Dear Members of the Compliance Audit Committee:

Affleck Greene McMurtry LLP Barristers and Solicitors Michael I. Binetti Email: mbinetti@agmlawyers.com Direct Line: (416) 360-0777 July 14, 2011 File No. 2778-001 BY SAME-DAY COURIER Compliance Audit Committee c/o Helen Smith 10th floor, West Tower, City Hall 100 Queen Street West Toronto, ON M5H 2N2 Dear Members of the Compliance Audit Committee: Re: EA5.3 (Jul 18, 9:30 AM) Compliance Audit Application by Roger Brook for the Election Campaign Finances of Ana Bailão (Statutory: Municipal Elections Act, SO 1996) We are the lawyers for Ana Bailão and have been retained to respond to the Application for a Compliance Audit filed by Roger Brook (the Applicant ) under Section 81 of the Municipal Elections Act, 1996 (the Act ) in respect of the 2010 Municipal Election Financial Statement of Ms Bailão. While the Applicant has not stated which provisions of the Act he believes have been contravened, we submit that there are no reasonable grounds upon which the Applicant or any other person, acting reasonably, could believe that contraventions of the Act have occurred. To that end, and to assist the Committee, we have prepared an issue-by-issue response to the allegations made by the Applicant that includes evidence and argument, which is attached hereto as Schedule 1. The issue-by-issue response reveals that there are no reasonable grounds to conclude that a contravention of the Act has occurred keeping in mind that [t]he [Act] must be 365 Bay Street, Suite 200, Toronto, Canada M5H 2V1 Telephone 416 360 2800 Fax 416 360 5960 www.agmlawyers.com

Page 2 Affleck Greene McMurtry LLP Barristers and Solicitors interpreted to give effect to its purpose and to achieve a coherent result, not absurd results : Corporation (City of Vaughan) v. Di Biase, 2011 ONCJ 144 (Ontario Court of Justice) at para. 42 citing R. v. Bell Express Vu Limited Partnership, [2002] 2 S.C.R. 559 (Supreme Court of Canada). Moreover, for there to be reasonable grounds to believe that a contravention of the Act has occurred, the facts must warrant that belief by a reasonable person. To paraphrase Justice H.I. Chisvin in Vaughan (City) v. Defrancesca et al., 2008 ONCJ 762 (CanLII) at para. 8: The obligation by [the committee] then is to determine if the elector is acting on mere conjecture or suspicion. Is this just a fishing expedition? If the elector is acting on conjecture, suspicion or merely proceeding on a fishing expedition, then that would not constitute reasonable grounds. In other words, a key issue for the Compliance Audit Committee to decide is whether the purpose of the Act that expenses be properly reported and subjected to a limit has been given effect. The Applicant has raised no reasonable grounds, nor are there any actual grounds, to suggest that the purpose of the Act has not been given effect. Ms Bailão has reported expenses in the available categories, which are listed on the Financial Statement as being either subject to the campaign expense limit or exempt. That the Applicant may not agree with the sub-categorization of those expenses on the Financial Statement is both immaterial and irrelevant as the purpose of the Act has been given effect by Ms Bailão. Central to the Applicant s request seems to be the allegation that certain individual donations are to somehow be categorized as corporate donations (see Issue #5 of the Applicant). These donations are, on their faces, proper donations. The Applicant has only led his suspicions based on information obtained through questionable practises, all of which does not amount to any apparent contravention of the Act, or otherwise. www.agmlawyers.com

Page 3 Affleck Greene McMurtry LLP Barristers and Solicitors To assist the Committee and the Applicant understand how amounts were accounted for on Ms Bailão s 2010 Financial Statement (attached hereto as Schedule 2 ), Patrycja Kadja, the Chartered Accountant who signed the audit declaration in respect of Ms Bailão s 2010 Financial Statement, has prepared an full audit reconciliation spreadsheet, which is attached as Exhibit C to the issue-by-issue response. Ms Kadja is unfortunately on vacation but did take the time during same to prepare the spreadsheet referenced above. Generally, the issues raised by the Applicant are incoherent and based purely on the Applicant s unqualified speculation and conjecture without any reasonable grounds or evidence to believe that a contravention of the Act has occurred. These issues are: 1, 4, 5, 6, 7 and 8. Regarding Issue #2 - the amount of rent declared as an expense - Ms Bailão is well within the formulas set out in the Compliance Audit Reports of Joyce Frustaglio (pages 11-12) and Bernie DiVona (pages 47-49), which are attached to the issue-by-issue response as Exhibits D and E, respectively. Rent receipts for Ms Bailão s campaign office are attached to the issue-by-issue response as Exhibit A. Regarding Issue #3 Fundraising Expenses and contrary to the Applicant s allegations, Ms Bailão did in fact accurately report fundraising expenses for events held. Ms Bailão has produced invoices that clearly show fundraising as being the purpose of the expenses and has attributed the proper amounts thereto (see Exhibits F to J of the issue-byissue response). This should have been readily apparent to the Applicant before making an objection on this issue in that it appears as though he reviewed the aforementioned invoices. That he now complains is not a reasonable ground to suspect that a www.agmlawyers.com

