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Last fall, a lawyer for a local union pension fund came across a puzzling entry on the fund’s federal tax return — a $100,000 commission that had reportedly been split by Daniel DaPonte and Stephen D. Alves.

DaPonte and Alves, Rhode Island state senators and financial advisers who worked at UBS Financial Services, didn’t handle any of the pension fund’s investments. So why, the fund’s trustees wondered, did the return say that they had each received $50,000?

That question set off a chain of events that has led federal investigators to examine the circumstances as part of Operation Dollar Bill, the wide-ranging probe of influence-peddling at the State House.

The explanation from Prudential Financial, which oversees investments for the annuity fund of Local 99 of the International Brotherhood of Electrical Workers in Cranston, only deepened the mystery.

“The $100,000 payment,” responded Prudential in a letter written last fall, “was a one-time finders fee” to UBS for “introducing Prudential to the possible opportunity at IBEW Local No. 99 Annuity Fund.”

That came as news to the financial consultant who oversaw the process in which Prudential was selected and says he was not aware of UBS’s involvement or the $100,000 payment. The lawyer for the pension fund says he was also unaware.

The Prudential letter did not elaborate on how UBS earned its finders’ fee or what role DaPonte or Alves played. In the letter, Prudential stressed that the money came from Prudential, not the union or its members’ retirement money.

A UBS spokeswoman told The Journal Friday that the $100,000 went to DaPonte and Alves “to compensate these two brokers for their comprehensive groundwork and client-development work to bring together a plan for the plan administrator [Prudential].”

While each man was credited with $50,000, the spokeswoman said, their shares were reduced by standard cuts taken by others at UBS. DaPonte’s lawyer said that ultimately his client received about $18,000; Alves did not respond to questions regarding his role or his share, referring questions to UBS.

J. Richard Ratcliffe, DaPonte’s lawyer, said that DaPonte has been questioned by an investigator from the U.S. Department of Labor. Ratcliffe said that DaPonte’s fee was based on extensive work that he did to assist Prudential in preparing its bid.

A Prudential spokesman declined to comment.Prudential was hired to oversee the fund in 2004 and the payments to UBS were made in November of that year.

Michael Joyce, the Boston financial consultant who oversaw the process in which Prudential was chosen, said that he met with DaPonte, at a union official’s request, but that neither DaPonte nor Alves had anything to do with Prudential’s hiring, which was done through a competitive-bidding process.

In 2004 and 2005, DaPonte co-sponsored bills at the Rhode Island State House affecting electricians — including legislation supported by the Local 99 business manager, Allen Durand, who referred DaPonte to Joyce, the financial consultant.

DaPonte’s lawyer said that there is no conflict — that DaPonte never filed any legislation at Durand’s request, and that Durand lacked the power to steer DaPonte business since Durand represented just one vote on the six-member board that controls the pension fund.

Investigators from the FBI and the Department of Labor have been asking questions about the $100,000 payment, said Richard Corley, Durand’s lawyer. Records have been subpoenaed from the union, UBS and Prudential, and people from those entities have been questioned, according to defense lawyers.

In a recent letter to union members, Durand wrote that the investigation is part of “a larger investigation of misuse of tax dollars on certain construction projects in the state. The investigation is also focused on the activities of some members of the Rhode Island General Assembly.”

LATE IN 2003 or early in 2004, Michael Joyce recalls receiving a call from Al Durand at Local 99.

Durand, who had been elected business manager of the union in 2002, was chairman of the annuity fund’s board of trustees. The trustees were using Joyce’s Marco Consulting Group in Boston to help choose a financial company to help administer the union’s annuity fund.

The fund’s six trustees, half from the union and half representing electrical contractors who pay into the fund, had decided to offer union members a new investment option — a “self-directed” retirement plan that would allow them to choose from a variety of mutual funds and other investments, like a 401(k) plan.

The Marco Consulting Group, which already worked for the fund, had been asked to help study self-directed plans and to conduct a competitive-bidding process to select an administrator for the self-directed plan.

According to Joyce, Durand asked him to meet with DaPonte to see what financial services he might be able to offer.

Durand knew DaPonte from the State House, where Durand is a registered lobbyist for Local 99. Corley, Durand’s lawyer, said that Durand got to know DaPonte when the union official would go to the State House to testify on legislation of interest to the union and electricians.

DaPonte and Durand are friends, said Ratcliffe, DaPonte’s lawyer.

