A Toronto Transit Commission project manager, his wife and son, and the owner of a paving company are facing charges related to an alleged fraud involving a TTC contract.

The Toronto police said Wednesday that Bruno Colavecchia, 49, a project manager overseeing work at TTC construction sites, is charged with fraud over $5,000, money laundering and possession of the proceeds of crime.

The TTC says Colavecchia was responsible for the payment of invoices to IPAC Paving Limited, a company hired by the TTC to perform contract work.

Police allege IPAC owner Sebastien Corbo, 51, billed the TTC $198,619 for work that amounted to $54,087, for a total alleged fraud of just over $149,000.

Corbo faces charges of fraud over $5,000, possession of property obtained by crime and money laundering.  

Police allege that Colavecchia, his wife Vincenza Grossi, 49, and their son Michael Colavecchia, 21, created bank accounts and received funds directly from IPAC under fraudulent companies. Grossi and Michael Colavecchia face charges of laundering the proceeds of crime and possession of the proceeds of crime.

"The contracts and the work that was done were not in line with the fee invoices that were submitted and paid," TTC spokesman Brad Ross told CBC News on Wednesday. "We have very strict, very tight controls around contract management and how invoices are handled."

Ross said Colavecchia has been fired and the IPAC paving contract terminated.

The TTC began investigating in July 2009 after receiving a tip about the alleged fraud.

The Toronto Police Service began to assist the investigation in the summer of 2010.

Ross said the investigation is ongoing and said the TTC is taking steps to improve oversight in how contracts are paid.   

All four suspects are scheduled to appear in court on July 28.