Shugar was working for the Department of Health and Welfare when he was detained by the RCMP in 1946. Previous to this appointment, Shugar had worked for the British and Canadian navies in developing anti-submarine equipment and served on the executive of the Canadian Association of Scientific Workers. The espionage commission accused Shugar of spying for the Soviets because of his known association with Fred Rose and Sam Carr. They were also suspicious of Shugar becuase "his explanations failed to convince us." The documents stolen by Gouzenko from the Russian embassy also suggested that Shugar had conspired directly with the Russians, although there was never any evidence of his criminal activities.

Shugar was the first of the suspects to be acquitted in court. The ruling was handed down before the commission completed its final report, yet the government refused to edit the report to reflect the fact that he had been found innocent at trial. Even more surprising was the commissioners' decision to comment on the results of Shugar's trial in their report. Specifically, they criticized the judge's decision and argued that there was sufficient evidence to find Shugar guilty based on the requirements established in the Official Secrets Act. Despite his innocence, Shugar was later dismissed from his job in the Department of Health and Welfare. 

The following brief biography comes from the espionage commission's final report:

"Shugar, who on his discharge from the Navy, entered the employ of the Department of National Health and Welfare in 1946, had entered the Canadian Navy on February 5th, 1944, as an Electrical Sub-Lieutenant R.C.N.V.R. He had been born in Poland in 1915, coming to this country at the age of four or five. He received his B.Sc. in physics from McGill University in 1936 and his Ph.D. in 1940. For a short time he was employed in the Department of Physiology of that University and then entered the employ of Research Enterprises, Limited, a Crown Company, at Leaside, near Toronto, in January, 1941, where he remained until he joined the Navyas above mentioned."