Page 4 Affleck Greene McMurtry LLP Barristers and Solicitors contravention of the Act has occurred; rather it is pure speculation and suspicion on his part, which does not meet the test for ordering a compliance audit. Ms Bailão will be in attendance on July 18, 2011 to answer any questions that Committee may have and/or provide the Committee with further clarification or evidence. Also in attendance will be Jack Prazares, the publisher of the SENSO magazine referred to in the Application, Sonya Ribero of FACES PHOTONEWS, as well as the landlord of Ms Bailão s campaign office, who are available to answer any questions that Committee may have. To summarize, Ms Bailão has put forward evidence and explanations to counter each and every one of the Applicant s Issues. In light of the above and the attached, we submit that there are no reasonable grounds upon which the Committee could conclude that a contravention of the Act has occurred. Accordingly, we respectfully request that the Applicant s request be denied. We are available to answer any questions the Committee may have and look forward to the opportunity for doing so. Sincerely, Affleck Greene McMurtry LLP Per: Michael Binetti Encl. www.agmlawyers.com

SCHEDULE 1

SCHEDULE 1 Ana Bailao ( AB ) Responses to Compliance Audit Request Side-by-Side Comparison Allegation Response Issue #1: Twenty returned contributions Twenty contributions totaling $13,500 were cashed and returned later at some point. This is many times more than all other councillors put together. Alan Menke's donation was legitimately returned by 2 campaigns for example because he had overcontributed but Bailao offers no reason. Context: All of the donors were affiliated with companies in the real estate construction industry. During a live debate on Rogers TV local activist Scott Dobson asked all candidates to reveal the source of their campaign funding one week before the elec1ion and they agreed. He did this because he had previously found many real estate construction companies amongst in AB's 2003 returns which was a campaign issue. The money must have been returned before the list was released because the 20 embarrassing contributions didn't appear. 1) The Applicant has failed to identify what part of the Municipal Elections Act, 2006 ( MEA ) he alleges has been contravened. Nothing in the MEA requires a candidate to accept and/or retain donations. At the end of August 2010, a community blog suggested that AB's election contributions were "disproportionately" representing members of the construction industry. [The inference being that donations from members working in this industry had biased the candidate in favour of a "pro-construction" agenda]. AB's campaign staff felt this to be an unnecessary distraction to the campaign. As a leader and heavily-involved member of the Portuguese community AB is well know and well recognized within this community. With a large proportion of Portuguese Canadians making their living in the construction and small business industry, understandably these groups chose to donate to AB's campaign. While all donations were personal cheques and entirely legitimate campaign donations, in an effort to mitigate the distraction caused by accusations that AB's campaign favoured a particular sector

- 2 - Allegation Response over another, AB made the decision to not accept donations and/or return donations from individuals connected to the construction industry. The AB campaign also published a list of all donations one week before the election to demonstrate full transparency regarding election donations, including full names of donors and addresses. All contributions received during AB's campaign were from individuals, as were those which were returned. The campaign CFO had been regularly receiving and depositing cheques since the beginning of the campaign. Early in the campaign, regular meetings were held between AB and the campaign CFO to discuss contributions before depositing same. As time progressed, the significant time commitments of the campaign made these meetings more difficult to schedule. In light of this, once a meeting was held to review donations, a number of contributions that had been deposited were subsequently returned. Issue #2: Contribution by way of below market rent (campaign office) 2) Corporate or individual donation by way of below market rent Campaign office rental. Receipts show rent to Michael Michielli for $1000 for 6 weeks and $1000 for one month for 2 months rent. The same landlord has advertised the same ground-floor unit at 1486 Dundas W for rent at $1600 'plus' in May 2010 and since. 2) AB states that the amount listed as an expense in respect of her campaign office is completely reasonable and that it complies with the MEA. In or around May or June 2010, AB chose an office on Dundas Street West for the site of the campaign office in an area where many store-fronts were vacant and being offered for lease (to this

- 3 - Allegation http://toronto.en.craigslist.ca/tor/apa/2394410521.html Currently $1800 a month through Metro Realty http://www.metcomrealty.com/pdfs/1486_dundas_st_w_-_dec- 9_2010.pdf The lease agreement is informal and contains no detail. Phone service begins on Aug. 16, while internet starts on August 1, 2010. The first 6-week rental agreement begins on Aug. 15. There were election signs in the window prior to August. Mike Michielli's $750 donation to Bailao was returned while his wife Michelle's $750 donation was accepted. Mike appears to work with an unnamed major construction company and also owns Mike of Italy on Dufferin. http://do.anuncioo.com/jobs/offering/home-help/distritonacional/santo-domingo/construction-engineer-or-civil-engineerwanted-2393505 Response day, many continue to remain vacant). The landlord of the premises, Michael Michelli, told AB s campaign staff that if 1486 Dundas St. W. was not rented by August 15, 2010, that it could be provided to the campaign for two months and that he would allow the campaign to have access from August 15, 2010 onwards to make any repairs and get the office in working condition ( fixturing period ). AB s campaign staff told the landlord that the campaign would not require or be using the campaign office in earnest until September 2010. The landlord thus charged $1000.00 all in for the month September and $1000.00 all in for the month of October, as agreed, including the fixturing period. See attached Exhibit A - rent receipts See also attached Exhibit B Bell Canada account showing services having been billed commencing on August 19, 2010 (page 2) and an order date for same on August 10, 2010 (page 3) See also Exhibit C - Reconciliation of accounts prepared by AB s campaign auditor To this day, the premises used as AB s campaign office at 1486 Dundas St. W. are vacant. In accordance with Toronto elections by-law, signage for campaign offices was only permitted to be placed 90-days prior to the date of the election. For the 2010 municipal election this was July 29, 2010. AB s campaign staff did not have access to the

