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Joseph Goudie was having coffee in his usual haunt in Happy Valley, Nfld., this week when a buddy said he had seen a Conservative candidate complaining on TV about being drawn into something called the in-and-out scheme.

That troubled Mr. Goudie greatly. The 69-year-old canoe builder and former provincial cabinet minister had himself run as the Conservative candidate in 2006 in the federal riding of Labrador.

“My wife obtained a copy of the press story on the Internet. And I was named,” he said in a telephone interview Friday.

It was the first time he learned that he was one of 67 Conservative candidates who had received money from the national party, then sent it right back so the national party could buy advertising that was claimed as local campaign spending.

Elections Canada says the transaction allowed the Conservatives to exceed national-campaign spending limits by more than $1-million. The agency also says the scheme allowed local candidates to claim rebates on election expenses for money that they didn't spend themselves.

In an affidavit sworn on Wednesday for Elections Canada, which is investigating the scheme to determine whether election laws were violated, he says: “I feel angry that I and [the] campaign team have been dragged into this mess.”

Conservative Party spokesman Ryan Sparrow says the allegations are merely gripes from a failed campaign.

“These advertisements purchased by the local campaigns were identified as such in the tag lines required by the rules for election advertising,” Mr. Sparrow wrote in an e-mail Friday. “These are people who wanted to run for the Conservative Party. They knew the program was legal. They are speaking out now – a full two years later because they lost.”

Mr. Goudie said he was too busy travelling all over Labrador trying to defeat the Liberal incumbent to know the details of what was happening at the campaign office. That was left to campaign manager Debbie Singleton.

In her own affidavit, Ms. Singleton said she was contacted by Brian Hudson, an official at Conservative headquarters, who explained that the party would be sending the campaign some money but it would have to be sent back immediately.

“Our campaign had just started and we had very little money and so I asked Mr. Hudson if I could use some of that money to advertise on local radio and in the local newspaper,” Ms. Singleton wrote.

“Mr. Hudson said no, that this money was for television advertising and that we would have to pay for radio and newspaper ads ourselves. I then asked Mr. Hudson if the TV ads would mention or in any way reference Mr. Goudie's campaign. He said the TV ads would be generic and there would be no reference to Mr. Goudie.”

Ms. Singleton turned the matter over to Gordon Barnes, who was Mr. Goudie's official agent. The affidavits were sent to Elections Canada after the individuals realized they were part of the probe.

During the last week of the campaign, Ms. Singleton wrote, she asked Mr. Barnes about the transfer and he told her that the money had come in and gone back out like it was supposed to. Ms. Singleton wrote that, to her knowledge, none of the television ads contained Mr. Goudie's name.

“I feel awful that we were used in this fashion,” she said in the affidavit. “If I was the victim of one of those e-mail scams, I wouldn't feel more duped than I do now for having been innocently caught up in this matter.”

As for Mr. Barnes, he said in an affidavit that he had no reason to suspect the propriety of the instructions from the party. On Jan. 16, $2,097.20 was transferred into the campaign account. On Jan. 17, $2,118.20 was transferred back to the Conservative Party of Canada – the difference between the amounts being a $21 bank fee.

Mr. Barnes wrote that he had initially seen no reason not to declare the transfer as election expenses to Elections Canada and make a rebate claim for 60 per cent of that money – as per party instructions.

“The first time that I knew that there were any problems regarding this in/out transfer from the national headquarters of the Conservative Party of Canada,” Mr. Barnes wrote, “was when I was advised of this by an Elections Canada official who was involved in the review of Mr. Goudie's candidate return.”

In the end, Mr. Barnes decided not to claim the rebate.

“All I have is my reputation,” he wrote. “The fact that I and our local campaign were drawn into this scheme by the Conservative Party of Canada angers me greatly.”