Fumo, one of the most powerful politicians in Pennsylvania, last year received a target letter - a formal notice that he is likely to face charges related to the fraud and obstruction-of-justice probe.

Fumo recently told people close to him to brace for an indictment, and has assured them that he will vigorously fight the charges.

"He's looking forward to clearing his name," said a person close to the Philadelphia Democrat. "He's kind of relieved the investigation is coming to a close."

Since 2003, the FBI and IRS have grilled everyone from Fumo's florist to a Senate-paid private eye. Agents have scrutinized Fumo's yacht trips, his finances, his use of legislative staff - and his aides' alleged cover-up.

But the heart of the case appears to be whether Fumo illegally exploited a multimillion-dollar South Philadelphia charity to fund his personal and political agenda - using it, as one person close to case put it, "as his personal piggy bank."

The charity, Citizens' Alliance for Better Neighborhoods, is funded mainly by public dollars and Peco Energy donations - most of the money won with Fumo's influence or help.

Early on, agents scrutinized those donations. Now, instead of pursuing how the money was raised, they are focused on how it was spent.

The Inquirer previously reported that the charity paid for political polls and secretly funded a lawsuit against a Fumo political rival.

The Inquirer has learned from sources that authorities are also investigating whether the charity bought Fumo household items and provided its SUVs - a Ford Expedition and a Lincoln Navigator - for Fumo to use on vacation.

Last week in Harrisburg, Fumo walked away without answering when asked whether he expected to be charged.

Fumo, who has served in the state Senate for nearly three decades, has said the investigation is politically inspired by the Bush White House.

Now 63, he has long been respected and at times feared for his intelligence, political instincts, and network of appointees and allies.

Fumo has faced criminal charges before, only to prevail against them.

In 1973, five years before he became a senator, he was arrested on charges of vote fraud, but the charges were quickly withdrawn.

In 1980, a federal jury convicted him of putting "ghost" employees on the state payroll, but a judge threw out the conviction, a decision affirmed on appeal.

Citizens' Alliance was founded in 1991 by Fumo allies, including two legislative aides.

One was Ruth Arnao, a close friend and a senior staffer in Fumo's legislative office in South Philadelphia until 2004. Until recently, Arnao, 51, was executive director of Citizens' Alliance. She, too, received a target letter last year. Her lawyer did not return phone calls seeking comment Friday.

The senator has extolled the charity's good works: rehabbing the Passyunk Avenue commercial strip, subsidizing charter schools, and doling out grants to the likes of the St. Edmunds Golden Age Club, a legal clinic for the disabled, and the Anti-Defamation League.

FBI and IRS agents began investigating Fumo's relationship to Citizens' Alliance in 2004 after The Inquirer reported that the charity had collected millions of dollars in donations from unidentified sources.

The newspaper later revealed that the money had come from Peco Energy and the Delaware River Port Authority.

Peco secretly gave the charity $17 million as part of legal settlements in which Fumo agreed to drop his opposition to its business plans, the paper revealed. The senator has noted that Peco also agreed to cut bills to consumers as part of the settlements.

Fumo, long a power on the port authority, used his clout to obtain $10 million for Citizens' Alliance. The port authority is largely funded by tolls paid on its bridges and the PATCO commuter train.

Aside from the Peco and port authority money, Citizens' Alliance has received more than $4 million in state and other government grants.

As the federal probe nears its end, people knowledgeable about the inquiry say prosecutors have dropped the idea of bringing charges related to the Peco donations.