03/21/2012 05:05 EDT | Updated 05/21/2012 05:12 EDT

Securities watchdog lodges allegations against Jaffer's former business associate

OTTAWA - The Ontario Securities Commission has made a series of allegations against a Toronto businessman who embroiled a former Conservative cabinet minister and an ex-MP in an ethics controversy.

The securities watchdog lists nine allegations of fraud and misrepresentation against Nazim Gillani that centred around his dealings with a now bankrupt firm called HD Retail Solutions.

Gillani had introduced the owner of the firm to former Conservative MP Rahim Jaffer in 2009, telling him the ex-politician could help secure federal funding for their company.

"Mr. Jaffer has opened up the Prime Minister's office to us...," Gillani wrote in an email to a principal at HD Retail Solutions and other potential associates.

The OSC alleges that Gillani and his business partner Ryan Driscoll were not properly registered to trade securities, but misled others into thinking they were as they handled investor funds.

Gillani described himself as a venture capitalist who ran a company called International Strategic Investments, among others. The OSC says the firm was not incorporated in Ontario or registered with the commission.

Prime Minister Stephen Harper removed Jaffer's wife, former junior cabinet minister Helena Guergis, from cabinet over concerns she was trying to use her position to help further Jaffer's business dealings.

Jaffer was found earlier this year to have been in breach of federal lobbying rules, and the Conflict of Interest and Ethics Commissioner found Guergis had broken conflict-of-interest rules. Guergis lost her bid for re-election as an independent in last year's federal election.

A hearing into the OSC allegations against Gillani and Driscoll is scheduled for April 3.

A spokesman for Gillani, Brian Kilgore, said his client is out of the country but will appear at the hearing.

"He emphasizes that they're allegations, not charges, and he thinks a lot of what is in those allegations is misconstrued or incorrect or inaccurate," Kilgore said Wednesday.

The former director of HD Retail Solutions testified to a Commons committee in 2010 about his experience of dealing with Gillani.

"From my perspective, our brief encounter with Mr. Jaffer and subsequent communications pertaining to the result of that meeting from Mr. Gillani were just a few of many elements in the roller-coaster ride of raised and dashed expectations that our company's employees, investors, suppliers, and stakeholders endured...," Ian Harvey said.

The allegations against Gillani were first brought to light by a private detective hired by Harvey to look into the Toronto businessman. Derrick Snowdy went to the Conservative party with his concerns after collecting a raft of information about Gillani.

It was then that Harper took action to remove Guergis from cabinet and caucus.

"These (allegations) are in line with the results of evidence my investigation produced," Snowdy said in an email Wednesday.