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| John Hill |
Although the grounds for divorce are not listed, Cady’s 30-month penitentiary sentence likely had something to do with it. Karen Cady had pleaded guilty to fraud over $5,000. Karen was a bookkeeper for Henninger’s Diesel Ltd.
In the course of her employment, she embezzled over $1 million. She deposited her ill-gotten gains in a credit union account. Michael Cady’s name was added to the account. Although Karen made $28 an hour, the credit union account was used for expensive purchases, including a trailer, a jet ski, a snowmobile, a boat, home improvements, a Caribbean vacation and concert tickets. Although Micheal was a heavy equipment operator, his work was intermittent, and he often relied on employment insurance.
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The only issue in contention was whether Michael Cady was willfully blind to the large influx of cash deposited into the credit union account.
The trial judge did not find that Karen Cady had provided information to explain how the couple could fund their purchases. The Ontario Court of Appeal reaffirmed the definition of wilful blindness that the Supreme Court of Canada set out in R v. Briscoe 2010 SCC 13: wilful blindness “imputes knowledge to an accused whose suspicion is aroused to the point where he or she sees the need for further inquiries but deliberately chooses not to make those inquiries.”
There was certainly reason for Michael Cady to be suspicious. He knew his wife had previously been convicted of defrauding a prior employer. She had twice declared bankruptcy and had a poor credit rating. When Michael and Karen bought their first home, they were forced to use a high-interest-rate lender because they could not get a mortgage elsewhere. Michael was aware of several large payments made from the credit union account without explaining the source of the funds.
In her reasons for conviction, the trial judge did not set out what information Karen Cady conveyed to her husband about the source of the funds. However, the lifestyle the two were living was extravagant and would have evoked questioning of the source of the funds. Indeed, the Court of Appeal noted that Michael Cady told police that he suspected his wife was committing fraud, but he chose to give her the benefit of the doubt. With all the lavish spending, the Court of Appeal was not persuaded that Michael Cady deferred to his wife’s financial management of family finances.
The Court of Appeal does not deal with the money laundering charge for which the appellant received a concurrent 30-month sentence. It would appear that the reasons for the judgment of the trial judge are left undisturbed (R. v. Cady 2022 ONSC 4372). The trial judge found that Michael Cady withdrew funds from the credit union account, received transfers of funds from the account and used the funds to purchase property.
In the agreed statement of facts, Cady admits the credit union account contained funds obtained by his wife’s fraud. Michael Cady intentionally converted the funds into property by transferring funds from the credit union into a bank and then using those funds to buy property.
The trial judge concluded that Michael Cady either knew that the funds were obtained illegally by his wife’s fraud or he was willfully blind to their origin. The trial judge noted numerous red flags that should have alerted Cady that the funds were obtained unlawfully. He should have inquired about their origin before withdrawing them from the credit union account, depositing them into his bank account, and using the funding to buy property. The knowledge element for the possession of property and money laundering charges has been made out.
The Court of Appeal left the trial judge’s finding that Michael Cady converted his wife’s fraudulently obtained funds undisturbed. The trial judge noted that the Supreme Court of Canada, in R. v. Daoust 2004 SCC 6, clarified that the conversion of property known or believed to have illicit origin should not be used for personal gain. Wilful blindness was defined by the Supreme Court in Sansregret v. The Queen [1985] 1 SCR 570 as arising when a person who has become aware of the need for some inquiry declines to ask because he does not wish to know the truth and prefers to remain ignorant.
Michael Cady found out the hard way that he could not escape punishment by simply benefiting from his wife’s crimes.
John L. Hill practised and taught prison law until his retirement. He holds a J.D. from Queen’s and LL.M. in constitutional law from Osgoode Hall. He is also the author of Pine Box Parole: Terry Fitzsimmons and the Quest to End Solitary Confinement (Durvile & UpRoute Books). Contact him at johnlornehill@hotmail.com.
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