DaPonte, D-East Providence, was a rising member of the Senate leadership. Elected to the Senate in 1998, when he was a junior at the University of Rhode Island, DaPonte became the deputy majority whip in 2003.

DaPonte had been hired in early 2001 as a financial adviser at Tucker Anthony, where a more senior senator, Stephen Alves, D-West Warwick, also worked. In December 2001, DaPonte joined Alves at UBS.

When Durand asked Joyce to meet with DaPonte, he described him as “a good guy” and “well-known” in Rhode Island, Joyce recalled.

DaPonte came to Joyce’s office in Boston. DaPonte spoke about investment opportunities that UBS offered, but there was nothing that Joyce was interested in, or that he even viewed as relevant to his search for a company to administer the self-directed plan. UBS never bid for that work.

DaPonte gave Joyce his UBS business card — a business card that Joyce saved until turning it over to the federal authorities after they began investigating last fall.

Prudential Financial, meanwhile, was a serious bidder for the Local 99 pension work. At the time, according to the letter sent last fall to the annuity fund’s lawyer, Prudential “had an informal relationship with UBS whereby UBS may introduce Prudential to any possible opportunities in the Providence, Rhode Island area and UBS would be compensated by Prudential if an opportunity resulted in a client for Prudential.”

Prudential’s point-man on the Local 99 annuity fund bid was Nick McParland, an executive in tax-exempt sales based in Hartford, Conn. McParland declined to comment when asked last week if he had met with DaPonte, or to elaborate on Prudential’s “informal relationship” with UBS.

As part of that relationship, Prudential said in its letter, UBS and Prudential negotiated a $100,000 “fee” that Prudential would pay to UBS if it landed the Local 99 annuity fund business.

“The $100,000 payment was a one-time finders fee to UBS for introducing Prudential to the possible opportunity” at Local 99, said Prudential.

Asked what Prudential got for its $100,000 if UBS didn’t introduce Prudential to Local 99, McParland replied, “Obviously it’s more complex than that, but I can’t comment.”

Ratcliffe, DaPonte’s lawyer, said that the $100,000 finders’ fee wasn’t negotiated until after Prudential got the business — not prior to, as Prudential’s letter stated.

According to Ratcliffe, DaPonte had learned in 2003, through his friend Al Durand, that Local 99’s annuity fund was going to add a self-directed plan for its members.

DaPonte talked to people at UBS, said Ratcliffe, and was referred to a UBS staffer in Hartford, who put DaPonte in touch with McParland. DaPonte helped Prudential assemble the “platform” of mutual funds that would be included in the plan.

“It was Dan’s belief that he would be involved in the educational process — of educating union members [about the investment choices],” Ratcliffe said. “He had hoped to receive ongoing commission business. Let’s face it — this is a young guy who wanted to get business.”

Although DaPonte worked closely with Alves at UBS, Ratcliffe said, DaPonte isn’t sure what Alves did regarding the prospective Local 99 business.

“There was some conversation that Alves could have worked on this [had the deal gone through],” Ratcliffe said.

On another occasion, Ratcliffe said, DaPonte also met with the executive board of Local 99 — which was separate from the annuity fund’s governing body — to pitch some other financial services. But he wasn’t chosen.

Meanwhile, in 2004, the trustees of the annuity fund voted to hire Prudential, passing over bids from Putnam and Mass Mutual. Afterward, Joyce, the fund’s consultant, objected to using UBS or any third-party brokers, said Ratcliffe. So the business that DaPonte had hoped for fizzled.

Joseph J. Pezza, the fund’s lawyer, said there was good reason to reject third-party brokers — to avoid additional fees — and that a prominent firm such as Prudential should have sufficient resources to administer the fund without calling in third parties.

At that point, Ratcliffe said, DaPonte “had invested a considerable amount of time,” with no financial return. So Prudential agreed to pay UBS a $100,000 finders’ fee, in lieu of commissions. Someone else at UBS negotiated the figure, Ratcliffe said, and Prudential’s McParland informed DaPonte that the payment would be $100,000.

Neither UBS nor Prudential would elaborate on how the figure was reached, or by whom.

In November 2004, Prudential sent UBS a check for $100,000.

LAST SPRING, Prudential provided financial information regarding the annuity fund to the actuaries who were preparing the fund’s 2005 tax return. Prudential reported that DaPonte and Alves had each received a $50,000 commission, and the information appeared on the annuity fund’s tax return, which was filed in September.

