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A New York attorney specializing in tax law, under investigation by a U.S. grand jury for renting two underage girls from their mother for sex, was arrested on an immigration warrant last week in Grimsby by Niagara Region police but then released.

James Colliton, 42, formerly with top-shelf law firm Cravath, Swaine & Moore in New York City, was picked up last Friday by local police, the Toronto Fugitive Squad and immigration officials, Niagara Regional Police Detective Sergeant Bob Jackson said yesterday.

But because it was an immigration matter involving him being unlawfully in the country, he was taken into the custody of Canadian immigration officials.

“If the offence was in the United States, we don’t have jurisdiction,” said Jackson. “We don’t arrest people for offences that happen (there.)”

Last night several American media outlets were reporting that Colliton had been handed over to Department of Homeland Security officials at the Rainbow Bridge in Niagara Falls, New York by Canadian officials. Canadian Border Services and immigration officials could not be reached last night to confirm the reports.

New York City police officers who went to Colliton’s apartment yesterday found a note asking them to contact his lawyer.

Barbara Thompson, a spokesperson for the Manhattan District Attorney said Colliton is officially considered a fugitive.

Colliton was in Canada while a grand jury, which only made public the charges against him yesterday, was investigating allegations that he used two teenage sisters aged 15 and 13, as prostitutes in his Manhattan apartment.

Thompson said the charges against Colliton involved incidents that dated back to the summer of 2000.

The indictment charges that Colliton gave the girls alcohol and marijuana, and the paid the young girl to have sex with him between 2000 and 2004.

In late 2004, the indictment charges, the 15-year-old girl’s sister - then 13 - also moved into Colliton’s apartment with her mother’s permission.

Although the 13 year old moved back to her mother’s place, her mother then sent her back to Colliton’s apartment who then allegedly began a sexual relationship with her that lasted for more than a year.

The charges state that Colliton engaged in oral, anal and vaginal intercourse with the younger girl approximately five times a month - and paid fees to the mother based on the sex acts he was committing with her daughter.

Colliton met the girls’ 38-year-old mother in 2004 and began to pay her money to continue having access to her daughters.

The mother, whose name has not been released, faces charges of promoting prostitution and endangering the welfare of a child.

The investigation began after the 13-year-old, who is now 14, told New York City Administration of Children’s’ Services about her mother and what happened.

Colliton also faces charges of bribing a witness and urging the witness to lie about him, with him allegedly going as far as sending them money.

The law firm Colliton worked for is considered to be one of America’s top law firms, which has as regular clients companies such as IBM and Time Warner.