In his 14 years as chief judge of the U.S. District Court here, Frank J. Battisti has acquired a reputation as the most powerful man in Cleveland, and one of the most controversial.

Now Battisti is at the center of another controversy, his most serious yet. He has become that rarity, a federal judge under federal investigation.

In a case that has shaken the court and the legal community, Battisti has been accused of using his judicial power to enrich proteges, friends and relatives through a series of court appointments and questionable business dealings.

One of his chief accusers is fellow U.S. District Court Judge Ann Aldrich. She in turn has been portrayed as a "woman scorned" who is bent on getting even with a Cleveland lawyer because he spurned her proposal of marriage.

The investigation follows the resignation last fall of a bankrupty judge (and former Battisti protege) and the conviction of a lawyer for embezzling from a bankrupt business.

Each development and lurid rumor has fallen like a bombshell, creating large headlines and sending shock waves through the federal courthouse.

Controversy is nothing new to the 60-year-old judge. In 22 years on the bench, he has drawn praise and angry criticism for his handling of some of the most difficult cases of his time, from his dismissal of federal charges against eight Ohio National Guardsmen in the 1970 Kent State shootings to his busing order for the Cleveland school system. In the process, many Clevelanders believe that Battisti has become the most powerful man in town.

Since March, evidence on Battisti and possibly others has been presented to a grand jury in Toledo by the FBI, the Justice Department's public integrity section and the judicial council of the U.S. 6th Circuit Court of Appeals.

Judges and lawyers here are stunned. Investigations of federal judges, who have lifetime tenure, are rare. Last year, Alcee Hastings in Miami became the first sitting federal judge ever indicted, and his subsequent acquittal on bribery charges left the federal judiciary's record clean.

Battisti has refused comment on the investigation, but his lawyer, Robert Rotatori, said, "It's pretty clear that it's his conduct that's the subject of the investigation." Rotatori said that he expects that Battisti will testify before the grand jury and that no charges will be returned against the judge.

A principal role in the case has been played by one of Battisti's colleagues, Aldrich, who was appointed by President Carter in 1980 as the first female federal judge in Ohio. Just outside her office is a small framed quotation: "Women who seek to be equal to men lack ambition."

In May, Aldrich released an affidavit, prepared earlier for investigators, charging that in 1980 Battisti arranged for lucrative bankruptcy cases to be channeled to the Cleveland law firm of Climaco, Seminatore, Lefkowitz and Kaplan. In return, she charged, the firm gave a $40,000 bonus to the judge's nephew, Gino Battisti, then a 25-year-old, first-year associate at the firm, just out of the Cleveland State University law school.

Aldrich said Gino Battisti had bragged about the deal at Climaco's 1981 Christmas party.

Though the Climaco law firm has heavy political connections and includes among its clients Teamsters President Jackie Presser, Sammy Davis Jr. Enterprises, the Cleveland City Council and the Ohio attorney general, it reportedly had little previous bankruptcy experience.

Court records show that U.S. Bankruptcy Judge Mark Schlachet selected the Climaco firm as examiner in the White Motor Corp. case, at that time the largest bankruptcy in U.S. history. With assets of $1 billion, the legal fees for the examiner were expected to approach $1 million.

Schlachet, 37, is a long-time Battisti protege and the son-in-law of one of Battisti's best friends. Battisti named Schlachet as clerk of his court in 1974 and to the bankruptcy judgeship in 1977.

Schlachet resigned last year days after the 6th Circuit's judicial council completed a secret report on him and recommended his suspension and public censure. The council found that he had channeled 13 substantial bankruptcy cases to a former law partner, had assigned Battisti's nephew Gino and niece Linda Battisti to work on bankruptcy cases and had later hired Linda as clerk of his court.

In her affidavit, Aldrich said that last June she asked Shimon Kaplan, a close friend from the Climaco law firm, to check out the bonus story.

She said Kaplan told her that Gino Battisti's base salary was $19,000 and that he had received $41,000 in bonuses, an amount equal to about "10 percent of all amounts received by the firm from the cases 'attributable' to Frank Battisti."

The law firm immediately responded with its own charges, but it has not denied specifically that Gino Battisti got the bonus or explained why it was awarded. Instead, it complained that Aldrich was seeking revenge because Kaplan had refused to marry her.

The firm's head, John Climaco, said in a written statement that "her allegations are totally false" and that both Aldrich and Gino Battisti were "dead drunk" the night of the 1981 Christmas party and their conversation about bonuses was "open to serious question."

