City of Winnipeg removes steel fabricator, owner from police HQ lawsuit

The City of Winnipeg has dropped its lawsuit against one of the subcontractors it had accused of defrauding taxpayers.

A notice of discontinuance was filed in the Manitoba Court of King's Bench on Jan. 19. It says the city is no longer suing Abesco Ltd. and its owner Wally Fast, but doesn't say why.

The city is suing dozens of people and companies it alleges defrauded taxpayers during the construction of the Winnipeg Police Service headquarters. The lawsuit was filed in January 2020, a month after a five-year RCMP investigation ended without charges.

The city alleged in a May 4, 2022, notice of motion that Abesco submitted bills for unrelated work on a Winnipeg church, a Winnipeg Transit garage and a police canine facility. The action against Abesco, a steel fabricator, has now been discontinued.

Abesco was among other names added to the list of defendants in the lawsuit in May, including John Garcea, his wife, Mabel, and five associated companies, Pietro Giannuzzi Sr. and 6820540 Manitoba Ltd.

The city alleged in court filings at the time that police HQ subcontractor Garcea, his wife, Mabel, and five of their companies defrauded the city through inflated invoices, billings for work that was not done, and billings for work that was unrelated to the police headquarters.

In a statement of defence filed Jan. 6, the Garcea Group denies its companies Strada Construction Ltd., S&J Construction Ltd., Colour Design Decorating Inc., Granite Concrete Services and Tuscany Construction Ltd. were used as instruments to "perpetrate a fraud" against the city.

"The Garcea Group denies that it designed, orchestrated, implemented, had knowledge of, participated in, or was party to the scheme as alleged or at all, and puts the city to the strict proof thereof," the statement of defence says.

The Garcea Group says S&J and Granite did "nominal amounts of work on the project … for which they were paid in full as was appropriate."

They also say Strada had no involvement in the police HQ construction project.

"Strada received a payment from the general contractor Caspian and promptly returned all funds to Caspian and otherwise received no payment on this project," the statement of defence says.

Colour Design, Tuscany, S&J and Granite were subcontractors to Caspian, and owed duties to Caspian and not to the city, it says. Strada, John and Mabel were not parties to the agreements and cannot have liability in this action, it says.

"The Garcea Group acted at all times honestly, diligently and in good faith, that it was honest and candid in relation to its contractual performance," the statement of defence says. "It completed all work required of it in good and workmanlike manner and for the sums agreed upon in the agreements with the general contractor Caspian."

It goes on to say Colour Design was not paid in full for work it did for water damage remediation and is still owed $100,000.

"The Garcea Group states that it did not create, provide or submit altered, fraudulently created and/or inflated quotes and/or invoices," the statement of defence says.

The Garcea Group has filed a cross claim against Caspian Projects, its owner Armik Babakhanians, his son Shaun, wife, Jenik, office manager Pamela Anderson and Paul R. LaMontagne, who was a Caspian employee at the time, and their related companies.

"The Garcea Group states that, if the city has suffered losses and damages as alleged, or at all … such losses and damages were caused or contributed to by the Caspian defendants," the cross claim says.

The numbered company 6820540 Manitoba Ltd., owned by Peter Giannuzzi Jr. and formed for tax planning purposes, filed a statement of defence and cross claim that says the company's "sole involvement with Caspian Projects was to receive the funds due and owing to Giannuzzi Jr. pursuant to the employment settlement."

The employment settlement stems from Giannuzzi Jr.'s tenure as an employee of Caspian Projects starting in 2009.

"Beginning in or around 2012, Giannuzzi Jr.'s employment relationship deteriorated as a result of the toxic work environment at Caspian Projects, combined with Caspian Projects failing to live up to its promises regarding salary payments, project profits and ownership shares. This culminated in November of 2013 with Giannuzzi Jr.'s departure," the statement of defence says.

Caspian and Giannuzzi Jr. came to an agreement over how much he was owed for his work, resulting in a $1 million settlement paid to the numbered company over two instalments, with the first payout in January 2014, followed by the second in April 2015.

In a May 4, 2022, notice of motion, the city alleges 6820540 Manitoba Ltd. was an alter ego of Giannuzzi and was "used as an instrument … to perpetrate a fraud on the city" for Giannuzzi Jr.'s personal gain.

The numbered company denies it "conspired with, colluded with or otherwise engaged with any party whatsoever for the purposes of defrauding or injuring the city," court documents say.

"It neither benefited from, nor was it enriched by, the alleged 'scheme.'"

The statement of defence says during Giannuzzi Jr.'s period of employment with Caspian, "unilaterally imposed" changes to the project by the city and Winnipeg Police Service contributed to cost increases. 

The city's project managers and Winnipeg Police Service representatives were "unco-ordinated and confused" as to their respective roles in the construction of the building, the filing says. 

The numbered company says "the city is making such allegations with a reckless disregard to their truth" and the accusations are "so serious and unfounded," they merit an award for lawyers' fees.

The numbered company's cross claim says if the city suffered losses, they were caused by the other defendants in the case, except for Giannuzzi Jr. 

Two other defendants, Peter Giannuzzi Sr. and G&G Interiors, filed a joint statement of defence that says the company issued only genuine quotes and invoices for work completed on the police headquarters.

The city says it only learned of G&G's involvement around April 2021, when it discovered Caspian had billed the city for $8 million in work it said was done on the police HQ by G&G "while [Caspian's] known payments to G&G totalled less than $6 million," the May 4 notice of motion says.

G&G "was not paid any excess or surplus above what was invoiced," says the statement of defence filed Jan. 6, which also asks for the lawsuit against them to be dismissed.