- 4 - Allegation Response 1486 Dundas W. property until August 15th, and only then did staff post campaign material at this location. The campaign office was not occupied as such until September 2010. N.B: The Applicant s statement suggesting that Michelle Michielli is Michael Michielli's wife is incorrect; Michelle is in fact Michael s son. Using a formula contained within the Compliance Audit Report For the City of Vaughan Re: Joyce Frustaglio dated October 17, 2008 of LECG Canada Limited (Ken Froese) and the Compliance Audit Report For the City of Vaughan Re: Bernie DiVona dated April 24, 2009 (the LECG Formula ), the value of AB s rent in the 2010 election for office rental is completely reasonable and acceptable. The LECG Formula is as follows: 50% of the fair market value per square foot for short-term leases of premises usually rented on a long-term basis (i.e., a lower amount) plus 100% of additional rental cost (i.e. taxes, common area costs, utilities etc) plus applicable HST See attached Exhibit D - Compliance Audit Report For the City of Vaughan Re: Joyce Frustaglio dated October 17, 2008 of LECG Canada Limited at Section 2.15 (page 12). See also attached Exhibit E - Compliance Audit Report For the City of Vaughan Re: Bernie DiVona dated April 24, 2009 of LECG Canada Limited at Section 4.70 (page 48). Accepting the Applicant s own assertions for the sake of argument

- 5 - Allegation Response only, the landlord of AB s campaign office appears to be offering the premises for rent for between $1,600 and $1,800 per month for a long-term lease. 50% of this amount is between $800 and $900 per month. AB declared $2,000 for two months (i.e., $1,000 per month), which is higher than what is prescribed by the LECG formula. The Applicant s assertions are thus, baseless. The Applicant has no evidence to contradict this calculation nor has he led any credible evidence on this point. Issue #3: Miscategorizing election related expenses as fundraising 3) Incorrectly miscategorizing election expenses as fundraising expenses. The election spending limit was 28,747.30 while Ana raised $62,217.03. She used up almost all of the limited election spending. AB listed no election salaries. Yet she did pay a $2440 fundraising salary to twentyfourten communications and consulting, which is located at 801-1223 King St. It's the same condo unit as AB's f/t campaign manager, Deyan Kostovski, the firm's owner. He describes himself as an ethnic media specialist in public relations & consulting and has since been hired as AB's assistant. http://ca.linkedin.com/pub/deyan-kostovski/1a/161/472 3) Deyan Kostovski was engaged by AB to organize the item listed as Fundraiser #1 held in April 2010 and listed on AB s 2010 Financial Statement as he had extensive experience in politics, fundraising and communications. Mr. Kostovski operates through his corporation, twentyfourten communications and consulting. The campaign was billed for Mr. Kostovski s services in respect of Fundraiser #1. See attached Exhibit F - Invoice from twentyfourten communications and consulting referencing fundraising consulting services. See also attached Exhibit G - Response form for Fundraiser

- 6 - Allegation Response #1. See also attached Exhibit C - Reconciliation of accounts prepared by AB s campaign auditor After a successful event, Mr. Kostovski agreed to volunteer on AB's campaign and ultimately accepted the position of campaign manager. Mr. Kostovski was also a great asset in assisting with the smooth transition to City Hall and setting up this new office. There is nothing improper in this relationship and the Applicant has led no credible evidence to contradict this or on this point. Similarly, just before the campaign office opened Main Street technologies submitted an invoice for "fundraising software," and yet the company's software section only describes software related to elections and not fundraising. http://mainstreettechnologies.ca/software.html The software company Mainstreet Technologies provides a wide assortment of technological support to election candidates, including fundraising software. This group provided fundraising software to the AB campaign necessary to coordinate contacts, letters, phone calls etc. The Applicant has led no credible evidence to contradict this point. See attached Exhibit H - Invoice from Mainstreet Technologies referencing fundraising software, which was used for Fundraiser #1. See also attached Exhibit C - Reconciliation of accounts prepared by AB s campaign auditor The July "fundraiser bbq" catered by Europa on Dundas St with $7919 in food was well advertised and split 40% fundraising and 60% promotional including t-shirts and fridge magnets that were purchased in April worn by volunteers throughout the campaign and In July, the AB campaign held a BBQ fundraiser in July 2010, one of three fundraisers throughout the campaign. This event was catered and hosted at Europa Catering, and the declared amounts in the submitted campaign financial documentation cover the food

- 7 - Allegation yet attributed to the fundraising event. Due to the way expenses were allocated the second fundraiser lost money. and venue for this event. Response The only advertising for the BBQ event was done via flyers. See attached Exhibit I - Flyer for fund-raiser at Europa Catering referencing fundraising nature of event. See also attached Exhibit C - Reconciliation of accounts prepared by AB s campaign auditor All t-shirts were purchased in a single order prior to the fund-raiser to receive a better price through economy of sale. The same was done for magnets. What merchandise was not given out to attendees of this BBQ was used during the remainder of the campaign, as declared in the filed campaign documentation. As such, 40% of the T-shirts and magnets purchased were in respect of this fundraiser at Europa Catering and 60% were expenses subject to campaign limit. See attached Exhibit J - Invoice for T-shirts and magnets showing 60/40 split. See also attached Exhibit C - Reconciliation of accounts prepared by AB s campaign auditor Issue #4: Use of past election signs not invoiced 4) Use of signs from 2003 campaign not invoiced. The campaign began using signs saved from 2003 campaign (have 4) AB denies that any election signs from her previous campaign were used in the 2010 election campaign. During the campaign it was remarked that a resident on Beaconsfield Avenue who had, of

