‘Like pulling nails’ to get paid: police HQ subcontractor

A demolition subcontractor on the Winnipeg Police Service headquarters project said he fought to get paid for his work and is still suffering from related losses.

While testifying at a public inquiry into the project Tuesday, Tiger Ventures Demolition owner Sheldon Pitz said he billed main contractor Caspian Projects $2.3 million for his company’s work. However, he said he was never fully paid and lost more money due to extra work he was instructed to complete without compensation.

“I lost money … I lost everything that I had. Plus, I had gone and mortgaged my house again. I would say that when this job was over, I was almost a million dollars in the hole,” said Pitz.

“I’ve still got a lot to pay off, too. It’s not over yet,” he added.

In 2021, Tiger Ventures filed a lawsuit against Caspian and its owner Armik Babakhanians. The suit alleges Caspian claimed it had a maximum budget of $2.5 million for the demolition work but billed the city for at least three times that amount.

In a statement of defence, Caspian and Babakhanians denied all of the allegations. The lawsuit is still before the courts.

Problems with the headquarters project at 245 Smith St. have plagued the city for years and sparked multiple legal battles. An external audit found the project had been severely mismanaged. Initially expected to cost $135 million, its price soared to $214 million, when flood damage and some late security upgrades are included.

On Tuesday, Pitz said he was initially very excited to get the HQ contract, since it would be his company’s biggest job yet.

However, he testified that getting actual payments from Caspian was “like pulling nails.”

The inquiry also viewed a document that shows a $10.15-million quote for demolition work, which notes Tiger as the subcontractor, which Pitz testified his company was not paid.

“I didn’t get (any) of it … That’s not my invoice,” he said.

Pitz said he never saw other companies doing demolition work at the building.

Later on Tuesday, Greg Fiorentino, the owner of subcontractor FABCA Projects, testified that his company was hired as a project manager and site supervisor for part of the construction.

Fiorentino answered many questions about a forensic accountant’s finding that pairs of “flow-through” invoices were exchanged between FABCA and Caspian in 2012, which was noted earlier in the inquiry. Expert witness Victor Neufeld testified that several sets of documents show Caspian paid contractor FABCA Projects a fee, then FABCA paid the same amount to a Caspian-controlled company.

“We were issued purchase orders for scopes of work. With the (orders), I expected to see instructions to hire X, Y, Z, to manage them … They would invoice FABCA, we would validate the invoice compared to the scope of work completed, we would pay them and then we’d (expected to) be reimbursed … from Caspian,” said Fiorentino.

However, he said his company never got contracts with subtrades.

Heather Leonoff, the legal counsel for the provincial inquiry, asked Fiorentino if he ever questioned the practice of paying cheques to the companies tied to Caspian owner Babakhanians, only to later receive the same amount back. Leonoff stated that happened 15 times.

“He’s paying you in advance to hire some trades. He never tells you to hire the trades and then you sent him back the money. And that wasn’t suspicious to you at all?” asked Leonoff.

“No. It was his money. It wasn’t my money … I assumed he was paying trades with it,” said Fiorentino.

He said his company was paid a total of $293,000 for management work on the project, including the fee for a site supervisor.

Leonoff asked Fiorentino if his company or any subtrades he hired completed $20.7 million of demolition work or $3.8 million of concrete work, amounts Neufeld found Caspian claimed to the city.

In both cases, Fiorentino answered “no.”

The city once sued Fiorentino, among dozens of other defendants, over the HQ project. However, the claims against him and many others were later dismissed.

The city has received $500,000 from a settlement of fraud and construction-deficiency lawsuits linked to the HQ project and expects to receive up to $28 million overall, depending when payment is completed.

joyanne.pursaga@freepress.mb.ca

X : @joyanne_pursaga