The Liberal party hit leadership candidate Joe Volpe with a $20,000 fine on Friday for breaking rules in signing up delegates.
A party panel found Volpe's campaign team had provided membership forms to cultural groups in Quebec without ensuring that any new members paid their own membership fee.
Although the rules stipulate that fees must be paid out of the member's own pocket, the panel said some people had their fees paid by Volpe volunteers.
The panel said there was no evidence Volpe or his senior officials knew about the problems.
That didn't appear to mollify the candidate, who said he would appeal the ruling.
"The press release issued today by the Liberal party, as well as the haste to proceed without due process, seems designed to inflict as much damage as possible on my campaign immediately prior to the delegate selection meetings," Volpe said in a statement on Friday.
According to party rules, the fine must be paid within 30 days or he'll be disqualified as a leadership candidate.
Volpe stays in the race
On Monday, Volpe said he would remain in the race despite accusations that his camp improperly signed up party members in Quebec.
At that time, Volpe didn't address the allegations specifically. Instead, he said that because of the "hurly burly" process of recruitment and nominations, the party sets up an arbitration process to "deal with errors and anomalies along the way."
Volpe added that he didn't think it was coincidental that the allegations came just days before every riding in Canada will choose their delegates ahead of the leadership convention in Montreal, beginning on Nov. 28.
At the news conference on Monday, Volpe suggested that his ethnicity has made him an outsider in the race, offering that the allegations may have come from those who believe him "not Canadian enough" for the job.
Alfonso Gagliano, the former Liberal embroiled in the sponsorship scandal, came to Volpe's defence while promoting his new autobiography, The Corridors of Power.
"Here again, another good old Italian-Canadian who is trying to get to the top of the Liberal party, and we want to bring him down, " Gagliano said on Monday.
Volpe — who served as a cabinet minister in Paul Martin's government — stunned political observers by signing up more than 4,000 new members in Quebec.
It gave him more support in the province than any of the other eight leadership hopefuls — including the sole candidate from Quebec, StÃ©phane Dion.
Volpe's team drew fire earlier in the year when it was revealed that thousands of dollars had been donated to his campaign in the names of children under the age of 18, including three who were the children of pharmaceutical industry executives.
He returned $27,000 in campaign donations.
Ignatieff faces complaint
Volpe's announcement on Monday that he would remain in the race came as rival candidate Michael Ignatieff was hit with similar allegations of membership irregularities.
Acomplaint filed with the Liberal party alleges that about 60 members were signed up improperly by Ignatieff's camp in two Toronto-area ridings, including one man in Ignatieff's constituency said to have died two years ago.
The complaint lists 48 members in Ignatieff's Etobicoke-Lakeshore riding who have allegedly admitted they did not sign a membership form or pay the membership fee, as required by party rules and electoral law.
It includes signed statements from three of the members who declare that "my membership fees were kindly paid for by the Michael Ignatieff leadership campaign."
The complaint also lists 11 members in the riding of Brampton-Springdale who all gave the same home address, which the complainant alleges is actually an Indian restaurant. Brampton-Springdale is held by MP Ruby Dhalla, a top Ignatieff supporter.
The complaint was filed by George Kunz, a long-time Liberal from Burlington, who said he's not affiliated with any of the leadership camps.
He told the Canadian Press that he began "doing some digging" after hearing about irregularities from several Liberal friends.