Federal agents have raided the homes of Baltimore Mayor Catherine Pugh amid uproar over lucrative business deals for her self-published children's book.
FBI and tax agents also searched city hall and a training centre associated with Ms Pugh on Thursday.
The Democrat earned hundreds of thousands of dollars through sales of Healthy Holly books to city entities.
She has been on a leave of absence since 1 April. Maryland's Republican Governor Larry Hogan urged her to quit.
Earlier this month most of Baltimore City Council said Ms Pugh should resign.
Ms Pugh's attorney, Steve Silverman, said in a statement to the Baltimore Sun on Thursday that the mayor was not "lucid" enough to make a resignation decision, but that she "is leaning toward making the best decision in the best interest in the citizens of Baltimore".
Now more than ever, Baltimore City needs strong and responsible leadership. Mayor Pugh has lost the public trust. She is clearly not fit to lead. For the good of the city, Mayor Pugh must resign.— Governor Larry Hogan (@GovLarryHogan) April 25, 2019
The FBI confirmed to CBS News, the BBC's US affiliate, that it is working with the Internal Revenue Service (IRS), America's tax-collection agency, on the inquiry into Ms Pugh's book sales.
Official sources say the mayor's deals for Healthy Holly books - which promote healthy eating and exercise - are part of the inquiry, but there is "more to the picture".
The federal investigation has been ongoing for more than a year, law enforcement sources told CBS.
Ms Pugh received $500,000 (£388,000) from the University of Maryland Medical System (UMMS) for 100,000 copies of the books that would go to schools while she was on the hospital system's board, the Baltimore Sun reported.
Baltimore still waiting for happy ending
Analysis by Jessica Lussenhop, BBC News
The FBI raid on Mayor Catherine Pugh's homes and offices is the latest catastrophe at the city's highest levels of power.
Fall-out from a sprawling corruption scandal in the city's police department has been playing out since 2017 - eight police officers were found guilty of robbing citizens and stealing overtime pay.
The department has been under federal consent decree since 2016. Mayor Pugh's pick to lead the agency out of its troubles was himself indicted for tax fraud just three months into the job, and sentenced to 10 months in prison last month.
Mayor Pugh's legal woes instantly call to mind former Mayor Sheila Dixon, who in 2009 was found guilty of misdemeanour embezzlement and she was forced to resign.
Dixon ran for office again in 2015 and lost - to Catherine Pugh.
Baltimore has many pressing needs - an alarming homicide rate, personnel shortages in the fire and police departments, maintenance backlogs in the schools - yet the day-to-day business of running the city seems to take a back seat every time a new scandal breaks.
This morning, students at a job training site were unable to go to class - because the FBI had taken over the building. It was hard to imagine a more stark representation of how officials' corruption is holding back a city perpetually struggling to get up on its feet.
Kaiser Permanente, another health provider, later revealed it paid over $100,000 for 20,000 copies of the books while it was negotiating a contract to become the medical insurance provider for Baltimore city employees.
Ms Pugh has called the book deal with the university medical system "a regrettable mistake". She has since resigned from the board and the university has hired an independent auditor to review the case, local media say.
"I apologize that I have done something to upset the people of Baltimore," she told reporters at City Hall in March.
The mayor added that she had returned a $100,000 payment from the UMMS for Healthy Holly books that had not yet been delivered.
Governor Hogan requested the state prosecutor's office to begin the investigation the same day Ms Pugh took her leave, citing a bout of pneumonia.
Mr Hogan called the book sales "deeply disturbing allegations" in his letter to state prosecutor Emmet Davitt.
"I am particularly concerned about the UMMS sale because it has significant continuing ties with the State and receives very substantial public funding."
The Baltimore Ethics Board and Inspector General are also conducting inquiries into Ms Pugh.
Ms Pugh became the city's mayor in 2016. She has held public office since 1999, staring her political career with the Baltimore City Council, then moving to the state General Assembly, and the state Senate in 2005.
Her staff have insisted to local media that she will be returning to her role after recovering from her illness.
Currently, a Baltimore council member, Bernard Young, is serving as acting mayor during Ms Pugh's leave of absence.