- 8 - Allegation pictures) and the AB team tweeted that they had run out of signs and would have to use the old ones. Response her own volition, preserved an AB election sign from 2003 had posted this on their property. No signs from this election were distributed by campaign staff, nor were any of these signs kept after the 2003 election. The Applicant has led no credible evidence on this point. Issue #5: Fourteen corporate donations (Co-op taxi drivers) 5) I have spoken with six of AB's donors listed together between fundraiser 1 and 2 who turned out to be taxi drivers working for Coop Taxi Associates. Issue 1. Company pressuring employees to donate their money on behalf of the company 14 AB Donors, Amount, Address, Postal Code, # AB has no knowledge of this assertion. AB has no knowledge of this assertion. Moreover, the Applicant has failed to identify what part of the MEA he alleges has been contravened. 1 Muhumed Mohamed #3 $300 75 Emmet Ave #605, TO, 416 458-8843 2 Rodolfo Valverde #2 $300 43 Derwyn Road, EY M4J4N1 3 Abukar Osman #5 $300 174 Jamestown Cres, Etob M9V3M5 4 Hussein Ali $300 720 Trethewey Dr #801 NY M6M5A5 5 Abdi Ali Hassan $300 67 Antelope Dr, Scar. M1B6K5 6 Mohamed Saleh Abdalla #5 $300 3453 Sunlight St, Miss. l5m7m8 7 Gebreamlak Beyene #1 $300 40 Guestville Ave, TO M6N4N2 8 Saladhin E Yonis $300 32 Taverner Cres, Ajax l1t5a3 9 Abtidon Abdirahim Mohamoud #4 $300 1050 Broadview #202,

- 9 - Allegation Response 416-841-9483 10 Ahmed Ayan $300 22 Castlemore Blvd, Bramp l6p2l3 11 Noorallah Shahseed #6 $300 10 Camden Dr, Concord 416-569- 7797 12 Alemseged Tesfai Fassil $300 400 McCowan Rd #808, Scar M1J1Js 13 Rajai Rebhi Yousef Natsheh $200 2 Pilkington Dr, Scar M1l0B7 14 YusufYusuf $200 5 Bellevue Cres #402, TO M9N1G5 I decided to visit a group of 14 donations, almost all of which were for $300 adding up to $4000 because I could not use google to find what company or practice they belonged to. After speaking to the first person and finding out that he did it "through the company, I bought a recorder and went to visit the others, finding out one by one that they drove cabs for Co-op and didn't seem to be familiar with AB or her policies (except M.M. #3 whose statement is contradicted by evidence). The others say they said they were asked by manager Abdul-Kadir Mohmoud to write a check for $300 to Councillor Bailao for the company. Some said they also gave to the mayor but I couldn't find it (>$100?) Everyone on Co-op's Board along with the manager & president including others living at those addresses gave large sums to many candidates, although nothing to AB. 1 Peter Zahakos, Pres. 26 Rothsay Rd Thornhill 905 709-0758 2 Eileen (M Renner) Zahakos 26 Rothsay Rd Thornhill 3 Abdul-Kadir Mohmoud (Mahamud) Mgr. 84 Tawnberry Circle Brampton (8-530 The West Mall Etob) AB has no knowledge of this assertion. Moreover, the Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB. AB has no knowledge of this assertion. Moreover, the Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB.

- 10 - Allegation Response 4 Zahra Tifow 84 Tawnberry Circle Brampton 5 Sam (Shemuel) Bitterman, Board Chair 136 Huntington Park Dr, Thornhill 6 Chava (Hava) Bitterman 136 Huntington Park Dr Thornhill 7 Joseph (Joe) Tripodi, Board mbr. 33 Playfair Ave TO 8 Margaret Tripodi 33 Playfair Ave. TO 9 Manuel (Da Silva) Reis, Board mbr. 27 Oak St Georgetown 10 Lidia (Bragga) Reis 27 Oak St Georgetown 11 Pitipanage Fernando, Board mbr. 6 Grandlea Cres. Markham (905) 472-9982 12 Geetha Femando 6 Grandlea Cres. Markham 13 Francisco Ramos, Board mbr. 3501 Glen Erin Dr. (suite?) Miss L5L2E9 14 Lawson (Larry) Huang, Board mbr. 10 Wycombe Rd Apt 112, TO 416-630-9920 Their contributions total $35,550 1 (PZ) M Augimeri $150, N. Kelly $150, G DeBaermaeker $200, M Thompson $250, J Pantalone $250, D. Minnan-Wong $250, P. Ainslie $300, P. Milczyn $300, K. Stinz $300, M. Grimes $450, D. Shiner $500, Mammoliti $1,250 2 (El) M Augimeri $150, N. Kelly $150, G DeBaermaeker $200, M Thompson $250, P. Ainslie $300, P. Milczyn $300, K. Stinz $300, M. Grimes $450, D. Shiner $500, Mammoliti $1,250 3 (AM) M. Augimeri $150, N. Kelly $150, G. DeBaermaeker $150, S. Hall $200, M. Thompson $250, A. Heaps $250, D. Minnan-Wong $250, P. Ainslie $300, A. Peruzza $300, P. Milczyn $300, K. Stinz $300, M. Grimes $450, J. Pantalone $500 4 (Zn N. Kelly $150, G. DeBaermaeker $150, S. Hall $200, J. AB has no knowledge of this assertion. Moreover, the Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB.

