Crown counsel continued its cross-examination of Michael Cady on Wednesday, suggesting Cady knew very well that his wife was stealing money from Henninger’s Diesel to pay for their “toys” and lavish lifestyle.
Michael Cady pleaded not guilty on Monday to charges of laundering the proceeds of crime and possession of property obtained by crime after his wife, Karen Cady, stole more than $1 million from Henninger’s Diesel. Michael Cady is being represented by defence lawyer Glenn Sandberg.
Karen Cady was sentenced to four years in prison in September last year after she pleaded guilty to possession of a fraudulent document used in the commission of an indictable offence and fraud over $5,000. This was Karen Cady's third fraud conviction in the past 15 years. She was further sentenced to one year concurrent to another offence relating to possession of a forged document.
The Crown alleges that between Feb. 10, 2016 and May 21, 2020, a total of $306,677.29 in fraudulently obtained funds flowed into assets owned and registered to Michael Cady. Those funds were filtered through his Northern Credit Union account, said the Crown.
On Tuesday, he took the stand in his own defence, claiming he was "flabbergasted" when he was arrested and further claiming he had no knowledge his wife had misappropriated $1.2 million from her employer.
Carolyn Hackett of the province’s Serious Fraud Office said there must have been red flags on Cady’s part over the more than four years he and his wife spent hundreds of thousands of dollars on boats, campers, ATVs and vehicles. Bank records show they spent $98,000 in 2017.
“This was four years in the making to come to this point,” said Hackett. “You saw the bankruptcies, the mortgage refusals, no information at all about her salary, a history of fraud, and extreme spending. As all this started piling up, you aren’t an unknowing, simple husband. You saw all these red flags, you knew this was suspicious and that the money was coming from an illegitimate source. You knew all of that, yet you were happy to continue to live off of it.”
“I didn’t know anything,” Cady said. “Maybe there were red flags for someone trained to look at that stuff, but that wasn’t my everyday concern. My everyday concern was to get up and go to work.”
Hackett suggested almost five years of spending the more than $1.2 million stolen from Henninger’s Diesel was long enough for Cady to think about what would happen if they got caught, and what they are going to say if they did.
“I suggest you knew exactly what was happening, all this property showing up, and that you knew she was stealing,” Hackett said.
“You can suggest it, but you would be wrong,” Cady said.
As he testified on Tuesday, Cady said he had no control over a joint bank account they held at the Northern Credit Union, and that his wife, Karen, handled 100 per cent of the finances for the household.
Cady told the court he was surprised and angry that the police went after him, as he “had nothing to do with it. I had nothing to do with anything.”
He is adamant that he was only made aware of the theft when he was told by police officers.
That was the evidence he provided in his day-and-a-half testimony, that he was completely ignorant of their finances, and at no point did he ever check to see how much money was going into and out of their joint account.
“I never thought much about it,” he said. “I was never given any reason to question it.”
Even when he visited the credit union to withdraw or deposit money, he said he never paid attention to the receipts he was given by a bank teller, where the account balance would be in full view.
Cady said he was content letting his wife handle the money, even though she had filed for bankruptcy twice in the past and had been convicted of defrauding a local insurance brokerage of about $1,500.
Furthermore, when the couple decided to remortgage their home in an attempt to get a lower interest rate, the lender did not want to give money to Karen and would only agree to lending money to Cady.
“A lender is saying, ‘I choose you, Michael, because we trust we will get our money back, but if we give it to Karen, we might not get it back’,” said Hackett.
“I guess you could look at it that way, I don’t know,” Cady said.
“This is telling you Karen Cady is not trustworthy with money, and you knew that because of her previous two bankruptcies. You knew she wasn’t good with money. I suggest all those reasons were there, you just chose to ignore them.”
“You can suggest stuff, but you would be wrong, very wrong,” said Cady.
Hackett continued to probe Cady’s apparent lack of interest in any of the couple’s finances.
In 2017, the Cadys spent about $98,000 on big ticket purchases not including mortgage payments and truck payments, including a $40,000 pontoon boat, as well as a $26,000 payout for a 2014 Dodge Ram truck.
Cady told the court he was told by his wife that in addition to her salary of $28/hour, she was paid bonuses by her employer, Diana Fuller, president and owner of Henninger’s Diesel.
That year, Cady made less than $40,000.
“You would agree that to afford that, (Karen) would have had to have bonuses that are double her salary, at the least,” Hackett said.
“I don’t know,” Cady said.
Hackett questioned his total lack of knowledge regarding his wife’s job, exactly what she did, and how much she was making.
“You had no interest at all?” Hackett said.
“I wouldn’t understand,” he said.
“You understand stealing, that’s a concept you understand?”
“Yes,” he said.
Cady’s criminal record speaks to that.
In addtion to a 2005 conviction for three counts of arson for which he served a 12-month conditional sentence and a 2008 impaired driving conviction in Barrie, Cady was convicted on a number property and weapons crimes in 2008, as well.
The charges included two counts of break and enter; theft under $5,000; failing to comply with conditions; being in possession of property obtained by crime; careless storage of a firearm, prohibited device or ammunition; possession of a firearm or restricted weapon obtained by crime; use of a firearm during the commission of an indictable offense; causing bodily harm by criminal negligence, and; failing to comply with conditions of undertaking.
He served a four-year prison sentence for those crimes.
Final submissions will take place today at 10 a.m.
