Dozens of doctored documents for the Winnipeg police headquarters project were submitted to the city and paid out, including invoices that suggest at least $680,000 was diverted to the construction of a church, according to expert testimony.

Forensic accountant Victor Neufeld spent his third day testifying at the provincial inquiry into the project, detailing how altered documents were used to increase the amount the city paid out to Caspian Projects for the construction of the police headquarters.

Inflated pricing quotes and invoices were used to justify costly change orders on the Graham Avenue building, which ended up costing $214 million instead of the $135 initially approved by city council.

In one example involving painting, Caspian put in a change order which appears to include quotes with inflated amounts, according to Neufeld.

He said the guaranteed maximum price for painting was $2.86 million, but the cost overage change order bumped that up to $2.96M. 

“So Caspian is asking for an extra $100,000,” Neufeld said. 

When he looked at how the painting budget was used he noticed “inconsistencies.” 

“It appears that Caspian said that the $2.86 million was insufficient. They provided those quotations, but at the same time, they did not apparently even use all of that budget for painting.”

Neufeld said masonry, electrical, mechanical and other subcontractors were paid out of that budget. 

The Winnipeg Police Service HQ project has been subject to two city-commissioned audits, and a five-year RCMP investigation that resulted in no charges. 

Neufeld had access to documents seized by the RCMP from Caspian headquarters as well as investigative files compiled by the RCMP during its investigation.    

In an interview with the RCMP, the owner of Abesco, a structural steel subcontractor, expressed remorse for issuing a false invoice at Caspian’s request.

“I should have stopped this,” Wally Fast said. “I wish I could go back in time and change some of the decisions I made.” 

Abesco was providing structural steel for both the Winnipeg police headquarters and the Soul Sanctuary church which Caspian was building around the same time.

Abesco office staff told the RCMP that Armik Babakhanians, the principal of Caspian, requested a new invoice to cover more than $450,000 of work on Soul Sanctuary.

“It’s very clear that these are Soul Sanctuary costs that were claimed,” Neufeld told the inquiry. 

In addition to the Abesco claim, there appeared to be $230,000 of Soul Sanctuary costs that were included in a claimed invoice from painting subcontractor Colour Design Decorating, Neufeld said.

“It’s a re-invoice of the work done at Soul Sanctuary,” said Neufeld. 

‘Fudge’ letter and forgery

In an email exchange, a subcontractor tells a Caspian employee, “I gave him a separate fudge letter!” and she replied “I have a fudge letter for 74K and 59K. I think [Armik] may ask you to change it after he’s done more [calculation.]”

In another email exchange, the Caspian employee writes “can you please do a dummy invoice for $82,000 as per the attached progress claim? I know you and Armik [Babakhanians] spoke about invoicing for the headquarters job. You can send in your actual invoices for that. I need this one for backup to the city.”  

Neufeld showed a slide that shows side-by-side invoices from a landscape company —  one for $400 for residential maintenance and the other for $330,000 in landscaping services for the police shooting range.

When the RCMP showed the landscaper the invoices during an interview, the owner said “This is a forged document, this is not something as made.” 

“These are just some of the documents I have in my report.” Neufeld said. 

Neufeld is scheduled to testify Thursday at the inquiry.