Winnipeg police HQ contractor sued over $2.3M demolition agreement

A subcontractor hired to do demolition work on the Winnipeg Police Services Headquarters construction project is suing HQ contractor Caspian Projects Inc. and its president, Armik Babakhanians, for breach of contract and unjust enrichment.

In a lawsuit filed in the Manitoba Court of Queen’s Bench on April 7, Tiger Ventures alleges Caspian fraudulently misrepresented the amount of money available for demolition and asbestos work, then billed the city inflated invoices worth more than three times the amount paid to Tiger. 

“This is really an issue of what’s what’s fair and reasonable,” said Tiger’s lawyer, Kenneth Zaifman.

Winnipeg lawyer Kenneth Zaifman says the owner of Tiger Ventures was outraged when he learned Caspian billed the city three times what it paid Tiger for demolition work. Tiger says during the construction of the police HQ, it discovered asbestos, asked Caspian for more money, but was told there was none. (Tyson Koschik/CBC)

In a statement of claim, Tiger says in 2011 it signed a $2.3-million contract with Caspian to do demolition work on the HQ, but along the way it discovered the building had asbestos.

The lawsuit says in 2015, Tiger tried to renegotiate its budget with Caspian to no avail. Tiger said it later went back to Caspian to see whether the contractor could talk to the city to find additional funds for the asbestos work, but was told there was no more money to give.

“The plaintiff understood that it would lose money, but it relied on the representation of the defendants and entered into the agreement in anticipation of future good-will from the defendants and the City of Winnipeg,” the lawsuit says.

The construction of the police HQ has been clouded for years with allegations of fraud, forgery and breach of trust. It was also the focus of a five-year RCMP investigation.

In December 2014 RCMP raided Caspian’s head office in what turned into a five-year investigation into allegations the contractor defrauded taxpayers during the police HQ project. (Brett Purdy/CBC)

In 2018 the city filed a lawsuit against Caspian and the engineering firms involved in the construction project claiming they made mistakes that will cost taxpayers north of $10-million to fix.

In December 2019 Manitoba Justice announced the RCMP investigation was complete and no charges would be laid.

In January 2020, the City of Winnipeg sued Caspian, Babakhanians and dozens of others who worked on the project, claiming they defrauded taxpayers of more than $24 million through fraudulent paperwork and secret kickbacks. 

In court filings, the city said it hired forensic accountant Victor Neufeld to sift through the paperwork to determine the extent of its losses.

In an affidavit, Neufeld said Caspian claimed the demolition work on the HQ was done by a different company, and submitted just one invoice to the city related to Tiger Ventures. That invoice wasn’t for demolition, but for landfill dumping fees. 

“Virtually all the work reported in the Caspian progress claims that may relate to the Tiger scope of work was supported by invoices submitted in the name of the defendant, Fabca Projects Ltd. (‘Fabca’),” Neufeld said.

He says the Fabca invoices totalled approximately $20.7 million.

Forensic accountant Victor Neufeld’s sworn affidavit alleges Caspian billed the city $20.7 million for demolition and abatement work it says was done by Fabca Projects Ltd., but that much of that work may have been performed by Tiger Ventures Ltd., which had been paid $2.3 million. (Court documents)

Neufeld’s affidavit says it was unclear how Fabca could have done the work because they only had four people with security clearance to work on the HQ, compared with Tiger, which had more than 150.

Zaifman says when the owner of Tiger Ventures heard that Caspian invoiced the city claiming FABCA did the demolition and asbestos work, he was outraged, especially since Tiger didn’t believe it was paid a fair price to do the job.

It put his business in some peril because he was, you know, losing money on a contract that he should have made some money on,” Zaifman said.

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