The City of Winnipeg states the contractor in cost of constructing the Winnipeg Law enforcement Company headquarters used the venture to settle outstanding money owed with subtrades for dollars owed on other construction projects, new courtroom filings reveal.
They also say lead contractor Caspian Design modified invoices to shell out for “personalized residence advancement tasks.”
“We see instances of subtrades staying paid by [Caspian] for intended perform a lot of months, and in truth sometimes several years, immediately after the get the job done was concluded (if at any time the perform was accomplished) and just after subtrade invoices have been issued to the city,” Town of Winnipeg attorneys Michael Finlayson and Gabrielle Lisi wrote in a brief filed in the Manitoba Courtroom of Queen’s Bench on June 13.
The town released a civil lawsuit against dozens of people today and providers involved in the police HQ design challenge, which include lead contractor Caspian and its owner, Armik Babakhanians, in January 2020.
The city alleges a scheme to inflate and overcharge the city for construction costs through fraudulent estimates and invoices, altered prices from subcontractors and kickbacks.
The project was accomplished in 2016, a long time at the rear of agenda and far more than $79 million more than finances. The RCMP launched a felony investigation into the task in 2014, which was closed in late 2019 with no prices laid.
The city’s most recent court filing says it found a lot of irregularities in invoicing and payment of subtrades concerned in the police headquarters undertaking by a team referred to as the Caspian defendants.
That group consists of Caspian Design, Caspian Projects Inc., and related businesses Mountain Building, Jags Improvement, Brooke Holdings Ltd., Logistic Holding Inc. and Jaw Enterprises Inc.
It also includes Armik Babakhanians, his wife, Jenik, his son Shaun, and office environment supervisor Pam Anderson.
“They paid for residential assignments and their individual private dwelling improvement jobs done by subtrades by modifying invoices to make them look task-relevant,” wrote Finlayson and Lisi.
Create-offs ‘commonplace’ at Caspian: metropolis
The city isn’t going to specify which residence renovations it really is referring to.
Even so, in 2014 look for warrant files, RCMP alleged a previous accounting assistant employed by Caspian advised law enforcement invoices have been billed to the police HQ project that experienced almost nothing to do with the work currently being finished. That included a $25,000 cheque for a swimming pool at a dwelling that belonged to Shaun Babakhanians, RCMP alleged.
The Mounties also reported that invoices for renovations to a private home owned by a person of the customers of the Babakhanians spouse and children were being billed to police headquarters.
“Caspian at times identified as the organizations back … [to] have them regulate or reissue the invoices” so it would clearly show the law enforcement headquarters occupation code, the former accounting assistant explained to investigators. She also said Caspian questioned contractors to “delete the house handle,” the 2014 lookup warrant documents mentioned.
The courtroom filings say the Caspian defendants appeared to settle money owed with subtrades from prior jobs by altering invoices, “with or with out subtrade involvement” and publishing them to the town.
In earlier courtroom filings, the town stated it obtained an e-mail trade involving Caspian personnel Peter Giannuzzi Jr. and Shaun Babakhanians.
In a spreadsheet connected to that correspondence, Giannuzzi referred to, between other points, “insignificant home enhancements [being] prepared off on projects” and “undertaking revenue” of about $12.5 million similar to the law enforcement headquarters challenge.
“If Mr. Giannuzzi is to be believed, producing off own house enhancements on ongoing … tasks was commonplace at [Caspian],” Finlayson and Lisi wrote in the June 13 quick.
It was in reality “so commonplace that Mr. Giannuzzi, astonishingly, then appears to complain that some of his particular house advancements were being not allowed to be prepared off on [Caspian’s] ongoing assignments,” they wrote.
None of the allegations have been analyzed in court.
HQ-associated costs, non-connected mixed: city
The most recent court docket filings also allege Caspian applied the law enforcement HQ project to shell out off exceptional money owed owed to subcontractors for other positions.
As an example, the metropolis alleges that nine of 10 invoices from subcontractor Abesco which were claimed by Caspian and paid by the town “show up to mix [police HQ] project-similar expenses (approx. $800,000) with $1.55 million for non-challenge-associated expenditures,” Finlayson and Lisi wrote. All those other initiatives provided a Winnipeg Transit garage and a law enforcement canine facility, the town suggests.
The city’s brief states a handwritten notation on one of all those invoices study, “This was produced as per Armik’s ask for so we could obtain payment for Transit Garage.”
The new court files say “a comparable pattern can be noticed” with a team of defendants collectively referred t
o as the “Garcea Team defendants.” In certain, the metropolis details to an bill from Colour Style and design, a single of the defendants in that team.
In that invoice, $230,000 relating to function on Soul Sanctuary — a church on Chevrier Boulevard that was built by a Caspian-controlled corporation at the very same time function was executed on the Winnipeg law enforcement HQ project — was claimed by Caspian and paid by the city as part of the law enforcement HQ task, the town alleges.
City would like economic paperwork
Acquiring a entire photo of payments to subtrades is “important” to fully grasp the character and extent of alleged fraudulent statements to the town, the courtroom files say.
The town is in search of a courtroom order persuasive the Caspian defendants and consultants that labored on the law enforcement HQ to provide personalized and company revenue tax returns, banking documents and money statements.
“The Caspian defendants are now trying to use the tangled website that they established to defraud the metropolis as a defend by which to retain appropriate proof from the town and this courtroom,” wrote Finlayson and Lisi.
They say the metropolis is now attempting to “disentangle that world-wide-web” and will demand economical paperwork to do so.
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