City alleges more companies were part of 'scheme' to defraud taxpayers in Winnipeg police HQ project

The City of Winnipeg has found more companies and people it claims were involved in a scheme to defraud taxpayers in the construction of Winnipeg's police headquarters, according to court documents.

The city now wants to add those names to an ongoing lawsuit against dozens of other entities that it claims conspired to inflate and overchargefor work on the $214-million police headquarters project.

In a notice of motion filed on May 4, the city asked Manitoba Court of Queen's Bench Chief Justice Glenn Joyalfor leave in order to amend its statement of claim in the suit, originally filed in 2020.

Already named in the suit are police HQ contractor Armik Babakhanians andhis company, Caspian Construction, along with former City of Winnipeg chief administrative officerPhil Sheegl and dozens of other entities involved in the project.

Joyal ruled in March that Sheegl accepted a $327,200 bribe from Babakhanians as part of that project, whichsaw the city purchase a Canada Post warehouse and office complex and convert it into the new home for the Winnipeg Police Service.

Earlier this month, the judge ordered the former CAO to pay damages as part of a $1.1M judgment. Sheegl's lawyer says he plans to appeal.

In its May 4 court filings, the city said it gathered new evidence in April 2021 from the RCMP, which collected data from Caspian computer servers.

The city alleges in the new filings that police HQ subcontractor John Garcea, his wife, Mabel, and companies controlled by the Garceas defrauded the city through inflated invoices, billings for work that was not conducted at all, and billings for work that was entirely unrelated to the police HQ project.

The city also now claimsthat police HQ subcontractor AbescoLtd.billed the city for unrelated work on a Winnipeg church, a Winnipeg Transit garage and a police canine facility.

Neither Garcea or Abesco owner Wally Fast responded to requests for comment.

John Garcea is the principal of S&J Construction, a firm that has worked on significantprojects in Winnipeg, such as True North Square.

The city wants to add John and MabelGarcea and five of their companies S&J, Colour Design Decorating Inc., Strada Construction, Granite Concrete Services and Tuscany Construction to its list of defendants, referring to them in court filings as the "Garcea Group" defendants.

The city claims those companies were used by Garcea and his wife "to perpetrate a fraud on the City in furtherance of their own personal interests" and that it recently learned of "irregularities" in the Garcea Group's invoices and quotations Caspian submitted to the city in the course of the headquartersproject.

According to the documents, the city paid Caspian $2.66 million for berm work the company said Strada Construction Ltd. did on the police gun range on Wyper Road. The city claims that in fact, the work was done by another contractorBayView Construction for $1.4 million. Caspian also invoiced the city for that and was paid, the court documents say.

"Strada had no employees cleared to perform work at the Wyper facility during the currency of the project," wrote forensic accountant Victor Neufeld,who conducted an audit of records which was summarized in court filings.

The city says Caspian claimed expenses unrelated to the police HQ including billing for work done on Soul Sanctuary a church on Chevrier Boulevard that was built by a Caspian-controlled company at the same time work was conducted on the Winnipeg police HQ project.

That claim issupported by invoices from the Garcea-owned painting company, Colour Design, wrote Winnipeg CAO Michael Jack in an affidavit.

One of the invoices submitted as an exhibit in the case had the handwritten notation: "WPS $850,000 Soul $230,000," according to court documents.

In a statement,Soul Sanctuary lawyer Leilani Kaganwrote that the church "has no knowledge of the allegations made by the City in its most recent court filings."

"Moreover, the painting work at the Soul Sanctuary project was not done by Colour Design. [The church has] documentation and a warranty from another commercial painting company for the work completed at their premises," Kagan wrote.

The city also alleged in its May 4 notice of motion that itpaid Caspian $740,000 for additional concrete work on the police HQ project that was "supported by S&J quotations."

However, the "total known payments to S&J and Granite Concrete for project-related work were only approximately $50,000," the city claims.

Previous court filings in the city's lawsuit included an email exchange between Babakhanians and his son Shaun about John Garcea, the principal forS&J Construction.

That email exchange suggestedGarcea was looking for a way into the police gun range project, but later appeared concerned that if they asked Sheegl to intervene, city procurement officials may grow suspicious.

"He's got way too much hair on him and it will be way too easy for somebody to start drawing lines [between] Sheegl, Garcea and Caspian," Shaun Babakhanians said in an email to his fatherand a police HQ subcontractor.

Company documents show Strada was incorporated on Oct. 24, 2011, one day before the date of the first Strada invoice to Caspian for work conducted on the police HQ.

Court documents show Caspian paid Strada almost $1.2 million in 2012 and five dayslater, Strada paid Caspian the same amount.

Company billed for work conducted elsewhere: city

In the new court filing, the city also accuses Abesco Ltd. and its owner, Wally Fast, of defrauding taxpayers.

Caspian claimed expenses unrelated to the police HQ, supported by Abesco invoices, whichthe city paid, according to the latest filing.

"These non-project expenses included expenses for work done on the Soul Sanctuary project, the Winnipeg Transit Garage project and the K9 project," said the notice of motion.

About $1.9 million of the $2.6 million the city paid Caspian for Abesco work on the police HQ was actually spent elsewhere, the city's court filing claims.

Previous court documents include a 2013 email exchange between Armik Babakhanians and Abesco's Fast.

"Wally please call me important need to do progress for transit but you claim on police," Babakhanians told Fast in the email.

None of the city's allegations have been proven in court.

Prior to the city's civil lawsuit, the police headquarters project was the subject of two external audits and an RCMP fraud-and-forgery investigation.

That investigation, which spanned five years, ended in 2019 with no charges laid.

City alleges more companies were part of 'scheme' to defraud taxpayers in Winnipeg police HQ project

2 years ago

Duration 1:55

The City of Winnipeg has found more companies and people it claims were involved in a scheme to defraud taxpayers in the construction of Winnipeg's police headquarters, according to court documents.