Bruce Carson was convicted on five counts of fraud three more than previously known, and received court-ordered psychiatric treatment before becoming one of Prime Minister Stephen Harper's closest advisers.
And his lawyer told The Canadian Press that Mr. Carson disclosed his entire criminal record during a security check that was required to become a senior staffer in the Prime Minister's Office.
The latest revelations raise new questions about Mr. Harper's judgment in hiring Mr. Carson as his chief policy analyst and troubleshooter - roles Mr. Carson played until leaving the PMO in 2008.
Mr. Carson would have been privy to top secret government files in his for job as a senior adviser to the prime minister.
The PMO asked the RCMP last month to investigate Mr. Carson after a probe by the Aboriginal Peoples Television Network alleged the 65-year-old may have illegally lobbied the federal government on behalf of a company that employed his girlfriend, a 22-year-old one-time escort.
The Tories weren't the only party Mr. Carson courted.
A friend said he worked freelance for the Liberal caucus research bureau for a time during John Turner's leadership, between 1984 and 1990. He also served in the Progressive Conservative research service at the Ontario legislature and for Conservative senators on Parliament Hill during the 1990s.
During Mr. Carson's stint at the PMO, it was publicly known that he had been jailed and disbarred by the Law Society of Upper Canada in the early 1980s for two counts of defrauding clients.
But court documents uncovered by The Canadian Press show he had another run-in with the law in 1990, while he was working as a researcher for the Library of Parliament.
He was charged with defrauding a Budget Car and Truck Rental of a 1989 Toyota vehicle. He was also charged with defrauding the Bank of Montreal and the Toronto-Dominion Bank of sums exceeding $1,000 each.
In June 1990, Mr. Carson pleaded guilty to all three counts and received a suspended sentence and 24 months probation on condition that he "continue treatment at the R.O.H. (Royal Ottawa Hospital)" and make restitution of $4,000 within 23 months to the car rental company.
Patrick McCann, who represented Mr. Carson in 1990 and is acting for him again now, said the suspended sentence demonstrates the charges were "not considered to be that serious."
"He genuinely had a bit of a meltdown as a result of his marital break-up," Mr. McCann said in an interview.
"It was part of the situation at the time that he was having some ... psychiatric counselling and that was a factor, I think, that came into play too."
A friend of Mr. Carson's said he suffered "a stress-related mental collapse brought on by an ugly divorce."
Neither the PMO nor the RCMP have confirmed that Mr. Carson was given a security check. However, people who've worked at senior levels for previous prime ministers say someone in Mr. Carson's position would have been subject to a thorough review by both the RCMP and the Canadian Security Intelligence Service.
Mr. McCann said he didn't know what the security review process for Mr. Carson entailed but "I know that he did (undergo a security check) and I know that he disclosed this to them."
Since turning over the lobbying allegations to the RCMP, the PMO has severed all ties with Carson, who had been serving as head of the federally-funded Canada School of Energy and the Environment in Calgary since leaving the PMO. He has taken a leave of absence from that job.
"Given what we've learned about Bruce Carson, our government will not be in communication with him on any matter," PMO spokesman Dimitri Soudas said when the APTN story broke.
Privately, Mr. Carson's friends are upset that Mr. Harper has ostracized his long-time adviser, without waiting for the results of the police investigation, and has refused to frankly discuss what he knew about Mr. Carson's past and why he felt Mr. Carson deserved a second chance.
Mr. McCann said Mr. Carson is distraught over the recent firestorm. And he called the APTN report "a huge ambush."
"I mean, that journalists can do that to people ... he's got a girlfriend with a past and that's the thing and that was the whole sort of, when they really went after him, that's what they went after. Man, that's cheap."
Mr. Carson met with the TV network on three occasions, expressing dismay during the third interview when reporters delved deeply into the lobbying issue, his relationship with his fiancée and suggestions he may have used his influence to help her business project.
After several minutes, Mr. Carson walks out of the interview, trailed by a camera as he walks into the street.
Mr. McCann said he's confident the lobbying allegations will amount to nothing.
"The real issue right now, I think, is the lobbying act issue and I think when that all plays out, there'll be no charges, there'll be no ramifications at all. I don't think he's done anything wrong."
In the meantime, he said the controversy has been "pretty traumatic" for Mr. Carson.
"This is a guy that since 1990 at least has managed to get his life in good shape and has been very successful and had a great job out in Calgary there and now stuff's coming crashing down on him."
Financially at least, however, Mr. Carson's life was not in good shape either before or after the 1990 convictions.
A summary of the disbarment finding against him in 1981 said his "fiscal position had deteriorated due to a land development project in which he had become involved and due to an extravagant lifestyle." It noted that he had purchased five different homes in six years, "each one being more expensive than the other."
Mr. Carson and his then-wife defaulted on mortgage payments in May 1979, prompting the Supreme Court of Ontario to issue a writ allowing a savings and loan company to take possession of the property, the Ottawa Citizen reported in 1981.
The newspaper, citing court documents, also said the couple was sued by a developer that sought to recover another Ottawa home in 1977.
In addition, the Citizen story said Mr. Carson was:
- Ordered by a judge in 1980 to come up with more than $3,000 plus interest after failing to pay money owed on the lease of a Lincoln Continental;
- Ordered in a 1978 court judgment to pay more that $1,900 to a company after a cheque bounced;
- Sued in 1979 by Hudson Bay Co. for $1,189.50 owing on merchandise.
In 1993, documents show Mr. Carson declared bankruptcy, with a debt of $103,000. As recently as 2002 - just before he went to work as then-opposition leader Harper's director of policy and research - he was in debt to the tune of $369,000 and was being hounded by creditors. In the latter case, Mr. Carson has told The Canadian Press that he arranged to pay back his creditors over a period of time.
Mr. McCann said the '93 bankruptcy was the result of Mr. Carson being out of work and juggling two families.
Mr. Carson's financial woes were well known among his former colleagues at the Library of Parliament's research branch. Five former colleagues, who spoke separately to The Canadian Press on condition of anonymity, said he sought to borrow money repeatedly.
In one instance recalled by several former co-workers, Mr. Carson told a colleague he wanted to take his kids on a trip but was having financial difficulties due to his divorce. The colleague was persuaded to allow Mr. Carson to use his credit card number as surety for renting a car.
Mr. Carson ran up several thousand worth of charges on the number, maxing out his colleague's card.
The former colleagues praised Mr. Carson's work. They said he was well-liked by MPs, whom he served on Commons committees, and was a bright, affable, easy-going individual who produced solid, reliable research.
However, around the time of the 1990 charges, Mr. Carson was absent from work more and more frequently, offering up dubious excuses for his absences.
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