The City of Winnipeg will make its case in court Monday for access to documents obtained by the RCMP during their five-year investigation into the construction of the Winnipeg Police Service headquarters.
The city is suing more than two dozen individuals and companies involved in the construction project for allegedly conspiring to defraud taxpayers through kickbacks and a fraudulent invoicing scheme.
The lawsuit names 27 defendants, including contractors, consultants and the City of Winnipeg’s former chief administrative officer, Phil Sheegl.
“To prove its case, the city requires the entire paper and electronic trails of the scheme,” reads the city’s motion, which will be heard at Manitoba’s Court of Queen’s Bench Monday.
Contractor Caspian Projects, its owners, employees and family members are fighting the city’s request in court. They say copies of the seized documents can be produced through the “ordinary discovery process” in the course of the civil proceedings.
The city says that would require trust, since the accused parties would be left to decide what “relevant” documents are required to be disclosed.
“A party who has perpetrated a fraud is unlikely to readily disclose the evidence of its wrongdoing to the party suing him,” the city says in court filings.
The allegations in the civil lawsuit have not been proven in court.
The five-year RCMP criminal investigation — dubbed Project Dalton — was closed in December without charges being laid.
Court of Queen’s Bench Chief Justice Glenn Joyal heard a number of motions related to the civil suit in a hearing last week.
He dismissed a motion made by Caspian, Sheegl and several consultants to strike the statement of claim. He also dismissed their motion seeking specific details about the allegations against the individuals and companies named.
Seized records not relevant: Caspian
The city wants paper and computer files seized from Caspian during a December 2014 police raid, the bank records of 11 individuals and companies, and documents voluntarily given to the RCMP by subcontractors.
“[The law] is not intended as a crowbar by which the city may forcefully pry its way into the business and personal affairs of its adversaries, regardless of relevancy or privacy,” reads Caspian’s motion brief.
“The city has no ‘legal interest’ in seized documents which are no longer lawfully detained, the periods of detention having expired and no proceedings instituted.”
Caspian says the records that were seized en masse contain information related to projects other than the downtown police headquarters.
The city argues those documents are relevant because they “may form part of the paper trail of the alleged fraud.”
The city alleges Caspian may have charged taxpayers for work performed on other construction projects.
Those include the homes of members of Caspian owner Armik Babakhanians’s family, the Winnipeg mail processing plant project, the Soul Sanctuary church, and the Winnipeg Transit garage project, the city’s allegations say.
“The assertion that financial records relating to the Caspian defendants are irrelevant” is “astonishing,” the city said in court filings, “in an action where the city alleges that [defendants] moved funds as if playing a shell-game as part of their scheme.”
The city alleges it paid more than $24 million to Caspian in connection with invoices from Fabca, a construction company that did not do any of the work described.
Invoices, and in some cases money, flowed between several Caspian-linked entities, “but the transactions were completely phony,” according to the city’s motion.
The defendants’ claim that they are “victims of a prosecution abandoned” can’t be reconciled with “the unchallenged evidence of $24 million in fraudulent Fabca invoices submitted by Caspian to the city during the [police headquarters] project,” the city says.
“Despite this, the Caspian defendants clearly take the position that they are blameless victims.”
It says that establishing the various allegations is one thing, but quantifying the loss which resulted is another.
“It cannot be done without determining what Caspian actually paid legitimate subcontractors for the work which was actually done. Financial, accounting and bank records are clearly necessary for this,” reads the city’s motion.
If the defendants are allowed to decide which documents are relevant, the city says, “there is a very real possibility that the RCMP documents in their entirety will never see the light of day.”