It all started last Sept. 23 in the lobby of a fashionable Toronto condominium when Sidney Jaffe, a wealthy, well-known Canadian businessman and patron of the arts, returned from his afternoon run. A man walked up to him, flashed a gold badge, and demanded that he go to police headquarters for questioning.

It was a ruse that, for Jaffe, ended in a Florida prison.

As it turned out, the man was not a Toronto policeman. He was an international bounty hunter hired by a Jacksonville, Fla., bail company about to forfeit $137,000 in bail money after Jaffe failed to appear for trial on land fraud charges.

Within a few hours, Jaffe had been whisked across the border at Niagara Falls, shoved into a rented Lear Jet and flown to Florida for trial. Today, he is serving a 35-year sentence for land fraud.

While the state of Florida got its man, the Canadian government is furious.

The kidnaping violated treaties between the United States and Canada dating back to the 1840s. The only legal way the United States could have brought Jaffe back to Florida for trial was through a formal extradition proceeding.

Florida law enforcement authorities will not discuss the case, they say, because it is pending in the courts.

Gerry Shannon of the Canadian Embassy here says the Jaffe controversy is viewed by his government as "very serious. We don't hold any brief for Jaffe as an individual. He has been convicted of a crime . . . . What we are worried about is the precedent. The question is whether a bounty hunter can cross a national border and abduct a citizen."

Shannon said the state of Florida never attempted to go through regular channels to have Jaffe legally extradited and that his government wants Jaffe returned to Canada.

Martin Mendelsohn, a Washington, D.C., lawyer representing Jaffe, asks how the United States would respond if other countries--the Soviet Union or Iran, for instance--started kidnaping Americans accused of crimes in those countries. "What if the ayatollah decided Bruce Laingen was a criminal and sent two bounty hunters over from Tehran? How do you think the U.S. would like that?"

T. Michael Peay, the U.S. State Department lawyer working on the case, said he could not discuss it. Murray R. Stein, the U.S. Justice Department lawyer assigned to the case, also refused comment on the case or on the legal rights of bounty hunters.

Timm Johnsen, the bounty hunter who returned Jaffe to Florida, made $13,700, 10 percent of the bail. In court, he bragged that he is an accomplished bounty hunter and has returned fugitives from 21 foreign countries.

But he didn't bargain on the wrath of the Canadian government. Today, he is out on bail while he appeals a U.S. magistrate's ruling that he should be returned to Canada to stand trial for kidnaping.

Daniel Kear, a Fairfax County man who acted as Johnsen's driver, is also fighting extradition by the Canadians. A U.S. magistrate in Virginia has also concluded that he should be extradited to Canada. Kear is out on bail while he decides whether to appeal or surrender for extradition.

Neither Johnsen nor Kear would return phone calls. A lawyer for Johnsen's bonding company also refused to comment. Johnsen said in court that he believed his activities were legal. Florida judicial officials have not commented on whether they consider Jaffe's abduction a proper means of returning him for trial.

The case has generated a flurry of high level diplomatic communications between the United States and Canada. The Jaffe matter was discussed at a meeting here last week between Jean Chretien, Canada's minister of justice, and Attorney General William French Smith. The Canadian press has been filled with angry stories and editorials on the case.

"The cowboys and Indians approach to law enforcement seems to be alive and well in the United States," the Toronto Star said in an editorial in February. "If it works there, fine. But when bounty hunters, hot on the trail of a fugitive from American justice, choose to ignore international boundaries and import such tactics here--breaking Canadian law in the process--Canada not only has a right but a duty to protest."

Jaffe, 57, was born in New Jersey and began doing business in Canada in 1956. He had been living full-time in Canada since 1966 and became a landed immigrant in 1971, a citizen in June, 1981.

In a telephone interview from the state prison in Avon Park, Fla., Jaffe described himself as an international investor who has been involved in a number of businesses including land development, financing and foreign currency trading.

Jaffe says that in 1976 he took over a financially troubled land development project in Putnam County, Fla., south of Jacksonville. He claims his problems started when he issued interim deeds to customers that did not provide clear title to the land. He said he planned to provide the final deeds with clear title within a legal time period.

In 1980 he was charged with 28 counts of selling improper land deeds. Investigators claimed he had collected at least $1.6 million by signing the illegal deeds, that most of the money was missing and that the lots are still unimproved. Jaffe has been sued separately by many of the deed holders.

Jaffe says that when the "policeman" approached him in Toronto, he assumed it was just some more routine questioning on the Florida case. There was a driver waiting outside in a blue station wagon.

But shortly after he got in the car, Jaffe said, he realized something peculiar was going on. The door handles had been removed from the inside. "I rolled down the window and started screaming, 'Help, police, I'm being kidnaped.' "

He says Johnsen and Kear beat him with an iron pipe, pulled him back in and handcuffed him. As they drove around, he said, they continued to beat him with the pipe and warned him, "Keep this up and you'll have a heart attack. It makes no difference to us if we deliver you dead or alive." Eventually he was driven to the Niagara Falls border crossing.

The three crossed the Canadian side of the border without incident. Jaffe did not indicate to Canadian officials that he was being kidnaped. "Everybody asks why I didn't say anything," he said. "I had been beaten twice, had my life threatened several times. Also they said they'd hurt my daughter. I also didn't know who I was dealing with, whether they were gangsters or the Mafia."

Johnsen has denied in court that Jaffe was beaten.

On the American side, Jaffe persuaded Johnsen and Kear to allow him to call home to tell his family he was all right. After his phone call, his family alerted the local police from the American side of the border who surrounded the plane, but after a short discussion with the bounty hunters, the plane was allowed to leave. The content of their conversation is expected to be part of the evidence in the kidnaping trial.

Jaffe says that he never really took the charges very seriously, not when he was arrested for land fraud in 1980, not even in the Lear Jet as the bounty hunters sat drinking glasses of vodka to celebrate their catch.

"I laughed, I thought they can't be serious," he said. "Obviously, I was wrong."

Jaffe said he missed his scheduled trial date because he had received a concussion in a fall playing basketball and had letters from two doctors saying he could not travel.

"I wasn't trying to avoid the trial. Yes, I was in Canada, but that's where I live. I never hid. I was never in hiding," he said.

He thought that at the worst he would receive a fine and a suspended sentence, but Florida Circuit Judge Robert Perry sent him to jail for 35 years and fined him $150,000.

He believes he may have been singled out as an example because he was from out of state and because he had attempted to have the trial transferred into federal court where he believed he could get a fairer trial than in a Florida state court.

His lawyers are appealing the conviction, but Jaffe is still in prison because he cannot post the $3 million bail that has been set.

He called the Putnam County, Fla., justice system "a throwback to the Middle Ages," and said he will continue to fight.