New investigation opened

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This article was published 26/01/2017 (2793 days ago), so information in it may no longer be current.

RCMP have opened a second criminal investigation into the activities of the construction firm at the heart of a troubled civic project as a result of allegedly incriminating documents found at a warehouse fire last summer.

Meanwhile, civic officials have refused to say if they are reviewing the invoicing submitted by Caspian Construction for two other civic projects it was hired to construct: the South Osborne Transit garage and the Winnipeg police canine facility.

Affidavits filed with the court by the RCMP show investigators’ suspicions of Caspian’s involvement in the construction of the Canada Post mail processing plant adjacent to the Richardson International Airport escalated into a full-blown criminal investigation in February 2016.

Those suspicions were further enhanced this past summer by the discovery of documents found in a Regent Avenue warehouse, which revealed altered subcontractor invoices for work carried out at the mail-processing plant between 2008 and 2012.

The RCMP affidavit states investigators allege Caspian owner Armik Babakhanians and Pamela Anderson, the firm’s office and accounting manager, altered invoices submitted by subcontractors on the mail processing plant and then filed inflated invoices to Canada Post for the same work.

“The review showed that on some change orders, Canada Post is believed to have paid Caspian costs at an inflated rate, based on invoices which are believed to have been altered,” stated RCMP Sgt. Breanne Chanel in an affidavit filed with the court in August.

The original RCMP investigation into suspected fraudulent billing involved in the construction of the Winnipeg police headquarters on Graham Avenue has widened to include allegations of bribes and kickbacks to civic officials, including former CAO Phil Sheegl and former mayor Sam Katz.

RCMP are investigating Sheegl for breach of trust for allegedly having accepted a secret $200,000 payment from Babakhanians in exchange for helping his construction firm get the police-headquarters contract, and then splitting that amount with Katz.

No charges have been laid, and the RCMP investigation, which began in December 2014, is ongoing.

Babakhanians, when contacted at his firm’s McGillivray Boulevard office, refused to comment about the recent allegations involving Sheegl and Katz and the Canada Post project.

Sheegl and Katz could not be reached for comment. Katz has not responded to telephone and text messages. There was no answer at the door of his family’s home in the RM of Headingley.

Messages for Sheegl have not been returned. He was not at his Tuxedo home when the Free Press knocked on the door Friday afternoon.

The police-headquarters project escalated in cost from $135 million to $214 million, which prompted city council to order two independent audits and ultimately a majority of council in the summer of 2014 requested Manitoba Justice review the audit findings, which led to the RCMP being asked to investigate.

The RCMP said the Canada Post mail processing plant had an initial approved budget of $48.8 million, which climbed to $69.9 million as a result of changes carried out during construction.

Lawyer Robert Tapper, who represents Sheegl and Katz, said the allegations are unfounded and the result of sloppy work by the RCMP. Tapper confirmed Babakhanians paid Sheegl $200,000 but said it involved an Arizona real estate deal from 2011 where Babakhanians had acquired an interest in property there that was owned by Sheegl and Katz.

Caspian had also been awarded the contracts to construct the $22.6-million South Osborne Transit garage on Brandon Avenue and the $1.25-million WPS canine facility, adjacent to the west district police station on Dugald Road.

While the transit garage was built just under budget, earlier RCMP affidavits allege Babakhanians inflated invoices for the headquarters project in part to cover cost overruns on the transit garage project he was responsible for.

A civic spokeswoman said the city is co-operating with the RCMP investigation and would not comment on any concerns or possible reviews of the invoicing on the transit garage or the WPS canine facility projects.

While the RCMP investigation is ongoing, Chanel stated in her affidavit the RCMP expects to conclude its probe by the end of February or May of this year, when it will forward a brief to the Manitoba director of prosecutions for a decision on whether charges should be laid and against which individuals.

Chanel stated in an affidavit she filed with the court in August police became suspicious of Caspian’s work on Canada Post’s mail-processing plant in February 2016, when they found identical invoices for the same work but one marked “true” and the other marked “inflated.” She said she suspected, like the Winnipeg police-headquarters project, Caspian officials had altered the invoices from subtrades working on the mail-processing plant and inflated billings submitted to the Crown agency.

The RCMP affidavit disclosed they were led to the invoices for the Canada Post project following a fire June 19 at a Regent Avenue West warehouse. Winnipeg police arson investigators discovered several boxes of documents related to Caspian’s work on the mail-processing plant, which prompted them to contact the RCMP.

The warehouse is owned by a numbered company. A record search by the RCMP revealed Babakhanians is the president of the numbered company and its majority shareholder. The numbered company’s mailing address is the same as Caspian’s — 2245 McGillivray Blvd.

Chanel stated RCMP seized eight bankers boxes of documents relating to the Canada Post mail-processing project. The warehouse appeared to be essentially vacant, Chanel said, with the exception of the documents stored on the second floor. Some of the documents had been damaged by the fire and others damaged by water.

“The records appear to contain Caspian’s record of invoicing and balancing of accounts with subtrades from this project,” Chanel stated.

In a request for an order to seize the documents, an RCMP officer stated in an affidavit: “I believe that a search of the building located at 1001 Regent Ave. will afford evidence of the offences of fraud over $5,000 and falsification of books and documents and will support further investigation in this matter.”

Chanel said Canada Post officials told her on the mail-processing plant project, Caspian was entitled to additional pay when aspects of the project were changed during the construction phase: in addition to the true cost, Caspian was entitled to charge 10 per cent overhead and a further 10 per cent profit.

— with files from Mike McIntyre

aldo.santin@freepress.mb.ca