Al Coutinho, a powerful New Jersey Democrat who shepherded through some of the state's most important economic-development initiatives, is stepping down as the result of a state investigation into the finances of his family's charity.

The Newark Democrat said Wednesday that the state attorney general's office had opened a criminal investigation into the workings of the Bernardino Coutinho Foundation, a nonprofit that puts on cultural events such as Newark's Portugal Day Festival. The investigation was first reported in the...