‘Cash envelopes’ were ‘funnelled’ to Toronto councillor’s election campaigns, OPP allege witnesses said

The police investigation that led to election-finance charges against two Toronto city councillors last month unearthed some eye-popping allegations from witnesses and saw officers execute a search warrant at a high-profile political strategy firm, court records obtained by CBC News show.

OPP investigators say they heard from witnesses that “cash envelopes” were “funnelled” to Justin Di Ciano’s election campaigns, that a developer groomed him over years to get him elected and help get projects approved, and that the same developer provided construction work to Coun. Mark Grimes.

Detectives later searched the offices of Campaign Research, a polling and research firm with close ties to Toronto Mayor John Tory, amid allegations that work done by the firm was provided to — but not properly declared by — Di Ciano and Grimes.

None of the revelations have been tested in court.

They come from an OPP search-warrant application filed in July by officers probing the two Etobicoke politicians. The pair were each charged Nov. 16 with a non-criminal count of submitting incorrect expense declarations for the 2014 municipal election.

Scott Fenton, a lawyer for Di Ciano, noted that most of the witness statements compiled in the warrant application have “nothing to do with the minor regulatory charge” against his client, “undoubtedly reflecting the assessment made by law enforcement that there was no merit to any of those.”

The OPP court filing indeed notes that officers weren’t relying on those allegations as evidence of any Municipal Elections Act violations.

Grimes’s lawyer, Peter Brauti, said the recently re-elected councillor denies any wrongdoing, filed all his paperwork properly and is being tarred by accusations “made by a source seriously lacking in credibility and for political motives.

“We are unaware of any improper contributions being made from any party,” Brauti wrote in an email.

Developer alleged to have ‘actively recruited’ Di Ciano

Di Ciano has been under police scrutiny since last year, following a complaint initially lodged with Toronto’s integrity commissioner that he improperly benefited from personal and business ties to developer Dunpar Homes Ltd., which has a number of projects in his former ward. The one-term councillor decided not to run for re-election and officially left office over the weekend, with the new council being sworn in Tuesday.

In the OPP’s search-warrant application, detectives say that early on in their probe of Di Ciano, they interviewed two former Dunpar employees about his relationship with company owner John Zanini — and heard it was a long-cultivated one going back years.

“Zanini link[ed] himself, as early as the 2010 campaign, to would-be Ward 5 Toronto city councillor Justin Di Ciano and actively recruited him for the position, supporting him financially to achieve that status,” police describe a witness telling them. “Zanini directed Dunpar employees to participate in furthering the objective of ensuring Justin Di Ciano win the Ward 5 council seat.”

Di Ciano ran unsuccessfully in Ward 5 in 2010 before winning the seat in 2014.

Another former Dunpar employee allegedly told police that he worked on that victorious 2014 campaign distributing flyers, putting up signs and “doing odd jobs.”

“He would occasionally be pulled off a job site to do campaign-related activities,” the OPP affidavit alleges he said. “Once elected, the strategy for Di Ciano and Zanini was to influence politicians’ decisions in favour of Dunpar real estate developments.”

Both ex-employees allegedly told police that “during the political process, cash envelopes were used to cover up financial support to the campaign and money would be ‘attached to a development’ or for ‘marketing expenses’ to conceal excess funds were being funnelled toward the Di Ciano campaign.”

The former Dunpar employees also told detectives about “construction work completed for Toronto city councillor Mark Grimes,” the police affidavit says, without going into further details.

None of those unproven claims factored into the election-finance charges laid against Di Ciano or Grimes, and police have made no allegations of wrongdoing against Zanini or Dunpar, nor were they ever a subject of the OPP investigation.

Grimes has previously said any suggestion Dunpar helped build or renovate his home is “unfounded and offensive,” and his lawyer characterized it as one of several “untested allegations without any credible evidence.”

In an interview earlier this year, Zanini told CBC News that he had no knowledge of any Dunpar offices, equipment or staff ever being used in any way to help on Di Ciano’s election campaigns. He said it’s possible that, without his knowledge, some Dunpar workers campaigned for Di Ciano because Di Ciano’s campaign manager and twin brother, Julien, was a Dunpar employee at the time.

Zanini’s lawyers have also called any claim Dunpar did construction work for Grimes “undeniably false.”

CBC article spurred witness to come forward, police say

The police probe took a turn in a new direction after a CBC report about it late last year sparked a witness to come forward, the OPP’s court filing says.

The witness was a former employee at Campaign Research — the strategy firm partly run by controversial political operative Nick Kouvalis, who had a major hand in the winning election campaigns of Toronto mayors Rob Ford and John Tory.

According to the witness, Kouvalis also did work for Grimes and Di Ciano in the 2014 election, the police affidavit says. His firm conducted multiple polls and voter-identification phone call sessions for the two councillors focusing on their Etobicoke wards.

Election filings show the councillors paid and declared some Campaign Research invoices. But investigators say the witness provided documents purporting to show that more than $26,000 was still owing weeks after the 2014 vote. Instead of billing the work to the councillors, “Kouvalis requested … that an invoice be produced for Dunpar Homes,” police allege they were told.

If the company picked up the tab, it could amount to an illegal contribution to the Grimes or Di Ciano campaigns.

But it’s unclear whether that invoice was ever sent to Dunpar, the OPP court filing says. A lawyer for Campaign Research told investigators the firm has no record of sending it, let alone of Dunpar ever paying for the councillors’ polling. He added that the police witness was now a business rival with “malicious intent.”

Dunpar Homes, through lawyers, said last week that it has no record of ever receiving or paying such an invoice. Earlier this year, the company’s lawyers had said it did pay the bill, but it was for regular “market research” Dunpar does and had nothing to do with the Di Ciano or Grimes campaigns. The lawyers said last week that they had provided that information “in haste” and were mistaken.

Tory won’t comment

At city hall, meanwhile, a spokesperson for Tory wouldn’t comment on the OPP document or the charges while the matter is before the courts.

Tory himself used, and declared, ample work from Campaign Research in 2014. Election expense receipts show the firm did $313,923 of polling, focus groups, robocalls and telephone town halls for his victorious run for the mayor’s office.

Tory endorsed Grimes for council in 2014, and then again this year, even after it emerged Grimes was under OPP investigation.

Grimes and Di Ciano are due in court later this month for their first appearance on the Municipal Election Act charge against them.