Landlord cashed rent deposit cheque then wouldnt let me move in?

I signed a lease for a great house. I gave the landlord a $1000 rent deposit, in the form of a certified cheque. I also sent the cheque to her via courier, signature on delivery. She emailed me before I had sent the cheque (I didnt get the email till later) saying she had decided not to rent the house after all.

I tried to stop the courier from delivering the cheque, but it was too late. The landlady said she would return the package as soon as she got it (she sent me an email).

A few days later she sent me another email saying she had received a package from me (the cheque) and asked where I wanted it mailed to. I replied I wanted it sent back to the address on the package, and put the address in a PHONE message, and EMAIL, and another certified letter.

I never eceived the cheque back. That was over a month ago. I emailed her several times, no response. I emailed her again today, and told her I was contacting the federal police if I didn't get the deposit back. She sent me an email right away, saying she wanted to call the police beforehand to explain why she didn't send it back. She will NOT tell me if she cashed it or not (she did), and will not tell me what she has "to explain".

She also will not accept any phone calls from me. She cancelled the lease I had with her, because she says her job in another country fell through, and she no longer wants to move. But then sitll cashed the cheque.

Should I get a lawyer, or just contact the police to have them handle it? I told her I was going to be contacting the OPP (provincial police) as well as the federal government. She seems like she is panicking now.