Caspian owner tells police HQ inquiry he submitted false invoices, but didn’t overcharge Admits falsifying invoices during testimony By: Joyanne Pursaga Posted: 2:52 PM CDT Monday, Mar. 23, 2026 Last Modified: 7:08 PM CDT Monday, Mar. 23, 2026 Updates

A key contractor has testified that he turned in hundreds of false invoices for the Winnipeg Police Service headquarters project, but stressed he did not overcharge the city for the work.

Caspian Projects owner Armik Babakhanians answered many rounds of questions about the financial documents during the public inquiry into the construction project Monday. He admitted to altering invoices from subtrades at his office.

“The numbers that were on them were not the original numbers your subtrades put on them?” asked Heather Leonoff, the legal counsel for the provincial inquiry.

“We modified it,” Babakhanians answered.

Leonoff noted the inquiry has heard Caspian, and other companies it controls, exchanged a series of cheques with matching amounts with some subcontractors, as part of a “flow-through” arrangement.

She suggested to Babakhanians that “making up the documents was a big job, wasn’t it?”

“Yes, I would say it was,” he answered.

The contractor also admitted to handing in some invoices that attribute construction work to companies that did not actually perform the work and claiming different amounts to the city than what his company actually paid some subtrades.

Babakhanians denied an allegation that he billed the WPS headquarters for work on other construction projects.

The city was plagued by problems related to the headquarters at 245 Smith St. for several years. An external audit concluded the project had been severely mismanaged. First expected to cost $135 million, the price soared to $214 million, when late flood damage and security upgrades are included.

The provincial inquiry heard from a forensic accountant earlier this month, who estimated $45 million to $50 million in excess claims were filed for the project. However, Babakhanians strongly denied allegations that Caspian overcharged the city to receive that amount.

“Where is that money? I could use it right now … If there is such money there, I just can’t understand it,” he said.

“We did that so we can get paid.”

The contractor said he was frustrated by being asked repeatedly to submit invoices and backup financial documents to the city, which he believes his contract with the city did not require.

“We did that so we can get paid,” he said.

On Monday, Babakhanians told the inquiry the invoices he submitted for the project aimed to match its guaranteed maximum price and cover his expected profit of $13 million to $15 million.

Lawyer George Orle, who represents Caspian at the inquiry, asked his client if he would ever enter a contract with the City of Winnipeg on the same terms again.

“I’m going to say categorically, hell no!” responded Babakhanians, loudly exclaiming the final two words.

Babakhanians also told the inquiry he was working to pay a $23-million legal settlement linked to the project as soon as possible.

In March 2023, city council voted to approve a settlement of fraud and construction deficiency lawsuits linked to the headquarters, with the final amount based on when payment is made. That called for the city to receive around $23 million, if paid within three years, with that previously expected to kick in Tuesday. If that is missed, the city would ask the Court of King’s Bench to order that it be paid $28 million.

He said he’s signed documents and taken all steps he could to ensure the city receives that money, though lawyers were still finalizing the payment Monday morning.

Winnipeg Mayor Scott Gillingham said he believes the option to pay $23 million was actually set to expire at 4:30 p.m. Monday.

Gillingham said the city would take immediate legal action to pursue the $28-million payment, if needed.

“This is about recovering as much money for taxpayers as possible. I believe our staff is fully prepared to take the next steps immediately,” he said.

The city has received only $500,000 of the payment.

“We have made significant changes in the way we operate at the City of Winnipeg to prevent this from happening again.”

Gillingham stressed the city has made many changes since the WPS headquarters project was built, including adding steps to procure contracts and manage real estate, as well as hiring a chief construction officer to add oversight.

“We have made significant changes in the way we operate at the City of Winnipeg to prevent this from happening again,” he said.

Babakhanians said he agreed to the settlement for business and personal reasons.

“It was a commercial decision but also it … just tore our family (apart). I just couldn’t see the pain (anymore),” he said.

Babakhanians said he still feels the city got great value for its investment in the project.

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“The city got more than they could ever dream of for value,” he said.

The contractor estimates he has faced about $5 million in legal costs to address allegations related to the project. He claims Caspian is still owed about $1 million from the city.

The inquiry will continue on Tuesday.

joyanne.pursaga@freepress.mb.ca

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Joyanne Pursaga
Reporter

Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne.

Every piece of reporting Joyanne produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press‘s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.