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City launches massive lawsuit alleging fraud, kickbacks over Winnipeg Police Headquarters

City of Winnipeg looks for information with suit over police headquarters
City of Winnipeg Chief Corporate Services Officer Michael Jack speaks to media about the city's latest civil action over the construction of the Winnipeg Police Service headquarters.

The City of Winnipeg has launched a second lawsuit over the police headquarters project, alleging massive fraud and large kickbacks.

The city filed a statement of claim and notice of motion Monday accusing a slew of people and businesses in relation to the construction of the Winnipeg Police Service’s new headquarters.

READ MORE: No charges to be laid in building of Winnipeg Police Service headquarters, Canada Post plant

The city is alleging the contractors behind the venture, Caspian Construction, along with dozens of others including former CAO Phil Sheegl, orchestrated a wide conspiracy to inflate prices and quotes and ultimately drive up the cost of the project.

“Today’s legal actions are against a number of parties,” said Winnipeg Mayor Brian Bowman at a press conference Monday afternoon.

“(They) include serious allegations of fraudulent activity and a complex kickback scheme.”

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Read the full statement of claim:

This lawsuit alleges Caspian Construction, its owner Armik Babakhanians, a number of its subcontractors and employees conspired to implement “a scheme to defraud the city and thereby obtain monies under false pretenses.”

It also claims contractors received “kickbacks”, along with Sheegl and his companies to the tune of $527,000.

The city has requested damages including punitive damages, but has not named an amount.

“Depending on how much we end up discovering through the course of this litigation, there are going to be any number of things that are going to look like justice or accountability,” said Michael Jack, Winnipeg’s chief corporate services officer.

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“So I’m not sure exactly what that’s going to look like. We have yet to have all the facts revealed to us just to indicate how deep the problem goes and how broad it was.”

Neither Caspian Construction, Sheegl or any other defendants named in the lawsuit have filed a statement of defence. There are eight “John Does” listed who could be included as evidence comes in.

None of the allegations by the city have been proven in court. Global News has reached out to Caspian Construction and Sheegl for comment.

This is the second lawsuit launched against Caspian Construction by the city. The first, launched in 2018, alleged a breach of contractual duties that lead to a ‘number of defects and deficiencies’ in the WPS Headquarters.

That lawsuit is still pending.

READ MORE: City suing builders behind Winnipeg Police headquarters

The move comes less than a month after Manitoba Justice announced it would not be pursuing charges due to a lack of evidence.

The province then said a public inquiry wasn’t warranted either because a police investigation into the issue was “comprehensive” enough.

“To be clear, the provincial and municipal governments should be standing shoulder to shoulder to protect taxpayers on something as serious as the police headquarters scandal,” Bowman said.

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“If the provincial government is not prepared to take action to protect taxpayers in response to the police headquarters scandal, I can assure Winnipeggers that their municipal government will use any and all legal means under its authority to seek accountability.”

RCMP began a full investigation in 2014 after the province asked them to review an audit of the $210-million project.

The city has demanded all files that the RCMP collected over the course of their investigation.

Jack said in the absence of criminal charges, there’s a chance those files could be returned back to their owners.

City of Winnipeg looks for information with suit over police headquarters
City of Winnipeg looks for information with suit over police headquarters

“We know there is relevant material as part of that seizure that we need to see, that needs to be part of this litigation,” Jack said.

The city said it agreed to an original contract price of $135 million, which climbed to more than $156 million by 2013, and currently sits at about $214 million.