Ontario Finance Minister Greg Sorbara in the Ontario Legislature. (CP Photo)

Ontario Finance Minister Greg Sorbara announced his resignation late Tuesday, after the RCMP raided his family's real estate development company and word broke that the Liberal politician has been named in a warrant related to fraud allegations.

"Earlier today I became aware of a search warrant alleging that I was the subject of an RCMP investigation relating to a land transaction somewhere between 1996 and 2002," Sorbara said Tuesday night.

"While I have no idea as to what the allegations are or the facts on which they are based, my responsibility as a minister of the Crown is to step aside pending a determination of the matters alleged in the warrant."

The warrant said there were reasonable grounds to believe Sorbara and other directors of Royal Group Technologies defrauded the company and shareholders when they bought land in Brampton, Ont., that was owned by a subsidiary of another firm, the Sorbara Group.

Sorbara was not in politics at the time.

Information contained in search warrants has not been proven in court.

Sorbara, 59, said he was "dumbfounded" to learn he had been named in the warrant as part of the investigation.

"A terrible mistake has been made," he said at a late-night news conference. "I want to tell you that I intend to get to the bottom of that."

RCMP spokeswoman Michele Paradis said the information leading to the warrant has been sealed. Sorbara said the fact the warrant is sealed is "unfair" to him.

The RCMP raided the Toronto and Woodbridge, Ont., offices of Sorbara Group. It is also continuing its investigation into Royal Group Technologies, a Toronto Stock Exchange-listed company. Authorities began looking into the financial affairs of that company back in February 2004.

Sorbara is a former director of Royal Group. Since being appointed finance minister, he has placed his holdings in blind management and resigned as director of the Sorbara Group companies, a firm run by his family.

Hours before his resignation announcement, Sorbara had insisted he would not give up his post despite calls from the New Democrats and Conservatives demanding his resignation while the police continue to investigate.

In a late-night news conference, Ontario Premier Dalton McGuinty called Sorbara "a friend and a confidant" as well as a valuable member of his cabinet.

"He's done the right thing under the circumstances," McGuinty told reporters covering the resignation. "If he's cleared, he will be returned to cabinet."

In the meantime, McGuinty has appointed Dwight Duncan to replace Sorbara in the powerful finance portfolio. The premier named Donna Cansfield as his new energy minister, replacing Duncan in that post.