- 11 - Allegation Response Pantalone $250, A. Heaps $250, D. Minnan-Wong $250, P. Ainslie $300, A. Peruzza $300, P. Milczyn $300, K. Stinz $300, M. Grimes $450 5 (SB) N. Kelly $150, S. Hall $200, A. Heaps $250, S. Thompson $250, A. Peruzza $300, F. Di Giorgio $300, C. Palacio $300, R. Ford $300, D. Ford $300 6 (CB) N. Kelly $150, S. Hall $200, A. Heaps $250, S. Thompson $250, A. Peruzza $300, F. Di Giorgio $300, C. Palacio $300, P. Milczyn $300 7 (JT) N. Kelly $150, J. Pantalone $250, M. Bernardinetti $300, D. Mohamed $300, R. Ford $300, P. Milczyn $300, M. Grimes $450 8 (Mn N. Kelly $150, M. Bernardinetti $300, D. Mohamed $300, R. Ford $300, P. Milczyn $300, A. Peruzza $350, M. Grimes $450 9 (MR) N. Kelly $150, S. Hall $200, A. Heaps $250, D. Mohamed $300, F. DiGiorgio $300, P. Milczyn $300, D. Ford $300, C. Palacio $300, M. Grimes $450 10(LR) N. Kelly $150, D. Mohamed $300, A. Heaps $250, F. DiGiorgio $300, P. Milczyn $300, A. Peruzza $300, R. Ford $300, C. Palacio $300, M. Grimes $450 11(PF) N. Kelly $150, A. Heaps $250, S. Thompson $250, R. Ford $300, P. Milczyn $300, A. Peruzza $300, C. Palacio $300. F DiGiorgio $300, V. Crisanti. $300 12 (GF) N. Kelly $150, A. Heaps $250, S. Thompson $250, D. Ford $300, P. Milczyn $300, A. Peruzza $300, C. Palacio $300 13 (FR) N. Kelly $150, S. Thompson $250, D. Mohamed $300, P. Milczyn $300, A. Peruzza $300, F. Nunziata $300 14(lH) N. Kelly $150, S. hall $200, D. Mohamed $300, P. Milczyn $300, A. Peruzza $300 Interestingly contributors gave exactly the same amount to various AB has no knowledge of this assertion. Moreover, the Applicant

- 12 - Allegation Councillors or Mayoral candidates. For example all 14 donations to Peter Milczyn were $300 etc.. I also interviewed board members. Co-op Board member Joe Tripodi, said they met together informally to decide who to donate to (board, pres. & mgr). Board member Larry Huang told me "it (meeting) was called by me." "We sort of agreed how we would donate." "300 that sounds like a nice number." "Abdul he talked about how he got his donations in." Yes of course they're doing it for the company. (RB: and you as well?) Sure, everyone has issues that are important to you", "We know the politicians who are on our side." Co-op has also been the main company lobbying on the issue using Sussex Strategy Group with Jamie Besner & Kim Wright meeting with councillors over the past two years. Tweets by Sussex associate Henry Boyd and wife Nicole Boyd indicate that they volunteered on AB's campaign. Henry Boyd says Bailao is a friend that he met through another friend while his wife worked at Globestar where AB worked. He said I think the person in my office who did throw a fundraiser to support her (AB) is a (Sussex) consultant by the name of Jamie Besner. Besner said neither he nor Co-op organized any fundraisers, however he says Co-op asked its employees to donate. Besner can't remember if he attended any fundraiser for Bailao because he attended so many. I left a message for Boyd describing colleague Besner's differing characterization, and asked him to call me back if Response has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB. AB has no knowledge of this assertion. Moreover, the Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB. 5) All contribution cheques received by AB s campaign were from individuals. Henry Boyd and Nicole Boyd are long time friends of AB and their involvement in the campaign was entirely on a personal basis. Ms. Boyd worked with AB in the past. Jamie Besner is also an acquaintance from the time that AB worked at City Hall as a staffer. AB denies that Mr. Besner organized any campaign fundraiser for her campaign. Mr. Besner did not attend any of AB's fundraisers and did not donate to the campaign. Three fundraisers were held for the AB campaign. AB has no knowledge of the balance of the Applicant s allegations. Moreover, the Applicant has failed to identify what

- 13 - Allegation he wanted to change what he said, but he hasn't called back. Interestingly the $4000 in checks is greater than the average profit from AB's 3 fundraisers. Response part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB. Manager Abdul-Kadir did not respond. Pres. Peter Zahakos is a long time major donor who has run for Metro Councillor multiple times including in Davenport in 1991. Issue #6: 3 rd party corporate advertising (Senso Magazine drop) 4) Company resources helped (advertise) candidate (Senso drop) During the election I was volunteering in the office of candidate Kevin Beaulieu when Portuguese magazines were being brought in by his supporters with what looked like election material for AB. The 100-page full colour magazine, Senso, (with AB's face on the cover and an interview with her, full of election signs and parts of the candidate brochure). The magazine had never been delivered before door to door in the ward (or apparently elsewhere.) http://www.now1oronto.com/newslstorv.cfm?content=177246 6) SENSO Magazine is a long running, quarterly issued publication emphasizing events and people in the Portuguese community. It is distributed free of charge at Portuguese/Canadian businesses and occasionally at residences. See attached Exhibit K - copies of SENSO magazine covers In August, 2010, SENSO magazine was among the Portuguese magazines that featured AB on the cover of an issue. Other prominent members of the Portuguese community are regularly featured on the cover of SENSO magazine, recently including Charles Sousa MPP Mississauga-South, and Peter Fonseca, former MPP Mississauga East-Cooksville, etc. AB was asked for an interview by SENSO, which she accepted. AB did not solicit the invitation nor did she control the content of the publication.

