Police HQ contractor accused of altering invoices to settle old debts

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This article was published 23/06/2022 (819 days ago), so information in it may no longer be current.

Caspian Construction, the company at the centre of a city lawsuit involving the beleaguered Winnipeg police headquarters project, altered invoices to settle old debts with its subcontractors, newly filed court documents allege.

“In short, there are many irregularities in the Caspian defendant’s invoicing and the payment of subtrade invoices on the (project),” City of Winnipeg lawyers Michael Finlayson and Gabrielle Lisi alleged in a motion brief filed on June 14.

“They appeared to settle debts with subtrades from prior projects by altering invoices with or without subtrade involvement, and submitting them to the city,” the lawyers wrote.

The headquarters project was budgeted at $137.1 million in 2011 and ballooned to $210 million by the time it was completed five years later.

After a lengthy RCMP investigation resulted in no charges, the city filed a lawsuit against Caspian Construction in January 2020, alleging the contractor and two dozen other defendants conspired and “schemed” to inflate the cost of the project for their own benefit.

In the case of one subcontractor, the city alleges, nine of 10 invoices submitted to and paid by the city “appear” to combine $800,000 in project-related costs with $1.5 million in non-project related costs, including the Winnipeg Transit Garage and police canine unit facility.

One invoice included a hand-written note that read: “This was generated as per (Caspian president ) Armik (Babakhanians’) request so we could receive payment for Transit Garage.”

The city alleges in last week’s motion that Caspian paid for renovations to employees’ homes completed by subcontractors by modifying invoices to make them appear “project related.”

“They paid for invoices sometimes years after invoices were issued, and were receiving invoices from subtrades years after subtrades’ last work on the project,” Finlayson and Lisi wrote.

The motion does not detail specific renovation projects. An RCMP search warrant for Caspian Constuction’s McGillivray Boulevard headquarters, executed in December 2014, included the allegations of a “whistleblower” who claimed Caspian and others altered invoices to pay for “personal expenses” of the Babakhanians family, including expensive home renovations.

“One of the houses was being renovated by the same subcontractor friends that had worked on the (police headquarters) project,” a whistleblower told police. “Caspian could pass off those invoices that were coming from legit sub trades. Caspian at times called the companies back and have them adjust or reissue the invoices so it would show (as work completed for the headquarters project). Caspian would also have them delete the house address where the work was completed.”

The city is seeking a ruling from the court ordering that Caspian and other defendants turn over additional relevant financial records.

“If the Caspian defendants’ invoicing practices were more orthodox, one might reasonably be able to narrow down the relevant invoicing to the period during which they were involved in (the project),” Finlayson and Lisi wrote. “However, there is nothing orthodox about how the Caspian defendants managed the project or their finances. These irregularities suggest the payments to subtrades and to other Caspian-controlled entities may have continued well beyond the project.”

A trial in the matter is set to be heard in 2024.

dean.pritchard@freepress.mb.ca

Dean Pritchard
Courts reporter

Someone once said a journalist is just a reporter in a good suit. Dean Pritchard doesn’t own a good suit. But he knows a good lawsuit.

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