Shortly thereafter, Pezza, the fund’s lawyer, was reviewing the return and saw the commissions. He alerted the fund’s trustees, who asked him to investigate. He contacted McParland at Prudential.

“As I informed you on the telephone,” Pezza wrote on Oct. 2, “the members of the board of trustees and various annuity fund plan professionals were surprised to learn of the . . . broker commissions disclosure as none of said individuals had any information or knowledge regarding the reason for said broker commissions payment.”

Furthermore, Pezza wrote McParland, nobody knew anything about DaPonte’s or Alves’s “involvement with the annuity fund.”

Copies of Pezza’s letter to McParland were also sent to all of the fund’s trustees and several financial professionals with ties to the fund.

Three weeks later, on Oct. 24, Prudential responded — not McParland but Carl Wagner, a “relationship manager” at the Hartford office.

Wagner’s letter described Prudential’s “informal relationship” with UBS.

The $100,000 came from “resources of Prudential and was not paid from the assets of the fund,” said Wagner. Nor, he said, did it affect Prudential’s ability to offer “the best available price” to the annuity fund for the company’s services.

“The value was to Prudential,” wrote Wagner, “not the Fund.”

The annuity fund’s trustees are not convinced. Last week, Pezza said that the fund may pursue legal action to recover the $100,000 if it can be shown that Prudential passed on the cost to the fund through higher fees.

The fund, which has 1,100 members, is divided into two parts — a self-directed plan of about $35 million, administered by Prudential, and another $80 million that is trustee-directed.

“If the Department of Labor investigation turns up that they somehow passed the cost on to us, the trustees will have to seek to recover that money,” Pezza said.

Meanwhile, Pezza said, he and his law partner, Joseph Rodio, took their concerns last fall to the federal authorities.

OPERATION DOLLAR BILL has its roots in a corruption case against former state Sen. John A. Celona, who pleaded guilty two years ago to selling his office and agreed to cooperate in the widening influence-peddling probe of several of his former colleagues.

Celona admitted that he sold his office to the CVS drugstore chain, Blue Cross & Blue Shield of Rhode Island, and Roger Williams Medical Center. While being paid as a consultant by CVS and Roger Williams, and profiting from a Blue Cross-financed cable TV show, Celona said that he did the companies’ legislative bidding at the State House.

At Celona’s sentencing in federal court on Jan. 31, a federal prosecutor said that the onetime North Providence senator’s cooperation had led to 14 “active investigations” involving seven public officials and seven corporations. Agents from the Department of Labor and the IRS have joined a law-enforcement task force that includes out-of-town FBI agents and the Rhode Island State Police.

Corley, Durand’s lawyer, said that Susan J. Murphy, a criminal investigator with the federal Labor Department who investigates possible wrongdoing involving pension funds, and James D. Pitcavage of the FBI are working on the Local 99 case.

During the 2004 session of the General Assembly, while DaPonte was seeking business from the Local 99 annuity fund, he co-sponsored a bill that Durand, the union’s business manager, lobbied for at the State House, according to Durand’s lobbyist reporting form.

The bill, involving bidding requirements for public works projects, was held for study in a Senate committee.

The same year, DaPonte co-sponsored a bill related to the electrical trades and two bills related to electricians, all of which passed the Senate and died in the House. Durand reported lobbying against one of the bills, but did not report a position on the other two.

During the 2005 session, which opened a few months after UBS received the $100,000 payment from Prudential, DaPonte was a co-sponsor of two more bills affecting electricians.

(That spring, DaPonte left UBS to form his own company, Axis Financial Group, in East Providence.)

Durand testified on behalf of one of the 2005 bills, which would have forbidden apprentice electricians with out-of-state certificates to work in Rhode Island. The bill passed the Senate and died in the House.

Durand also registered as a lobbyist for the other bill, regarding electrician’s licenses, which passed the Senate and the House and became law, without the governor’s signature.

Ratcliffe, DaPonte’s lawyer, said that there was no conflict between DaPonte’s legislative actions and his attempts to win union-related business. The $100,000 came from Prudential, not the union, he said. Ratcliffe said that Durand never asked DaPonte to sponsor any legislation, and DaPonte was not the lead sponsor on any of the bills.

“There’s no connection here,” Ratcliffe said. “He’s a part-time legislator, and he’s also a broker, trying to put deals together.”

mstanton@projo.com