Delgado, who said he deals with UBS managers in New York. “They were not sure. They seemed to think he was the introducing broker who brought [UBS] into the city.”

Jeff Britt, the Duie Pyle lobbyist, said that when Alves complained about Polisena and missing out on the Johnston pension business, he also voiced similar complaints about Mayor Napolitano and Cranston.

On Sept. 14, Alves left UBS. He has started a new company, Dorrance Street Financial, in downtown Providence.

IN THE MIDDLE of June, the House Finance Committee adopted a state budget and posted it on a bulletin board in a basement hallway at the State House.

Among the lobbyists and interested parties crowding around to see was the EDC’s lawyer, Rob Stolzman. Up to that point, he said, he assumed that the project-status legislation for A. Duie Pyle would be “smooth sailing.”

“I went over and checked and saw that HTP Med [the other EDC-backed tax incentive] was in, but I couldn’t find Duie Pyle,” he recalls.

Stolzman asked the House fiscal adviser, Michael O’Keefe, who said he didn’t know why Duie Pyle was out. Later, since the House Finance Committee consults with the Senate before adopting the budget, Stolzman asked the Senate fiscal adviser, Russell C. Dannecker, who just shrugged.

“We were never told why,” he says.

Stolzman was also realistic about the odds against reviving the matter so late in the session.

“At that point, if the train hasn’t left the station, only the caboose is left,” he said.

The same day that Stolzman discovered that Duie Pyle was out, the budget sailed through the House and was sent over to Alves’ Senate Finance Committee.

In Johnston, Mayor Polisena, who had been a state senator, learned that Duie Pyle had lost its tax break.

“I was disappointed, but I just assumed it got lost in the shuffle,” said Polisena.

Meanwhile, two Johnston legislators tried to flag down the departing train. Rep. Stephen R. Ucci and Sen. Christopher B. Maselli say they drafted resolutions, for the House and Senate, hoping to get Duie Pyle’s tax incentive re-inserted into the budget in the session’s waning days or hours. The resolutions, however, require the approval of the leadership to be put on the calendar.

Ucci says that Fox, the House majority leader, told him that Alves opposed the Duie Pyle incentive.

Fox told the Journal that he doesn’t recall discussing Duie Pyle with either Britt, the lobbyist, or with Ucci. The conversations “could have happened,” says Fox, “but I just don’t recall in the crush of things at the end of the session. We were rushing to get out.”

The House Finance chairman, Steven Costantino, D-Providence, told Ucci that “we can’t afford” to give Pyle a $336,000 tax break, according to Ucci. That didn’t make sense to Ucci, who argued that if the company didn’t come to Rhode Island, there would be no tax revenue. But it was late at night, on the final, marathon day of the session.

“No one wanted to hear it at that hour,” says Ucci.

Irked, Ucci says he initially voted against the tax incentive for the West Warwick water park, in Alves’ hometown. He subsequently changed his vote, telling colleagues, “I will vote for the West Warwick tax break, though I didn’t have a chance to vote on the Johnston one.”

On the Senate side, Maselli, a freshman legislator, said he asked the leadership to put his Pyle resolution on the Senate calendar for immediate consideration.

“Initially, I was told that it would be all right to put it on the calendar,” says Maselli. “Then, a day or so later, I was told no, because the Finance chairman of the Senate had a problem with it.”

Maselli said he went to Alves, who told him that granting the tax break to Pyle would “throw off the budget by $300,000.”

“He said we can’t do that, or we’ll have an unbalanced budget,” recalls Maselli. “I didn’t follow the logic of that, because Duie Pyle wasn’t even here yet. They hadn’t broken ground. Did the state budget for this, not knowing for sure that they were going to come here? But I was a freshman senator. It wasn’t going to pass.”

Maselli also noted the irony that while Duie Pyle’s tax break failed, the one for the West Warwick water park passed, as did the one for the medical-parts company in Charlestown.

“It obviously makes you wonder why one would pass, and not the other,” says Maselli.

Echoes Polisena, the Johnston mayor: “If they passed two others, why not the one in Johnston? That’s being prejudiced against me and my economic-development program and my community. There was the potential of us losing this deal for the town and the state, and that really upsets me.”

LAST TUESDAY, Carcieri, Polisena and other state and local officials gathered in a dusty pit in Johnston and dug silver shovels into the blowing sand, for the ceremonial groundbreaking.

They praised Duie Pyle chairman Pete Latta, grandson of the company’s founder, for his perseverance. Latta thanked them for their support, calling it a “textbook experience” of private industry working with government.

Afterward, standing before a mountain of dirt and a crane, Latta said that he might not have come to Rhode Island had he known, at the outset, that the state tax incentive would be denied.

Pyle may still ask the General Assembly to pass its tax break, but realizes the chances are slimmer with the project moving forward.

Barring bad weather or unforeseen events, Pyle hopes to open the distribution center in January.

mstanton@projo.com