Between October 2008 and July last year she stole $689,361.12 through numerous unauthorised cash transfers from two of the company's bank accounts into three of her personal accounts. The thefts also include use of two company credit cards for personal use.
When questioned by police, Hodgson stated she stole the money because she wanted to fund a shopping addiction.
Hodgson, a first time offender before the courts, further stated she knew what she did was dishonest but carried on to fund her lavish lifestyle.
The summary of facts did not reveal exactly what Hodgson spent the money on.
However the company's owner Geoffrey Truscott told the Bay of Plenty Times Weekend his own investigations had uncovered at least $100,000 was spent on jewellery, while other spending was for clothing, beauty treatments and generally "living the high life".
But not all the stolen money had been traceable, he said.
Hodgson's lawyer Rebekah Webby urged Judge Ian Thomas to take into account her client's mental health problems, for which she was now medicated.
Ms Webby said while Hodgson's doctor could not present absolute evidence to the court, it appeared that she may have been suffering from an undiagnosed bipolar condition, including hypermanic episodes, at the time of her offending.
Judge Thomas told Hodgson her offending was a "gross breach of trust by a person in a special relationship and the impacts on her victim have been far reaching".
He said: "Not only did you steal the money but you also failed to pay Inland Revenue and Mr Truscott had to borrow some $500,000 to pay what was owed to the tax department and it is likely that he will have to spend the rest of his life paying the money back.
"No doubt this has been a devastating blow to your victim and it has had serious consequences for him and his family," the judge said.
Judge Thomas said it was clear Hodgson had used the money to sustain a lavish lifestyle and her desire for shopping and it was "highly surprising" that her husband and others close to her had not uncovered the lavishing spending earlier.
Judge Thomas said due to Hodgson's lack of income and assets he was not able to make a reparation order.
Mr Truscott told the Bay of Plenty Times Weekend he was rapt to learn Hodgson was behind bars.
Mr Truscott said Hodgson's offending came to light in July last year after he started noticing cash issues and fielding inquiries from Inland Revenue.
"Once we started digging it, only took us only about 24 hours for the situation to unravel."
To facilitate the fraud, Hodgson had manipulated the financial records, created another set of accounts and falsified tax returns to hide the thefts, he said.
"Karen was very clever and cunning as she continued to come to work in the same car and dressed the same but behind the scene she was spending up large and leading a lavish lifestyle at our expense."
Hodgson is separated from her husband who has custody of their son. It is understood they live in Auckland.
Mr Truscott, 51, a married man with three children, said when he found out the full magnitude of the thefts he "felt sick".
It had been a huge blow financially and personally, causing extreme strain and stress in his family relationships. Mr Truscott said it was unlikely he could now retire at 65, as he had planned.
"We believe she [Hodgson] was playing us for a patsy from the start and despite the civil court proceedings we took against her she still owes us thousands of dollars.
"Her playing the medical invalid card doesn't wash with me, the only strain Karen is suffering is the stress from knowing she was facing jail."
Mr Truscott said it had cost his company close to $50,000 in legal fees to pursue civil proceedings against Hodgson and almost $70,000 in additional accounting and investigation costs.
"We have had to recreate all the accounting records for the last two years because she had artificially manipulated the accounts and was so clever and very cunning in the way she went about trying to cover her tracks.
"We tracked a lot of her spending down to fancy living such as visits to beauty therapists, clothing, jewellery, and high living. But there is still thousands of untraceable cash."
About $20,000 of items were recovered but attempts to have her bank accounts frozen proved unsuccessful and shortly after the judge's ruling she drained all her bank accounts, he said.
Mr Truscott said the business was financially secure.
"We employ 19 people and they have all rallied together to ensure the business is able to keep going and we are working to get past this."
