Husband must have known about wife's $1M fraud, Sudbury judge rules

The husband of a Sudbury woman convicted of $1 million fraud has also been found guilty in connection with the case and sentenced to two and a half years in jail. (File)

The husband of a Sudbury woman convicted of $1 million fraud has also been found guilty in connection with the case and sentenced to two and a half years in jail.

In late 2021, Karen Cady was found guilty of defrauding her employer, Henninger’s Diesel Ltd., of $1,008,432.58. The incidents took place between July 31, 2015, and June 24, 2019.

"The fraudulently obtained funds were deposited to an account at the Northern Credit Union that was initially registered to Karen Cady," said the court transcript.

Her husband, Michael Cady, now 45, was added as a registrant to the account on Feb. 10, 2016.

"The funds were subsequently used to make purchases of real and personal property, much of which was registered in Mr. Cady’s name, and to fund home renovations, vacations, concerts and other lifestyle indulgences," the transcript said.

In her decision, Madam Justice K.E. Cullin wrote that exactly how much Michael Cady knew about what his wife was doing was central to the case.

While she found Cady "a likeable witness" who deferred to his wife on financial matters, she wrote he must have suspected something was amiss when they were spending far more than they were earning.

"I concluded that he had turned a blind eye to extremely unusual and large disbursements of cash and cumulative spending in the absence of a plausible, legal source of income to support them," Cullin wrote.

He was aware his wife had a previous conviction for defrauding her employer, yet didn't ask where the money was coming from, the judge wrote.

"He was also aware that Diana Fuller, the principal of Henninger’s Diesel, was operating under a misapprehension that he had received a large inheritance from his father," the transcript said.

"After considering the totality of the evidence, I found that Mr. Cady either knew that the funds were obtained illegally by Karen Cady or that Mr. Cady was wilfully blind to their origin. On this basis, I convicted Mr. Cady."

In her victim impact statement, Fuller said her family-owned company had been built up over more than 50 years.

"During the time that funds were being fraudulently siphoned away, wages were reduced or frozen, bonuses were not paid and employees were compelled to participate in job-sharing," the judge wrote.

"This resulted in financial hardship and had the inevitable effect of undermining employee morale. It also adversely impacted the financial security of Ms. Fuller and her family as the owners of the company."

Fuller also said she was full of guilt and anxiety because "she felt that she had failed to protect her late husband’s business and its employees. In the aftermath, she has lost faith in the fundamental decency of humanity."

While the company was enduring hardships because of the fraud, "Mr. Cady enjoyed an extravagant lifestyle throughout the duration of his offences," the judge wrote.

"He purchased and renovated a home. He enjoyed tropical vacations and he purchased vehicles and luxury recreational goods. His use of the fraudulently obtained funds to subsidize lifestyle and consumer purchases have effectively prevented Henninger’s from recovering the majority of its losses. To date, only $216,000.00 of the funds have been recovered."

She sentenced him to concurrent sentences of 30 months for money laundering and 30 months for possession of property obtained by crime. She also issued a restitution order of $800,000, adding he likely will never be able to pay the full amount.

However, the $1,400 in cash he had on him when he was arrested will go to the defrauded business.

Read the full transcript here.