The City of Winnipeg’s legal team has asked for an additional $1.2 million to hire help to go through the “sheer volume” of paperwork surrounding the city’s Winnipeg police headquarters fraud case.
The team also alleges there may be as much as $24 million in fraudulent activity surrounding the case.
The city filed a statement of claim and notice of motion in January 2020, accusing a slew of people and businesses in relation to the construction of the Winnipeg Police Service’s new headquarters.
The city alleged 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.
Sheegl, and Caspian Construction have denied all allegations. None of the allegations have been proven in court.
While the city is seeking about $700,000 in damages just from Sheegl, the city’s Director of Legal Services Doug Brown said Tuesday they believe the city was defrauded by as much as $24 million, if not more.
“That’s a startling, frankly, starting point, of which I can accurately say to you that number has significantly increased.
“I can’t give you a final number at this point, but certainly that number has significantly increased.”
Brown said the team doesn’t anticipate needing more money to get through the accounting and discovery process.
According to the report, the city decided to sue after an initial review “identified over $20 million of contractor and subcontractor claims related to the Project that are not clearly documented or accounted for.”
“The legal and forensic work completed to date has identified a serious pattern of potential misconduct consistent with the allegations made in the City’s Statement of Claim. These matters require further forensic and legal review.”
The report says after the initial statement of claim for fraud, lawyers discovered new information that “suggests that the City paid more than 24 million dollars to Caspian … in connection with invoices of Fabca Projects Ltd. (“Fabca”). These invoices were variously described as relating to demolition, asbestos remediation and other matters.”
“None of the work described in the invoices was done by Fabca. It would appear that none of the 24 million dollars was ultimately paid to Fabca.”
Fabca was initially part of the city’s civil suit claim, but the city filed a notice of discontinuance against them last year.
The legal team said should one or more of the defendants for the civil case be found responsible for fraud around the building of the WPS HQ, it’s likely a judge would award costs to the city, recovering the legal fees.
However, that is not guaranteed, Coun. Brian Mayes pointed out.
The city has already spent $2.85 million on outside lawyers and forensic accounting, according to the report.
EPC passed the motion unanimously, and it will now to go council for approval.
The RCMP began an investigation into the matter in 2014 at the request of the province.
That investigation went cold in December of 2019 when Manitoba Justice said it would not be pursuing charges due to lack of evidence.
Despite that, the city went forward with a civil case against Sheegl, Caspian Construction and others, as it’s easier to prove a case in civil court than in a criminal court.
“The first is the burden of proof in a criminal case,” said University of Manitoba law professor Karen Busby last year.
“You have to prove it beyond a reasonable doubt. Whereas in a civil case, you just have to prove it on a balance of probabilities. That’s No. 1.
“No. 2, in a criminal case, the accused people have the right to silence. They don’t have to co-operate. They don’t have to say anything. But in a civil case, they do. And they have to produce documents on demand.
“And then thirdly, there could be differences in what exactly needs to be proven in terms of the elements of the alleged wrongdoing. So, you know, that the standard of a fiduciary and for a criminal charge could be different than the standard of a fiduciary for a civil allegation.”