The Metropolis of Winnipeg says the contractor in command of constructing the Winnipeg Police Service headquarters used the challenge to settle excellent money owed with subtrades for cash owed on different building tasks, new court docket filings reveal.
In addition they say lead contractor Caspian Building modified invoices to pay for “private residence enchancment tasks.”
“We see cases of subtrades being paid by [Caspian] for supposed work many months, and certainly generally years, after the work was accomplished (if ever the work was accomplished) and after subtrade invoices have been issued to the town,” Metropolis of Winnipeg legal professionals Michael Finlayson and Gabrielle Lisi wrote in a short filed within the Manitoba Courtroom of Queen’s Bench on June 13.
Town launched a civil lawsuit towards dozens of individuals and firms concerned within the police HQ building challenge, together with lead contractor Caspian and its proprietor, Armik Babakhanians, in January 2020.
Town alleges a scheme to inflate and overcharge the town for building prices via fraudulent quotes and invoices, altered quotes from subcontractors and kickbacks.
The challenge was accomplished in 2016, years delayed and greater than $79 million over price range. The RCMP launched a prison investigation into the challenge in 2014, which was closed in late 2019 with no prices laid.
Town’s newest court docket submitting says it discovered many irregularities in invoicing and cost of subtrades concerned within the police headquarters challenge by a bunch known as the Caspian defendants.
That group consists of Caspian Building, Caspian Initiatives Inc., and related firms Mountain Building, Jags Growth, Brooke Holdings Ltd., Logistic Holding Inc. and Jaw Enterprises Inc.
It additionally consists of Armik Babakhanians, his spouse, Jenik, his son Shaun, and workplace supervisor Pam Anderson.
“They paid for residential tasks and their very own private residence enchancment tasks carried out by subtrades by modifying invoices to make them look project-related,” wrote Finlayson and Lisi.
Write-offs ‘commonplace’ at Caspian: metropolis
Town does not specify which residence renovations it is referring to.
Nonetheless, in 2014 search warrant paperwork, RCMP alleged a former accounting assistant employed by Caspian informed police invoices had been charged to the police HQ challenge that had nothing to do with the work being completed. That included a $25,000 cheque for a swimming pool at a home that belonged to Shaun Babakhanians, RCMP alleged.
The Mounties additionally stated that invoices for renovations to a non-public residence owned by one of many members of the Babakhanians household had been charged to police headquarters.
“Caspian at occasions referred to as the businesses again … [to] have them regulate or reissue the invoices” so it will present the police headquarters job code, the previous accounting assistant informed investigators. She additionally stated Caspian requested contractors to “delete the home deal with,” the 2014 search warrant paperwork stated.
The court docket filings say the Caspian defendants appeared to settle money owed with subtrades from prior tasks by altering invoices, “with or with out subtrade involvement” and submitting them to the town.
In earlier court docket filings, the town stated it obtained an e mail change between Caspian worker Peter Giannuzzi Jr. and Shaun Babakhanians.
In a spreadsheet hooked up to that correspondence, Giannuzzi referred to, amongst different issues, “minor residence enhancements [being] written off on tasks” and “challenge income” of roughly $12.5 million associated to the police headquarters challenge.
“If Mr. Giannuzzi is to be believed, writing off private residence enhancements on ongoing … tasks was commonplace at [Caspian],” Finlayson and Lisi wrote within the June 13 temporary.
It was actually “so commonplace that Mr. Giannuzzi, astonishingly, then seems to complain that a few of his private residence enhancements weren’t allowed to be written off on [Caspian’s] ongoing tasks,” they wrote.
Not one of the allegations have been examined in court docket.
HQ-related prices, non-related mixed: metropolis
The most recent court docket filings additionally allege Caspian used the police HQ challenge to repay excellent money owed owed to subcontractors for different jobs.
For example, the town alleges that 9 of 10 invoices from subcontractor Abesco which had been claimed by Caspian and paid by the town “seem to mix [police HQ] project-related prices (approx. $800,000) with $1.55 million for non-project-related prices,” Finlayson and Lisi wrote. These different tasks included a Winnipeg Transit storage and a police canine facility, the town says.
Town’s temporary says a handwritten notation on a type of invoices learn, “This was generated as per Armik’s request so we may obtain cost for Transit Storage.”
The brand new court docket paperwork say “an identical sample could be noticed” with a bunch of defendants collectively known as the “Garcea Group defendants.” Particularly, the town factors to an bill from Color Design, one of many defendants in that group.
In that bill, $230,000 regarding work on Soul Sanctuary — a church on Chevrier Boulevard that was constructed by a Caspian-controlled firm on the identical time work was carried out on the Winnipeg police HQ challenge — was claimed by Caspian and paid by the town as a part of the police HQ challenge, the town alleges.
Metropolis needs monetary paperwork
Getting a full image of funds to subtrades is “important” to grasp the character and extent of alleged fraudulent claims to the town, the court docket paperwork say.
Town is in search of a court docket order compelling the Caspian defendants and consultants that labored on the police HQ to supply private and company earnings tax returns, banking data and monetary statements.
“The Caspian defendants are actually making an attempt to make use of the tangled internet that they created to defraud the town as a protect by which to maintain related proof from the town and this court docket,” wrote Finlayson and Lisi.
They are saying the town is now making an attempt to “disentangle that internet” and would require monetary paperwork to take action.