Needed, One Whistlebower Hotline: Ex-Contractors Filed $1M in Fraud Claims

Posted by Stephanie Mau

on June 5, 2014

photo highrise fire torontoA downtown high-rise in Toronto went up in flames back in 2010, resulting in hundreds of residents being displaced from their homes for several weeks. This catastrophe “required the expenditure of tens of millions of dollars,” and the Toronto Community Housing Corp. (TCHC) was brought on for building repairs.

Housing Services Inc. (HSI), a for-profit contractor and a subsidiary of TCHC, was hired as the general contractor in the “emergency phase” after the fire consumed 200 Wellesley Street, and then took on the role of subcontractor for the “reconstruction phase” afterwards.

Where There’s Smoke, There’s Fire

Since then, the two heads of HSI’s 200 Wellesley project – Roman Mesec and Lou Canton – have been dismissed from the contracting company. In late April, both men filed wrongful dismissal lawsuits against HSI, asking for a total of $700,000 in severance pay, unpaid salary and damages.

To their surprise, the defence struck back with revelations that during their tenure, the pair allegedly submitted more than $1 million in fraudulent claims as part of the repair costs.

These claims were only uncovered after the TCHC conducted a forensic audit into the company’s insurance claims, and were revealed for the first time recently in court.

Confusing Instructions?

Now, Mesec and Canton are claiming that they received “conflicting and/or confusing instructions” from TCHC, as well as 200 Wellesley’s insurance adjuster and a cost-control consultant, for what exactly they were allowed to claim for their work.

According to the TCHC, HSI was given explicit instructions for what they were allowed to claim and what they weren’t. In fact, they argue that Mesec and Canton “exploited” the reconstruction project to profit their own contracting company, which was struggling to achieve success at the time.

In their statement, the TCHC even accused the two former contractors of intentionally disregarding “mandatory directions” for their own gain and deceiving their stakeholders. In the forensic audit, costs made by Mesec and Canton were allegedly “undisclosed” and “unauthorized”, and in some cases, were “completely fabricated.”

Could someone have brought this fraudulent activity to light sooner? Surely these two weren’t working alone in a bubble?

This fraud could have been brought to light sooner had the company implemented a strong certified ethics reporting system. This is just another example of a case that shows just how important a whistleblower can be to shine the light on unethical dealings within an organization. Whistleblower Security is committed to promoting a culture of integrity, collaboration and transparency for our employees and clients. With a 24/7 whistleblower hotline, employees can be assured that all of their ethical concerns will be heard and addressed.

eBook: 7 Reasons to Implement a Whistleblower Hotline