Melt chocolate, 1/4 cup sugar and 1/4 cup water over low heat. Stir in the vanilla. Put all the other ingredients into a bowl. Beat with electric beater. Transfer 2 1/2 cups of butter to another bowl. Add the chocolate mixture to one of the butter mixture.
Grease and flour a 9 in. soring form pan. Put the mixture in the pan alternate spoonfuls. When finished stir with a knife briefly to create a marble effect.
Bake for 55-60 minutes in a 350ºF preheated oven. Cool cake in a pan for 10 minutes then remove and cool on rack. Cover with sifted confectioner’s sugar.