- 14 - Allegation Response AB has been heavily involved in the Portuguese community since University, motivated to support and assist the community as it struggles with high youth drop-out rates and low political involvement. This work in the community has understandably invited attention from community news outlets wishing to present this as a positive message to readers. See also Exhibit L - copies of other news publications featuring AB on their covers - Brazilian magazine etc & tal, FACES PHOTONEWS, and Gente Modesta AB hired design team Creative 7 (C-7) to design flyers, website etc. C-7 is owned by Ana Fernandes-Iria & Jamie Iria. Ana F-Iria is also Senso's news editor and she conducted the interview with Bailao. The two companies are located in the same office and there was a blurring between the two with regard to Senso's website, then called PTvirtual run by J Iria who also works for Sensa. Sensa's website published an article that praised the candidate that Bailao's volunteer staff says was authored by AB. AB understands that Mr. Prazares owns SENSO magazine, which showcases the activities and talents of members of the Portuguese community on a regular basis. Mr. Prazares is also a leader in the Portuguese community. AB understands that Mr. Prazares is a successful business owner of Trican Masonry and is involved with a multitude of non-profit organizations, including chairing the Carassauga cultural festival. Trican Masonry is a major donor to a wide variety of non-profit causes in Toronto and Mississauga, and has worked to reduce political apathy in the Portuguese community by being a strong supporter of Portuguese candidates. Ms. Ana Fernandes is a York University Professor, Editor of SENSO magazine and has been a lifelong friend of AB since working together on a community newspaper's youth column in 1998. AB understands that Creative 7 is a printing and design company

- 15 - Allegation Response which provides printing and layout support for SENSO magazine and whose owner, Mr. Jamie Iria, who has been an acquaintance of AB since arriving in Canada. Throughout AB's career, while at BCPbank, Globstar International, and as President of the Federation of Portuguese Canadian Business and Professionals, AB has employed Creative 7 for all levels of design, printing and publication. This working relationship continued during the campaign. AB states that Creative 7 is recognized for being thoroughly involved in the Portuguese community, including community work for the Alliance of Portuguese Canadian Clubs and Associations, the Federation of Portuguese Canadian Business and Professionals and various businesses, clubs and associations. AB understands that PTVirtual is a long established news website that has no working connection with SENSO magazine. During the campaign PTVirtual published a press release that AB campaign staff had distributed to media groups, which was not an advertising purchase. Neither Prazeres nor Ana Iria or her husband would agree to answer any questions. It would be interesting to learn what the relationship between Senso & C-7 is, and who decided to distribute the AB issue (at great cost) in highly Portuguese parts of Ward 18 in the middle of the election campaign. AB said it had always been something that Senso had wanted to do, (however the costly door-to-door drop has not been repeated since). AB has no knowledge of this assertion. Moreover, the Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable to AB.

- 16 - Allegation Both Prazeres and Fonseca again donated but AB returned the money, perhaps after the Now article was published. Creative 7 also worked on councillor Chris Fonseca's winning campaign http://sandpatel.com/category/design/ Chris is Avelino Fonseca's son's (former MPP Peter Fonseca) wife. Daughter Nancy Fonseca is running to replace Peter Fonseca as MPP http://www.facebook.com/nfonsecacampaign?sk=app_4949752878 Response The Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable AB. Moreover, see AB s response at Issue #1, above: all contributions from individuals connected to the construction industry were returned in accordance with AB s campaign policy. N.B: Despite Mr. Brooks' statement, neither Peter Fonseca nor Nancy Fonseca is related to Avelino Fonseca. Fonseca political family in Mississauga http://www.mississauga.com/news/article/971599-spudder Avelino F. was former MP Mario Silva's Chief Financial Officer in last campaign. I have never seen Senso locally in a Portuguese bakery/cafe or other shops but it is available at Casa Dos Acores banquet hall. Considering the cost of election material, the one-off decision to distribute this supposedly neutral magazine door to door during the campaign was at least as helpful as campaign material and appears to be a brazen attempt to skirt corporate campaign spending limits. AB denies this allegation. The Applicant has led no credible evidence on this point. Issue #7: 3 rd party corporate donation (Tower Storage bar-b-q)

- 17 - Allegation 7) Partisan campaign event paid for by corporate 3 rd party. During the campaign Tower Storage held a neighbourhood bar-beque with free food and featured speaker candidate Ana Bailao during the election campaign which attracted many people as it was advertised on flyers around the neighbourhood. I called Tower Storage, and a man who would not identify himself admitted that he only invited candidate Ana Bailao, but said it was just and event to welcome the storage depot to the neighbourhood. Candidate Ana Bailao said it was ok because she did not put up any campaign signs. She said she knew who owned the company but couldn't remember their names. The storage company was added to a building by Bilnia Investments Ltd that owns most of the block including 80 Ward st. 24 Ward St. 258 Wallace St. http://bilnia.com/ http://www.dailycommercialnews.com/csp/102585 Response 7) Tower Storage invited AB to attend a BBQ event they had organized in order to introduce themselves to the neighbourhood, and this invitation was accepted. The event was poorly attended, had no AB campaign signs. AB was only able to attend for approximately 45 minutes due to other commitments. The Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable AB. William (Bill) Weiner, the President of visioneering inc. 35 Oak St, gave $750 to AS but it was returned later. http://www.viscor.com/pc/english/en_presidents-message.htm 35 Oak is headquarters of Bilnia Investments (24, 80 Ward, 258 Wallace) Bilnia is being sued by the TTC for a pollution plume emanating from Bilnia's former GE polluted site that is affecting the former Lansdowne TTC shed. Rezoning from the current Employment lands category would substantially raise land values. While the corporate 3 rd party The Applicant s assertions are irrelevant. AB understands that the Tower Storage property is currently occupied by Ubisoft Entertainment, one of the largest and most established videogame software companies in the world. Last year this software company hired 120 people, added a further 145

