Em­bez­zle­ment case ends with $12,000 resti­tu­tion pay­ment

Ac­cused pleads guilty, had worked for for­mer Mashan­tucket chair­man

The Day - - REGION - By KAREN FLORIN Day Staff Writer

The prop­erty man­ager and book­keeper for for­mer Mashan­tucket Pe­quot chair­man Richard “Skip” Hay­ward, who was headed to trial in New Lon­don Su­pe­rior Court for felony em­bez­zle­ment charges, has re­solved her case by plead­ing guilty to a re­duced charge and pay­ing $12,000 in resti­tu­tion.

Karen M. Sul­li­van, 53, for­merly of Water­ford, pleaded guilty to fourth-de­gree lar­ceny Fri­day and was sen­tenced to two years pro­ba­tion.

Skip Hay­ward is cred­ited with re­viv­ing the Mashan­tucket Pe­quots in the 1970s and lead­ing them through the de­vel­op­ment of Fox­woods Re­sort Casino. He and his wife, Carol Hay­ward, were ex­pected to tes­tify at a trial sched­uled to be­gin April 23 be­fore a six-mem­ber jury.

Sul­li­van was charged in 2016 with em­bez­zling more than $123,000 from the Hay­wards while man­ag­ing a dozen prop­er­ties they owned under the busi­ness name Ban­ner­stone LLC. The cou­ple fired Sul­li­van in 2014 and re­ported the al­leged thefts to Gro­ton

Town Po­lice in 2015.

Sul­li­van pleaded not guilty to the ini­tial charges of first-de­gree lar­ceny, first-de­gree forgery and iden­tity theft. She was fac­ing a felony con­vic­tion and prison time if found guilty, but was pre­pared to de­fend her­self at trial, ac­cord­ing to her at­tor­ney, Se­bas­tian O. DeSan­tis.

The Hay­wards also were ready to tes­tify, ac­cord­ing to pros­e­cu­tor Stephen M. Car­ney.

Ne­go­ti­a­tions be­tween the state and de­fense con­tin­ued as the lawyers ar­gued pre­trial mo­tions and con­tin­ued as­sess­ing the ev­i­dence. On Fri­day, Sul­li­van ac­cepted the state’s of­fer to plead guilty to the mis­de­meanor lar­ceny charge, serve two years of pro­ba­tion and make an im­me­di­ate resti­tu­tion pay­ment of $12,000.

She paid in cash, ac­cord­ing to the court record.

“The money we were able to iden­tify with a high de­gree of con­fi­dence be­yond a rea­son­able doubt was $12,000,” Car­ney said Mon­day. “Con­sid­er­ing she had no crim­i­nal record, we made an of­fer of a Class A mis­de­meanor.”

The Hay­wards were no­ti­fied about the plea agree­ment and “they ex­pressed their con­cerns to us,” Car­ney said.

The Hay­wards told po­lice Sul­li­van was in charge of all fi­nan­cial trans­ac­tions and pre­pared a monthly re­port that Hay­ward re­viewed. Hay­ward told the po­lice the monthly re­ports ap­peared ac­cu­rate, though he never saw bank or credit card state­ments or tax doc­u­ments.

Fol­low­ing Sul­li­van’s ter­mi­na­tion, the Hay­wards said they re­ceived a no­tice from the IRS show­ing they owed $51,300, plus penal­ties and in­ter­est, for un­paid pay­roll taxes for Sul­li­van in 2012-2014. They said Sul­li­van was re­spon­si­ble for pre­par­ing and pay­ing the taxes and had been with­hold­ing from them let­ters in which IRS of­fi­cials warned the com­pany of the un­paid taxes and the in­tent to seize as­sets. The Hay­wards said they ob­tained state­ments from Dime Bank and two credit card com­pa­nies that re­vealed “an ex­or­bi­tant amount of dis­crep­an­cies from the ac­count­ings Sul­li­van had been pre­par­ing for them over the years.”

The Hay­wards said Sul­li­van used the busi­ness ac­counts to pay for her cell­phone bill, gro­ceries, doc­tor and den­tal bills, per­sonal trips, on­line pur­chases and pur­chases from Kohl’s, Home De­pot, liquor stores and Sul­li­van’s busi­ness, which was called Take Shape for Life. She al­legedly paid the credit card bills by mak­ing unau­tho­rized elec­tronic trans­fers from the Ban­ner­stone check­ing ac­count.

Po­lice said their in­ves­ti­ga­tion showed also that Sul­li­van had forged Skip and Carol Hay­ward’s names on dozens of pay­roll checks made out to her­self.

Sul­li­van’s at­tor­ney, DeSan­tis, said the Hay­wards were re­spon­si­ble for pay­ing Sul­li­van’s pay­roll taxes and only de­cided to press charges against Sul­li­van be­cause the IRS was re­fus­ing to for­give them for late fees and in­ter­est on the $51,000 in un­paid taxes un­til they filed a po­lice re­port.

The Hay­wards have sold many of their prop­er­ties in re­cent years, but DeSan­tis said po­lice re­ports in­di­cate the cou­ple still owned the Gales Ferry Post Of­fice, and that the gov­ern­ment in 2015 be­gan seiz­ing rent from the build­ing be­cause of the un­paid tax bill.

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