The Metropolis of Winnipeg says the contractor accountable for constructing the Winnipeg Police Service headquarters used the undertaking to settle excellent money owed with subtrades for cash owed on different development tasks, new courtroom filings reveal.
In addition they say lead contractor Caspian Building modified invoices to pay for “private dwelling enchancment tasks.”
“We see situations of subtrades being paid by [Caspian] for supposed work many months, and certainly typically years, after the work was accomplished (if ever the work was accomplished) and after subtrade invoices have been issued to 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 corporations concerned within the police HQ development undertaking, together with lead contractor Caspian and its proprietor, Armik Babakhanians, in January 2020.
Town alleges a scheme to inflate and overcharge town for development prices by means of fraudulent quotes and invoices, altered quotes from subcontractors and kickbacks.
The undertaking was accomplished in 2016, years delayed and greater than $79 million over price range. The RCMP launched a legal investigation into the undertaking in 2014, which was closed in late 2019 with no expenses laid.
Town’s newest courtroom submitting says it discovered many irregularities in invoicing and cost of subtrades concerned within the police headquarters undertaking by a bunch known as the Caspian defendants.
That group consists of Caspian Building, Caspian Tasks Inc., and linked firms Mountain Building, Jags Improvement, 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 dwelling 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 would not specify which dwelling renovations it is referring to.
Nevertheless, in 2014 search warrant paperwork, RCMP alleged a former accounting assistant employed by Caspian instructed police invoices have been charged to the police HQ undertaking that had nothing to do with the work being performed. 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 personal dwelling owned by one of many members of the Babakhanians household have been charged to police headquarters.
“Caspian at occasions referred to as the businesses again … [to] have them modify or reissue the invoices” so it could present the police headquarters job code, the previous accounting assistant instructed investigators. She additionally stated Caspian requested contractors to “delete the home deal with,” the 2014 search warrant paperwork stated.
The courtroom 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 town.
In earlier courtroom filings, town stated it obtained an e-mail change between Caspian worker Peter Giannuzzi Jr. and Shaun Babakhanians.
In a spreadsheet connected to that correspondence, Giannuzzi referred to, amongst different issues, “minor dwelling enhancements [being] written off on tasks” and “undertaking earnings” of roughly $12.5 million associated to the police headquarters undertaking.
“If Mr. Giannuzzi is to be believed, writing off private dwelling enhancements on ongoing … tasks was commonplace at [Caspian],” Finlayson and Lisi wrote within the June 13 temporary.
It was in actual fact “so commonplace that Mr. Giannuzzi, astonishingly, then seems to complain that a few of his private dwelling enhancements weren’t allowed to be written off on [Caspian’s] ongoing tasks,” they wrote.
Not one of the allegations have been examined in courtroom.
HQ-related prices, non-related mixed: metropolis
The most recent courtroom filings additionally allege Caspian used the police HQ undertaking to repay excellent money owed owed to subcontractors for different jobs.
For example, town alleges that 9 of 10 invoices from subcontractor Abesco which have been claimed by Caspian and paid by 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, town says.
Town’s temporary says a handwritten notation on a kind of invoices learn, “This was generated as per Armik’s request so we might obtain cost for Transit Storage.”
The brand new courtroom paperwork say “an analogous sample might be noticed” with a bunch of defendants collectively known as the “Garcea Group defendants.” Particularly, town factors to an bill from Color Design, one of many defendants in that group.
In that bill, $230,000 referring to work on Soul Sanctuary — a church on Chevrier Boulevard that was constructed by a Caspian-controlled firm on the identical time work was performed on the Winnipeg police HQ undertaking — was claimed by Caspian and paid by town as a part of the police HQ undertaking, town alleges.
Metropolis desires monetary paperwork
Getting a full image of funds to subtrades is “important” to grasp the character and extent of alleged fraudulent claims to town, the courtroom paperwork say.
Town is searching for a courtroom 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 net that they created to defraud town as a protect by which to maintain related proof from town and this courtroom,” wrote Finlayson and Lisi.
They are saying town is now making an attempt to “disentangle that net” and would require monetary paperwork to take action.