A WOMAN ordered to pay back nearly £6,000 after helping her lover plunder the bank accounts of her dying husband is using money from his will to settle the debt.

Catherine Ferguson has collected thousands of pounds from the estate of her late husband Eric - despite her secret affair.

Ferguson was written out of the will after her husband - then seriously ill with a brain tumour - discovered she was having an affair with his carer, Peter Arnold.

But the 43-year-old contested the decision and recently reached an out-of-court settlement with Mr Ferguson's family ahead of a hearing that was listed for three days.

It is understood that Ferguson, who was pregnant with Arnold's child when they were convicted of fraud charges last summer, will receive more than £40,000 from the will.

The Northern Echo understands she was seeking 60 per cent of the value of the family home and half of Mr Ferguson's assets, but settled for a lesser amount. It is understood that a judge at a pre-trial review warned both sides that a contested hearing would cost tens of thousands of pounds and advised them to reach a settlement.

The money was expected to be paid into Ferguson's bank account at the end of last week, which will allow her to meet a £5,900 penalty imposed at Teesside Crown Court in December. Ferguson was ordered to pay the money, said to be her benefit from the fraud, during a Proceeds of Crime Act application from Cleveland Police a week before Christmas.

Arnold was assessed to have benefited by £18,005, but was ordered to pay back only £1 because he had no assets after spending the money on three motorbikes, a necklace for his wife, clothes and pub meals.

The Recorder of Middlesbrough, Judge Peter Fox ruled that his case could be re-opened and the full amount recovered if Arnold came into money after his release from prison.

It is understood that the 44-year-old - jailed for two years and three months last July for a number of forgery offences - was freed early from his sentence a fortnight ago.

Ferguson was given a nine-month prison sentence suspended for two years last summer, and was told in December that she would be jailed for six months if she failed to pay back the money within a year.

At the hearing before Christmas, Judge Fox was told that Ferguson did not have the money, but was expecting to receive some from an inheritance claim at County Court.

The long-running wrangle was resolved at Middlesbrough County Court in April, and Mr Ferguson's sister-in-law last night said: "It's settled and we just want to move on."

Ferguson, who began an affair with Arnold after he was employed to work as a carer, cashed five cheques worth a total of £5,900 in her husband's name.

Arnold lied about past convictions for dishonesty when he applied for the job in November 2003, and was said to have started the affair the following June when his marriage was collapsing.

One of the offences involved Arnold carrying out a £2,000 balance transfer towards the deposit for a BMW car after he stole Mr Ferguson's credit card and personal details.

Arnold, of Stainmore Close, Norton, near Stockton, pleaded guilty to ten counts of forgery between August and September 2004 and asked for a further 37 similar offences to be taken into account.

Ferguson, of Quenby Road, in nearby Billingham, admitted seven offences of forgery between December 11 and 31, 2004, and a further chargeof false accounting.

It was claimed she had not benefited from Arnold's spending, but accepted she changed the address to which her late husband's bills and statements should be sent to prevent him discovering the deceit.

Father-of-two Mr Ferguson, a former British Steel engineer, who died aged 52 in February last year, had lived in Billingham with his wife, but at the time of the offences, they were in the process of getting divorced.

Mr Ferguson was left severely disabled as a result of an operation to treat a tumour. He was unable to walk unaided and had severely restricted speech.

Last night, Mr Ferguson's sister-in-law, Carol, who uncovered the pair's deception, said: "Eric always said if things go to court let the court decide and there can be no argument.

"We have acted upon his wishes and the courts have decided on the punishments for her and Arnold, and now a settlement has been reached with the estate."

Mrs Ferguson, from Peterlee, east Durham, added: "After what happened we were reluctant to pay her, but we knew she would be entitled to something for their years of marriage.

"She is getting some money, but not as much as she wanted."

Catherine Ferguson could not be contacted for comment.