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The Liberal leadership campaign is devolving into a tit-for-tat series of slurs and accusations, with two of the contenders now standing accused of improperly selling memberships to bolster their number of delegates.

Joe Volpe, who is the subject of an internal party investigation after allegations surfaced last week that he recruited members who did not pay their own fees - and some who said they did not know they had joined the party - said yesterday that his campaign is under attack because he is an outsider and an immigrant.

Similar allegations, meanwhile, have been levelled at leadership frontrunner Michael Ignatieff. A complaint has been filed with the party suggesting that a number of members in Mr. Ignatieff's Etobicoke-Lakeshore riding had not paid for their members, including one man who was dead, and that some 11 members signed up in the riding of Brampton-Springdale had given an Indian restaurant as their residential address.

Some pundits and Liberal party officials suggested after last week's allegations - and additional accusations that two of the people signed up by the Volpe campaign were no longer living - that it was time for him to quit.

The long-time Liberal told a press conference Monday morning, however, that he was staying in the race. And he seemed to be agreeing with Alfonso Gagliano, the former Liberal public works minister implicated in the sponsorship scandal, who told a reporter this weekend that he and Mr. Volpe are the victims of discrimination against Italians. Mr. Volpe immigrated to Canada from Italy 51 years ago.

He told reporters that some people within the Liberal party believe "I might no be Canadian enough."

It's clear, he said, that "the establishment would have preferred another candidate.

Party rules require that all members sign membership forms and pay their own fee, $10 in most ridings. Campaign finance rules also bar candidates from spending money on membership fees.

Calling the allegations levelled against him "over the top," Mr. Volpe said the party has an arbitration process to deal with errors and anomalies and he hoped that a ruling would come quickly.

He boasted of signing up tens of thousands of new party members, said he has been inundated with calls from across the country urging him not to quit the leadership race.

After the press conference, Mr. Volpe was chased down the street by two young men in ghost costumes waving a sign that said: Joe Volpe has spirits. They refused to tell reporters, who chased one of them for several blocks through downtown Ottawa, who they worked for.

Liberal leadership candidate Hedy Fry, meanwhile, has bowed out of the race Monday and thrown her support behind Bob Rae, the former NDP premier of Ontario who is considered one of the frontrunners..

It is with "mixed emotions" that Ms. Fry said she was stepping out of the contest, but "it has become clear that I lack the resources to continue."

Numerous polls have also suggested that Ms. Fry had scant support within the party, and nowhere near the number of delegates she would have needed to be a contender.

At a press conference at Parliament Hill's Centre Block on Monday with Mr. Rae standing beside her, Ms. Fry said she wanted to support a leader "with bold and progressive vision for this party."

She said her own priorities were the renewal of the Liberal franchise, economic productivity, medicare, innovation and world peace.

"Bob Rae is the only candidate under whose leadership these goals can be achieved," she told reporters.

Mr. Rae said Ms. Fry's support means a great deal to him. "It gives us a great boost as we head into super weekend" - this coming weekend, when the party ridings choose their delegates to the leadership convention.

Mr. Rae was asked about the allegations surrounding Mr. Volpe and the consequences that should follow.

"Obviously those are serious allegations," he said, "and it's going to be up to the party to sort it out as soon as possible."

When asked if he would welcome Mr. Volpe's support in the same way he had welcomed Ms. Fry's, Mr. Rae replied: "Let's not talk about hypotheticals."

It is not the first time Mr. Volpe has faced accusations of improperly conducting his bid for the leadership.

He was embroiled in a fundraising scandal in June, when he was forced to return five donations of $5,400 each from the under-18 children - including 11-year-old twins - of current and former executives of drug maker Apotex Inc.

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