The charge against Alexander (Sandro) Lisi relates to an alleged attempt to retrieve the notorious cellphone "crack video," which shows Ford apparently smoking crack cocaine.
The alleged offences occurred in May 2013 as a drug scandal engulfed Ford, who would later admit to having used the illicit drug.
The judge placed a publication ban on any evidence presented at the hearing — as is normal at this stage of the proceedings.
Lisi, 36, of Toronto, is charged with using threats of violence or other illegal means in an effort to retrieve the cellphone video.
The preliminary inquiry is designed to test whether there is enough evidence to commit him to trial.
Lisi, who was arrested in October 2013 on the extortion charge, has elected to be tried by a judge and jury should he have to stand trial.
Ford, who is currently a councillor, opted out of the mayoral race last September after he was diagnosed with cancer. He has since been undergoing chemotherapy.
The scandal over the video and subsequent other videos and other incidents thrust Ford into the international spotlight in May 2013. Ford was never charged with any crime related to his admitted drug use. He has called Lisi a friend.
Lisi's preliminary inquiry is expected to last several weeks.
Separately, he faces drug-related charges, due to go to trial later in the month.
At the time of Lisi's arrest on the drug charges, Ford professed shock.
He defended his friend as being on the "straight and narrow'' and said he had never seen him drink or do drugs.
"He's a friend, he's a good guy, and I don't throw my friends under the bus,'' Ford said.
Lisi, flanked by his lawyers, did not talk to the media as he left court Monday.
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