Fraud, fake documents alleged in Winnipeg police HQ investigation, say court documents
CBC News | Posted: February 29, 2016 5:38 PM | Last Updated: March 1, 2016
Caspian Construction alleged to have cheated city out of thousands of dollars
Fraud and forgery allegations are at the centre of the RCMP investigation into the construction of the Winnipeg police headquarters, according to court documents unsealed today and obtained by CBC News.
The documents that authorized the search of Caspian Construction's headquarters on McGillivray Boulevard in December 2014 were unsealed after CBC News filed a motion last year to make them public.
Caspian is the company hired by the city to build the new police headquarters on Graham Avenue.
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"Information has been received that there were numerous instances of improper invoicing and payments in regards to services rendered during the construction of WPS [Winnipeg Police Service] headquarters," RCMP Const. Marc Allard stated in the documents.
"Invoices are said to have been improperly associated to the WPS building when in fact the work was either done at other city properties, private properties or was not done at all."
Two witnesses who either work or had worked at Caspian provided statements to police detailing what Allard alleged were fraudulent invoicing and accounting activities, according to the information to obtain the warrant.
In the documents, Allard alleges that Caspian owner Armik Babakhanians, between 2011 and 2014, "did unlawfully by deceit, falsehood or other fraudulent means" defraud the City of Winnipeg of money exceeding $5,000. He also says Babakhanians "did knowingly use a forged document" as if it were genuine.
A former accounting assistant who was employed by Caspian between March and August 2013 told police "invoices were charged to the Winnipeg police headquarters that had nothing to do with the work being done." These include:
- Swimming pool — A cheque for $25,000 written for a swimming pool for a house that belongs to Shaun Babakhanians, Armik's son, according to court documents. A second accounting assistant, however, told police the swimming pool was not charged to the police headquarters, but to another Caspian job.
- House renovation — Invoices for renovations to a private home owned by one of the members of the Babakhanian family were charged to police headquarters. "Caspian at times called the companies back and have them adjust or reissue the invoices" so it would show the police headquarters job code, the former accounting assistant said. She also said Caspian asked contractors to "delete the house address," according to the documents.
- Septic tank — septic tank cleaning at a Babakhanians property on Wilkes Avenue was allegedly charged to police headquarters, court documents say. The second accounting assistant at Caspian told police this expense may have been a room and board cost for a Calgary man who lived in the property while working on the police headquarters project.
- Cleaning — SAB Cleaning, owned by Shaun Babakhanians, invoiced the police headquarters "once in a while" but according to the former employee, "did not have any employees, expenses or do any cleaning."
The former accounting assistant told RCMP she believes more than half of the invoices were altered during her employment at Caspian. She added "the invoices that did not appear right compared to the purchase orders where they were charged more than the actual cost was," according to court document.
She said she disclosed her concerns to the Winnipeg Police Service but did not give investigators a date. RCMP requested information about her contact with police but it did not receive a response from WPS.
A Winnipeg police spokesperson said they are unable to comment.
"It would be inappropriate for the Winnipeg Police Service to discuss the steps we did take. This is an ongoing investigation. We will continue to work with the RCMP in regards to any component of their investigation," the spokesperson said.
Allard also alleges in the court documents that Babakhanians and a Caspian manager committed forgery by creating false invoices.
The witnesses interviewed allege Caspian was billing expenses for the Winnipeg Transit Garage in Fort Rouge to the Winnipeg Police Headquarters. Caspian was hired by the city to build a new bus parking and servicing garage in 2012 in a separate contract from the police headquarters.
One contractor told investigators $53,800 of an $253,000 invoice "was for work actually completed at the Winnipeg Transit Garage."
When contacted by CBC News, Babakhanians declined to comment and referred questions to his lawyer.
Lawyer Patrick Riley could not immediately be reached for comment.
The statements in the court documents are allegations that have not been proven in court.
An RCMP spokesperson told CBC News charges have not been laid in the case and the investigation is continuing.
"At times, the RCMP had 14 investigators assigned to this case in addition to a number of specialized support staff. This is a large and extremely complex case that has already involved over 80 interviews," the spokesperson said in an email.
"RCMP investigators are also reviewing tens of thousands of pages of hard copies seized throughout the investigation as well as over 200,000 emails."
Extensive criminal investigation
The RCMP have been conducting an extensive criminal investigation of the new Winnipeg Police Service headquarters project, which involved massive renovations to the former Canada Post building on Graham Avenue.
The project was millions of dollars over budget and plagued by delays. It was also the subject of an external audit ordered by the City of Winnipeg. The audit outlined a number of instances of mismanagement.
Last year, CBC News applied to the courts to have the information in the search warrant for Caspian's headquarters made public. The RCMP and the attorney general of Canada sought to have an order sealing the material remain in place.
At the time, Judge Dale Schille ruled against the CBC's application, saying that unsealing the information could jeopardize the investigation.
However, Schille also ruled that sealing order cannot remain in place open-ended. As a result, the documents were unsealed on Monday.