- 18 - Allegation donation should be included whether it is Tower Storage or turns out to be a company associated with Bilnia/Visioneering (Bill Weiner), knowing the source would add a level of transparency should rezonings be announced. Response employees this year and plans to expand to 800 employees over the next 10 years. AB states that she is unaware of any plan or desire to rezone any of the properties at this site. AB understands that it is General Electric and not Bilnia/Visioneering that is currently in court proceedings surrounding the contamination of land at the site of the Landsdowne TTC barns, none of which is relevant to campaign finances. The Applicant has failed to identify what part of the MEA he alleges has been contravened and how such a contravention would be attributable AB. Issue #8: Missing receipt (Faces Photonews) 8) Missing receipt (Faces photonews) Didn't find receipt for full page add plus mini-cover add for AB. Faces PhotoNews Magazine, September 2010 Sonia Ribeiro, 3019 Dufferin St. Toronto, 416 270-9296 8) The article published in FACES PHOTONEWS was neither requested to be placed by AB s campaign nor was it an advertising purchase by the AB campaign. Sonia Ribeiro, Chief Editor of FACES PHOTONEWS, requested an interview with AB during the campaign. Unfortunately, due to Ms. Ribeiro's tight publishing deadline and the candidate's commitments, a mutually suitable time could not be reached before print time. Ms. Ribeiro asked for permission to use the information for her story from the information publicly available on AB s campaign website, in lieu of an interview, to which AB s campaign staff agreed. AB had no control whatsoever over what FACES

- 19 - Allegation Response PHOTONEWS would or would not publish. It is a publication independent of AB s campaign. Ms Ribeiro can confirm this fact for the Compliance Audit Committee.

