The RCMP have been tight lipped about their lengthy ongoing investigation into Caspian Construction, a Winnipeg-based contractor that was tasked with building Winnipeg's police headquarters.
But production order requests filed in court requesting further access to financial records have begun to reveal some of the allegations investigators are building a case around.
The RCMP has dubbed the multimillion-dollar fraud investigation Project Dalton. So far, investigators are alleging Caspian owner Armik Babakhanians, principal engineer with AAR Peter Chang and associate at GRC Architects Patrick Dubuc conspired to give $600,000 to a city project manager, Ossama AbouZeid, in exchange for influence in the awarding of contracts. Babakhanians is also accused of defrauding the city of more than $5,000. No charges have been formally filed.
Specifically, court documents obtained by The Journal of Commerce show that police allege they have evidence Babakhanians may have used inflated and altered subtrade invoices and quotes to defraud the city of millions of dollars for work that was done at costs less than his fraudulent submitted costs.
Police wrote they discovered that Mountain, a company controlled by Babakhanians, invoiced millions of dollars of services completed by other subtrades. According to an affidavit, police allege Mountain did not have employees nor had any Mountain employees ever been observed at the construction site.
Police also allege a "secret commission" was used for the hiring of key personnel. Triple D, an alleged shell consulting company, was formed by Chang, Dubuc, Babakhanians and Caspian's office manager Pamela Anderson. Court records show the secret commission aspect of the investigation is focused on disbursements from Triple D's contract for more than $1.3 million and an identified invoice from Dunmore Corporation to Mountain Construction for $100,000.
According to court records, through police investigation and previously granted production orders, investigators established that PJC Consulting, allegedly controlled by Chang, and PHGD, allegedly controlled by Dubuc, received $399,000 and $462,000 respectively by invoicing Triple D. Police have not been able to determine if Triple D, PJC and PHGD rendered any services.
"Dubuc, Chang and Amrik and AbouZeid have close personal associations that go beyond normal business relationships," wrote RCMP Const. Christopher Haskins in court documents. "I believe Armik used these connections to create an environment for their personal financial benefit through his criminal activities."
Caspian did not respond to requests for comment as of press time.
The police headquarters project first began attracting heat after it was hit with multiple negative audits. Back in 2009, the project was estimated to cost $135 million. But by 2013, costs had ballooned to $210 million.
"There is evidence to suggest that the city's failure to effectively manage the progress and quality of the design may have caused delays to Caspian," stated an audit in 2014 by KPMG.
The report went on to say the project was not completely compliant with the city's existing policies and the construction process was managed poorly. By that year the project had racked up 81 change orders amounting to nearly $20 million in extra costs.
"In our experience, this denotes a significant volume and degree of change during the course of design and construction," noted the report. "The effect of not proactively managing and acting upon change requests as they were received is that the pricing, review, approval or rejection of millions of dollars in changes were effectively deferred and not reported upon to committees of council for many months."
Police have also begun investigating another Winnipeg project by Caspian, a mail processing facility at 1870 Wellington Ave.
Caspian built the plant as part of a joint venture with Aecon Buildings. The RCMP said they are not investigating Aecon, but court records show the RCMP alleges Caspian also committed fraud on the Canada Post project.
Details of the RCMP's allegations were included in a request to a judge to seek more financial records to continue following the trail of money.