Climaco charged that "for many years" Aldrich had "maintained a very close, personal relationship with a member of our firm. That relationship deteriorated badly and, in our opinion, has distorted the judge's judgment."

Kaplan, who had previously been called to testify before the Battisti grand jury, released an affidavit saying that after he refused to marry Aldrich in March, 1982, she tried to persuade him to leave the firm.

"She believes that I chose to marry John R. Climaco's law firm and that is why I refused to marry her," he said. "I believe that Judge Ann Aldrich's recent actions are an attempt to get even with me and my law firm for my refusing to marry her."

In a separate letter to John Climaco, he said, "Her charges are off the wall. I never told her or anybody else we made deals to get work from judges. There was no deal. There was no 10 percent. These are outright lies. Why did she do it? We were involved, and she must have loved me too much. I must have hurt her very deeply, and for that I'm sorry."

One federal investigator who is familiar with the case doubted the revenge theory.

"She isn't a woman scorned," he said. "She is very much a federal judge who is concerned about the situation as she sees it."

Following the release of his affidavit, Kaplan was subpoenaed for a second appearance before the grand jury scheduled this month.

Meanwhile, Gino Battisti has left the law firm and is said to be living in St. Louis.

Schlachet, who refused to comment, explained last year that he was stepping down from the bench because of a Supreme Court decision stripping bankruptcy judges of some powers.

His resignation came last Oct. 4, following completion on Sept. 28 of the secret judicial council report finding that Schlachet had assigned 13 substantial bankruptcy cases to Lewis Zipkin, his former law partner.

Two weeks after Schlachet's resignation, Zipkin was convicted of embezzling $6,000 from a bankrupt business. He was sentenced to three years probation and a $3,000 fine and has appealed.

The judicial council also found that Schlachet had been involved in outside business dealings with Zipkin while a judge and that Zipkin had represented Schlachet and his wife in several private lawsuits while Zipkin was receiving bankruptcy assignments.

The judicial council found further that Schlachet, in assigning Battisti's niece and nephew to cases under the U.S. District Court's general jurisdiction, had violated a federal law that provides, "No person shall be appointed to or employed in any office or duty in any court who is related . . . within the degree of first cousin to any justice or judge of such court."

The council also found that Schlachet broke a federal law in the White bankruptcy case by failing to report to the U.S. attorney information on "the fraudulent disposition of assets of the White Motor Corp." Instead, Schlachet gave the information to the Climaco law firm, which did not submit a report on the matter until more than eight months later, according to the report.

The Climaco firm withdrew from the White case on Oct. 5, the day after Schlachet stepped down.

Meanwhile, during Zipkin's embezzlement trial, U.S. Bankruptcy Judge John Ray Jr. testified he reported the missing $6,000 to Battisti in 1978. Ray said Battisti told him he would handle the problem personally and asked Ray not to go to the U.S. attorney. Testimony in the trial indicated that Zipkin then replaced the money.

According to the Cleveland Plain Dealer, Battisti later refused to cooperate with the FBI in its investigation of the embezzlement.

Meanwhile, according to the Plain Dealer, investigators are also scrutinizing possible discounts given to Battisti relatives in the purchase of cars and a condominium.

Because of the controversy surrounding the investigation, Aldrich has become something of an outcast in the court.

Even the lawyers and judges who believe she did the right thing are not eager to be seen with her. She is also now the target of a rumor campaign that focuses largely on her relationship with Kaplan.

Aldrich has released only one public statement since she made her affidavit public: "I reaffirm the truth of everything I have said. I knew when I came forward that a vicious attack upon me was in preparation. There's no point in dignifying these statements with any response."

But she told Cleveland Magazine when she released the affidavit, "Shimon is a good friend."

Aldrich, trim and handsome at 55, said she had known Kaplan, 42, since he was one of her law students at Cleveland State University. Aldrich said she had discussed the possibility of marrying Kaplan in early 1982 and that Kaplan made it clear that he was not interested in marriage.

"When Shimon said he was not interested in marriage, I wanted to meet other friends," she told the magazine. "If he would not work at it, it was a waste of time. The relationship cooled then. I cared a lot about him. I still do."

Aldrich has said that she is saddened at the upheaval the investigation has caused in the court and that she respects Battisti professionally, particularly because of his pro-civil rights decisions.

She told the Plain Dealer she felt obligated to report the suspected wrongdoing, even if the personal consequences were unpleasant.

"Personally, I like Frank," she said. "And I'm sorry he blames me. But I think he has undermined the integrity of the federal judiciary. I really don't want to see the whole judiciary dragged in the mud."