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Businessman Snover Dhillon, centre, is seen standing between former Ontario PC leader Patrick Brown and former Conservative candidate Stockwell Day, at left.The Canadian Press

Senior Ontario Progressive Conservative officials discussed paying a disgruntled candidate $130,000 to drop a lawsuit if he agreed not to co-operate with a criminal investigation into a disputed nomination race.

The officials discussed reimbursing Jeff Peller, one of three Tory hopefuls defeated in a Hamilton-area nomination race last May, for his campaign expenses plus his legal fees, while acknowledging there may have been "illegal" activity, according to e-mails obtained by QP Briefing, a publication that monitors the Ontario legislature.

The e-mail chain is among members of former Tory leader Patrick Brown's inner circle and has been verified by The Globe and Mail. The e-mails show that a lawyer for the PC Party proposed funnelling money to Mr. Peller through Snover Dhillon, a businessman who has ties to Mr. Brown. But that proposal was blocked by Alykhan Velshi, who is now interim leader Vic Fedeli's chief of staff.

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The e-mails state that Mr. Peller spent $78,000 in campaign costs, roughly $30,000 in legal fees and paid Mr. Dhillon $22,000, but does not explain for what. The party's lawyer, Mike Richmond, offers several options to move forward, including having Mr. Dhillon repay the $22,000 or having that portion also covered by the party.

Mr. Velshi in the e-mails, dated Oct. 6, 2017, and marked confidential, takes issue with a suggestion that money could flow from the party to Mr. Dhillon to be passed on to Mr. Peller, calling it "indefensible."

"I don't want to pull the Mike Duffy card, but this is far worse than Duffy," he said, referring to the $90,000 the senator received from a former Conservative official to repay expense claims that had become controversial.

Ultimately, a deal was reached with Mr. Peller, but the terms are not known.

Mr. Peller told The Globe on Thursday that he could not respond to questions about the e-mails, including references to alleged illegal activity that is not explained. "I'm bound by the terms of my settlement and can't comment," he said. His lawyer, Paul Ingrassia, said Mr. Peller "is bound by an obligation of confidentiality."

Hamilton Police launched its investigation last June into allegations of forgery and fraud in the vote. Mr. Peller said he did ultimately speak with police. "I was only asked a couple questions."

He said he is "not 100-per-cent sure" who Mr. Dhillon is but wouldn't say whether he gave him money. "I can't comment on that, can't comment on the e-mails."

Mr. Dhillon and Mr. Brown could not be reached for comment. Mr. Velshi, who was Mr. Brown's chief of staff, declined to comment.

When asked about the e-mails by The Globe, Mr. Richmond reiterated what he told QP Briefing, saying that in his practice "it would be my job to synthesize all the different instructions I'm getting and requests I'm getting from people who were actually involved." He declined to elaborate.

Mr. Peller was one of two unsuccessful candidates in the Hamilton West-Ancaster-Dundas nomination race who sued the PC Party, alleging that widespread ballot-box stuffing torpedoed their bids. The other candidate, Vikram Singh, a lawyer, also reached a settlement. In a joint statement on Jan. 24 with Mr. Brown, he said he was withdrawing his lawsuit. (Hours later, Mr. Brown was forced to resign amid allegations of sexual misconduct.) "On the evidence that has been provided to me, I now accept that PC Party officials, staff and volunteers were dedicated to achieving the fairest result for the Hamilton community, and can no longer maintain that there was any untoward behaviour on their part," Mr. Singh said in the statement.

When asked by The Globe on Thursday whether he received a payment as part of his settlement, Mr. Singh said: "Given that the matter has been resolved, I cannot comment on specifics at this time." The Hamilton-area nomination was one of 13 plagued by complaints of voter fraud and broken rules, according to a Globe tally. The party has decided to overturn two of the nominations – in Ottawa West-Nepean and Scarborough Centre.

Hamilton Police said the investigation is continuing. Constable Lorraine Edwards declined to comment on the e-mails.

Mr. Dhillon made headlines in 2011 after he sat behind former prime minister Stephen Harper's family at a rally in Brampton, Ont. He was facing a criminal charge for allegedly fraudulent credit- and debit-card withdrawals at the time.

He also met with Mr. Brown at an event in India in January, 2011, and attended a Tory convention in Halifax a month later, appearing to violate bail conditions set in December, 2010, that barred him from leaving Ontario. In 2007, he sponsored a trip to India for Mr. Brown, then a federal MP, two other MPs and one of Mr. Brown's sisters.

Tanya Granic Allen says she aims to be a voice for those who felt “disenfranchised” by former Ontario PC leader Patrick Brown. Leadership candidates for Ontario’s Progressive Conservatives spoke after their second debate on Wednesday.

The Canadian Press