Exhibit A

Exhibit B

Exhibit C

CAMPAIGN FOR ANA BAILAO - EXPENSES Promo Victory/Appre PAID TO AMOUNT CK # Expense Type EXPENSE Budget category Advertising Banking Fees brochures office phones Signs Web & IT Rent Material Accounting Fundraiser # 1 Fundraiser #2 Fundraiser #3 ciat post election Lisa Shuttleworth $ 850.00 1 Fundraising Payment #1 for Hall rental & beverages for April 15 Fundraiser Fundraiser # 1 $ 850.00 Fernando Tavares $ 500.00 1 Fundraising Music for April 15 Fundraiser Fundraiser # 1 $ 500.00 Creative 7 $ 1,643.06 2 Fundraising Fundraiser Tickets & Invitations Fundraiser # 1 $ 1,643.06 Creative 7 $ 388.72 3 Fundraising website devepment Moneris (donation button) development Fundraiser #1 $ 388.72 Creative 7 $ 583.08 3 Operating Website Development (60% to operating) Web & IT $ 583.08 Lisa Shuttleworth $ 850.00 4 Fundraising Payment #2 for Hall rental & beverages for April 15 Fundraiser Fundraiser # 1 $ 850.00 Lisbon By night $ 2,169.60 5 Fundraising Catering April 15 Fundraiser Fundraiser # 1 $ 2,169.60 Lena Barreto. $ 192.10 6 Fundraising Decorations and Wine Glass Clips for April 15 Fundraiser Fundraiser # 1 $ 192.10 Ana Bailao $ 664.94 7 Fundraising misc expenses for campaign fund raiser Fundraiser # 1 $ 664.94 Marco Monaco $ 107.10 8 Operating Post office box rental office $ 107.10 Ana Bailao $ 35.00 9 Operating bloor festival table rental office $ 35.00 Main Street Technologies $ 734.49 10 Fundraising fundraising software Fundraiser #1 $ 734.49 SPI Screen Printing $ 6,271.50 11 Operating signs Signs $ 6,271.50 Eli Cohl $ 500.00 12 Fundraising band for July barbecue Fundraiser #2 $ 500.00 Event Centre $ 1,008.52 13 Fundraising rental tents for July barbecue Fundraiser #2 $ 1,008.52 Matrix $ 439.62 14 Fundraising t shirts and bags (40% used for Fundraising purposes) Fundraiser #2 $ 439.62 Matrix $ 659.44 14 Operating t shirts and bags (60% used for canvassing operating) Promo Material $ 659.44 Aviva Kapelus $ 88.47 16 Fundraising childrens activities for barebeque Fundraiser #2 $ 88.47 Christina Marques $ 248.14 17 Fundraising food for volunteers & fundraising Fundraiser #3 248.14 Europa Catering $ 7,910.00 18 Fundraising catering for barbeque Fundraiser #2 $ 7,910.00 Ed Yonge $ 125.00 19 Fundraising clown for barbeque Fundraiser #2 $ 125.00 Creative 7 Invoice # 2181 $ 135.60 20 Fundraising magnets 40% was used in fundraising activities Fundraiser #2 $ 135.60 Creative 7 Invoice #2181 $ 203.40 20 Operating magnets 60% to Operating Promo Material $ 203.40 Creative 7 $ 2,186.01 21 Operating brochures brochures $ 2,186.01 Ana Bailao $ 282.50 22 Operating voters list office $ 282.50 Lena Barreto $ 261.22 23 Fundraising misc expenses for barbecue Fundraiser #2 $ 261.22 Twentyfourten $ 2,260.00 24 Fundraising fundraiser coordinator Fundraiser #1 $ 2,260.00 Bell Canada $ 1,740.62 25 Operating Bell Invoice phones $ 1,740.62 Bell Canada $ 115.26 26 Operating Bell Invoice phones $ 115.26 Future Graphics $ 282.50 27 Fundraising colour BBQ July 18 fundraiser flyers #0177 Fundraiser #2 $ 282.50 Creative 7 $ 559.35 28 Operating 5000 flyers brochures $ 559.35 Creative 7 $ 333.35 29 Operating 4000 post cards brochures $ 333.35 Creative 7 $ 217.53 30 Operating flyers campaign office kick off brochures $ 217.53 Creative 7 $ 436.18 31 Operating campaign office window graphic office $ 436.18 Creative 7 $ 847.50 32 Operating 15000 flyers brochures $ 847.50 Marco Monaco $ 81.77 33 Fundraising Operating voicecast invoice for office grand opening Web & IT $ 81.77 Marco Monaco $ 201.93 34 Operating office supplies office $ 201.93 election sign dep. paid by Deyan (CK originally for $250 less refund $75 Deyan kostovksi $ 75.00 36 Operating expense) office $ 75.00 Mike Michielli $ 1,000.00 37 Operating Rent for Campaign office Rent $ 1,000.00 Mike Michielli $ 1,000.00 38 Operating Rent for Campaign office Rent $ 1,000.00 Bell Canada $ 526.88 40 Operating Bell Invoice phones $ 526.88 Villlager Annex $ 1,119.83 41 Operating Villager Adversitings Advertising $ 1,119.83 Marco Monaco $ 318.56 51 Operating office supplies office $ 318.56 Marco Monaco $ 64.41 52 Operating office supplies office $ 64.41 Brayden Root $ 146.90 54 b Post Election Shredding of voters list and office paperwork afer election post election $ 146.90 Deyan kostovksi $ 316.40 55 Operating voicecast invoice Web & IT $ 316.40 Proya Productions $ 322.05 56 victory/appre photographer for Victory Party Victory/Appreciat $ 322.05 Creative 7 $ 768.41 57 Operating flyer brochures $ 768.41 Creative 7 $ 1,067.85 58 Operating flyers brochures $ 1,067.85 Creative 7 $ 2,147.06 59 Operating flyers brochures $ 2,147.06 Creative 7 $ 649.80 60 Operating flyers brochures $ 649.80 Creative 7 $ 649.80 61 Operating flyers brochures $ 649.80 Creative 7 $ 197.70 62 Operating flyers brochures $ 197.70 Post Milenio $ 339.00 63 Operating advertising in portuguese newspaper Advertising $ 339.00 Deyan kostovksi $ 169.50 64 Operating voicecast invoice Web &IIT $ 169.50 Eruopa Catering $ 5,085.00 65 victory/appre food for victory party Victory/Appreciat $ 5,085.00 Casa Dos Acores $ 1,773.00 66 victory/appre bar/food for victory part Victory/Appreciat $ 1,773.00 blue pages $ 282.50 68 Operating adversiting in blue pages Advertising $ 282.50 Bell Canada $ 635.53 69 Operating Bell Invoice phones $ 635.53 Bell Canada $ 135.60 70 Operating Bell Invoice phones $ 135.60 Michael Viera $ 495.53 71 c Post Election office supplies/stamps for thank you letters volunteers post election post election $ 495.53 Lisbon By night $ 2,022.19 72 victory/appre Victory/Appreciat $ 2,022.19 Davenport Federal Liberal Assn $ 250.00 73 Operating rental of election sign wooden stakes Signs $ 250.00 Bell refund $ 11.86 Credit issued for phone service deposited with equipment refund 11.86 Guia $ 262.50 74 Operating adversiting in guia Advertising $ 262.50 Banking fees Including Moneris $ 824.39 n/a Operating banking fees Banking Fees $ 824.39 MSCM LLP $ 3,390.00 Accounting accounting fees Audit $ 3,390.00 TOTAL EXPENSES $ 62,137.03 $ 2,003.83 $ 824.39 $ 9,624.36 $ 1,667.58 $ 3,142.03 $ 6,521.50 $ 1,150.75 $ 2,000.00 $ 862.84 $ 3,390.00 $ 10,252.91 $ 10,750.93 $ 248.14 $ 9,697.77 $ Inventory from Candidate $ 80.00 $ 21,251.98 TOTAL FUNDRAISING Total Form 4 $ 62,217.03 Agreed to cheque copy on bank statement Agreed to invoice or receipt for expenses incurred after January 27th Category is appropriate b Not a qualifing expense moved to office expenses c Suggest to combine with victory day party/appreciation notes $ 62,137.03 Note cheque number 15 represents a deposit paid to Bell in the amount of $1,375 which was refunded Expenses Budget - Ana Bailao Campaign

Exhibit D

Exhibit E

Exhibit F

Exhibit G

Exhibit H

Exhibit I

Exhibit J

Exhibit K

Exhibit L

SCHEDULE 2