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The federal Liberals sent a legal warning to Stephen Harper yesterday, threatening to sue the Conservative Leader if he repeats his assertion that the sponsorship scandal showed evidence tying the Liberals to "organized crime."

The lawyer's letter came on the same day that the parties readied for next week's election call: Parliament rushed bills through the House; the government introduced new legislation to toughen penalties for gun crime; and Liberal sources confirmed they had recruited author and scholar Michael Ignatieff to run in the Etobicoke-Lakeshore riding now held by MP Jean Augustine.

The legal warning came after Mr. Harper refused a demand from Prime Minister Paul Martin to apologize. The party's lawyer sent a letter warning that the fight will move from the hustings to the courts if Mr. Harper or any MPs repeat the charge outside the House of Commons.

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In sending the letter, the Liberals likely were moving to amplify Mr. Harper's comments rather than play them down, in a bid to paint him as a nasty campaigner. The Liberals suggested that the charge echoed a Tory news release issued in last year's election campaign that suggested that Mr. Martin supported child pornography -- a statement that was retracted, but for which Mr. Harper refused to apologize.

"Yesterday in the House of Commons, Mr. Harper made a statement concerning organized crime, which is false," Mr. Martin said in Kelowna, B.C., where he was chairing the first ministers meeting on aboriginal affairs. "He should apologize and he should withdraw that statement."

Mr. Harper said he has no intention of apologizing.

"The Liberals need to apologize to Canadians for the sponsorship corruption, and the Liberal Party needs to come clean about the tens of millions of sponsorship dollars which are still missing," he said in a statement.

"A Conservative government will ask the appropriate authorities to take action against the Liberal Party to recover the missing money."

In his speech opening debate on the Conservative no-confidence motion expected to bring down the government on Monday, Mr. Harper said that testimony before the Gomery commission had shown the Liberal Party engaged in a kickback scheme involving organized crime.

He called the Liberals "a party that has been named in a judicial inquiry, a royal commission, has been found guilty of breaking every conceivable law in the province of Quebec with the help of organized crime, cannot lecture the separatists or anyone else about respecting the rule of law."

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In a letter sent late yesterday, Toronto lawyer Paul Schabas said he had been hired by the Liberals because of the allegations, and warned of legal action if Mr. Harper repeats them outside the Commons. MPs have legal immunity for defamatory statements made in the House.

"These statements are false and defamatory," Mr. Schabas wrote. "Should you make the same of similar statement outside the House, we are instructed to take all necessary legal action."

Mr. Harper's statement on Thursday was: "If I belonged to an organization and led an organization that was found to have been involved in a massive corruption ring using organized crime to defraud taxpayers, I cannot understand why anyone found in that position would want to be associated with that organization.

"However that is a decision that the Prime Minister has to make and has to explain."

Mr. Justice John Gomery's report on the sponsorship program found that a friend of former prime minister Jean Chrétien, Jacques Corriveau, ran an elaborate kickback scheme. But he made no mention of links to organized crime.

The dispute was reminiscent of last year's election campaign, Mr. Martin said -- a reference to the child pornography news release, his aides confirmed.

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"This is not the first time that Mr. Harper has made statements like this in the shadow of an election campaign," he said. "Canadians deserve better. They want to see a national debate."

Mr. Harper's communications director, William Stairs, declined to comment on the Liberals' legal threat last night.

Meanwhile, the recruitment of Mr. Ignatieff as a Liberal candidate, to be announced next week, adds some chattering class star power to the party's slate, but will also raise speculation that Mr. Martin has opened the door to a new candidate who could one day replace him.

The Prime Minister's advisers welcomed Mr. Ignatieff into the team, according to sources close to the former Harvard professor, with some saying that the advantage of recruiting a well-known candidate to a minority government outweighed concerns that he is gunning for the top job.

Meanwhile, a long-time friend of Mr. Ignatieff, former NDP Ontario premier Bob Rae, announced he would not run. The initial plan was to have Mr. Rae run in Oshawa, Ont.

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