City desperately hunting for treasure before it’s buried Gaining access to evidence from five-year fraud probe into police HQ construction essential for massive lawsuit's success
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Hey there, time traveller!
This article was published 10/01/2020 (1235 days ago), so information in it may no longer be current.
It might be Winnipeg’s answer to the Amazing Race.
Over the next few months, the City of Winnipeg, the RCMP, Manitoba Justice and nearly 40 individuals and companies named in a civil lawsuit will compete against each other to determine the fate of thousands of pages of documents collected during the fraud investigation of Caspian Construction for its work overseeing the construction of the downtown Winnipeg Police Service headquarters.
Winnipeg sues former CAO, contractors over police HQ 'fraud, embezzlement'
Contractors and subcontractors allegedly falsified documents and invoices, and submitted them for payment. Kickbacks were allegedly paid to the president of a corporation who, at the same time, was the city's top bureaucrat. Construction of the downtown Winnipeg police headquarters was millions of dollars over budget.
With no criminal charges being laid in the aftermath of years of RCMP investigation and no provincial inquiry being ordered, the City of Winnipeg has launched a lawsuit against the building's contractors, architects — and even its own former chief administrative officer, Phil Sheegl.
Mayor Brian Bowman said, faced with "serious allegations of fraudulent activities and a complex kickback scheme," the city had no choice.
"I was elected Winnipeg's 43rd mayor to lead the clean-up of a number of files, including dealing with the aftermath of the police headquarters' scandal, that we inherited," Bowman said during a hastily-called news conference Monday, minutes after the lawsuit was filed in Manitoba Court of Queen's Bench.
Paper trails and emails: city outlines its case for police headquarters fraud
It's hard to escape the irony.
A large downtown Winnipeg building designed to house the city police officers who uphold the law is allegedly built on a foundation of fraud on the scale of millions of dollars.
Beyond the precise legal language in a 57-page statement of claim filed Jan. 6 in Manitoba Court of Queen's Bench, as well as the hundreds of pages of affidavits and supporting documents, the City of Winnipeg paints a damning picture of the Winnipeg Police Service headquarters construction scandal.
At its heart, the city is now saying its former chief administrative officer, in partnership with construction heavyweights, was instrumental in a scheme to defraud taxpayers.
In a civil suit filed just last week, the city made an application to the Court of Queen’s Bench for an interim order requiring the RCMP to preserve all of the evidence it collected during its investigation, which began more than five years ago, and to make it available to be copied.
It is common for the police to receive requests from parties engaged in civil litigation for access to files obtained during a criminal investigation. However, rarely has this been done in such a high-profile case with so much public money hanging in the balance.
Furthermore, it is believed that many others — possibly including the RCMP itself, Manitoba Justice and the people named in the lawsuit — will ultimately seek to either retrieve that evidence or, at the very least, keep it from becoming part of the public record.
Michael Jack, the city’s chief corporate services officer, said the city desperately needs the evidence from the RCMP to strengthen what it believes is an already strong case against Caspian and the others named in the lawsuit.
“We really want these documents,” Jack said in an interview. “They are very important to our legal action and we want to move urgently to get them.”
The decision to launch a civil suit in the wake of a decision not to charge Caspian and others criminally is, in and of itself, hardly surprising. The city is on the hook for tens of millions of dollars in cost overruns on the WPS headquarters; originally pegged at $137.1 million when work started in 2011, total costs ballooned to more than $214 million by the time police moved into the building in 2016.
The lawsuit names Caspian Construction, its principals and related companies, former city chief administrative officer Phil Sheegl and more than 30 other people and companies. It is within that statement that the application for access to RCMP files was made.
Given evidence that had already been made public through court documents, it was somewhat surprising when, after five years of investigation and deliberations, the Manitoba Prosecution Service announced last month it would not be laying any charges. The department offered little explanation for its decision, other than its belief that, after reviewing all of the evidence collected by the RCMP, there was no “reasonable likelihood of conviction.”
Although the evidence did not apparently meet the standards for a criminal conviction — which requires proof beyond a reasonable doubt — Jack said it could be enough to carry a civil action where the burden of proof (a balance of probabilities) is less onerous. Even so, information contained in RCMP files is of vital importance in the effort on behalf of taxpayers to recoup fraudulent claims made by the contractor.
“It would be fair to say that we have a lot of evidence of fraud that comes from stuff already on the public record and in various applications for search warrants,” Jack said. “We have also been contacted by subcontractors who have confirmed what we feared was going on with invoices.
“But for a lot of the other evidence, we’re looking at things second-hand. We need to get our hands on the originals. In some instances, it’s going to confirm what we already know. In others, it’s going to tell us new things that will help our lawsuit.”
In its statement of claim, the city alleges the respondents were collectively involved in a “scheme” to defraud the city of tens of millions of dollars in fake costs charged to the Winnipeg Police Service headquarters project. And further, that hundreds of thousands of dollars generated by the fraudulent invoices was paid in illegal “kickbacks” to a host of people, most notably Sheegl.
“We really want these documents. They are very important to our legal action and we want to move urgently to get them.” – Michael Jack, City of Winnipeg’s chief corporate services officer
Jack said the city feels confident the court will grant an order for access to the police files. However, he noted a previous attempt to obtain materials from the RCMP investigation did not succeed.
In 2018, Canada Post made a similar application to access police files. Caspian had also worked on the construction of Canada Post’s new facility near Richardson International Airport. Concerns about similar fraudulent practices drew Canada Post into the criminal investigation.
Canada Post’s application was opposed by the RCMP, Manitoba Justice and lawyers for some of the companies and individuals caught up in the criminal investigation. The court ultimately declined to release the RCMP files.
There are two important differences between the Canada Post application and the most recent attempt by the city to gain access to the files.
First, Canada Post made its request while the police investigation was still officially underway, and before Manitoba Justice decided not to pursue criminal charges. And second, the request was not made in conjunction with an ongoing legal action, which is normally the case; in filing a civil suit, the city has satisfied that basic requirement.
The interested parties that very likely could oppose the city’s motion are quite numerous. However, without exception, all are playing their cards very close to their vests.
Lawyers for Caspian and related companies did not respond to several requests for response to the city’s motion to obtain RCMP files.
The same goes for Sheegl. Lawyer Robert Tapper denied that Sheegl had even been served by the civil suit and refused to state a position on whether he would oppose the city’s request access to the RCMP evidence or seek the return of any materials seized during the investigation.
The RCMP declined to comment because the matter is before a court.
The province, as well, is reserving comment on the city’s motion. Although it may not have a legal basis on which to oppose the release of RCMP files, the prosecution service will no doubt be sensitive to having the evidence made public because it may call into question the decision not to lay charges.
Jack said that there is some concern the evidence collected by the RCMP may not be adequately preserved. The suspects in this case are entitled to make their own court application to retrieve any materials seized as part of the investigation.
“Would anyone shred anything?” Jack said. “I don’t really want to consider that situation. Once litigation has started, everyone is under certain professional obligations to preserve evidence. That having been said, we do want to move urgently.”
Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.
Updated on Friday, January 10, 2020 7:27 PM CST: Changed photo.