Peter Nicholson OBE, 58, fronted a gang of fraudsters who claimed wages for 'ghost' employees at Newham Borough Council in east London.

Nicholson arranged trips to Canada for himself and relatives, all at the expense of the local authority, Snaresbrook Crown Court heard.

On one occasion, he and 10 others enjoyed a 10-day break to Canada worth £4,000 in February 2005.

Nicholson claimed the council 'rewarded' him with the holiday after he was made an OBE, a title he is now likely to lose.

But investigators rejected his claims as the trip was booked before the New Year's Honours List was announced.

Nicholson previously booked a nine-day break to Canada for himself and his daughter using council funds in 2002.

The con took place while he was head of the Youth Offending Team at Newham Council between May 20, 2000 and August 31, 2007.

Nicholson's duties involved coordinating efforts to rehabilitate young people who committed crimes.

He was found guilty of five counts of conspiracy to defraud after an eight-week trial.

Nicholson authorised three 'ghost' employees to be paid by the local authority when they did not exist, in order to syphon off the cash.

The payments were arranged by his finance officer, Shirin Bazrcar, 51, the manager of staffing agency Excel Employment, which received payments worth more than £65,000.

Bazrcar's firm hired David Tuck, 52, who ran Lads Construction Ltd and was paid thousands of pounds by the council for bogus building projects.

Nicholson was jailed for five and half years and Bazrcar was jailed for four years after being found guilty of four counts of conspiracy to defraud and two counts of money laundering.

Tuck, said to have been 'brought into' the scam by Nicholson and to have played a lesser role, received an 18-month prison sentence after being convicted of three counts of conspiracy to defraud and a single count of money laundering.

Passing sentencing, Judge Neil Sanders said Nicholson abused the 'very high degree of trust' placed in him by the council by setting up the "sophisticated" scam.

"For all of you, this was the result of greed.

"It's clear the effect of these convictions will go beyond each of you as individuals and impacts greatly on your families.

"But I consider that given the seriousness of the offences, an immediate custodial sentence is appropriate."

Wearing a dark suit, pink shirt and light blue tie, Nicholson shook his head as sentence was passed.

Prosecutor Alexander Goudie said the total amount stolen from the taxpayer was £281,771.90.

He added that payments for bogus employees were put into accounts held by Bazrcar's 16-year-old son, Ali.

The address given for one 'ghost' was registered in the name of Nushan Mostani, Bazrcar's sister.

Scott Wainwright, defending Nicholson, said he was now a 'broken man' and had lost everything as a result of the scam.

"During his tenure at the council he did some very positive work, with the Youth Offending Team being taken from the bottom to the top of the league.

"The OBE will doubtlessly be removed and he will be stripped of the pension he has contributed to.

"He acknowledges that if it were not for his actions, David Tuck would not be sitting where he is now.

"He is aware of the effect his greed has had."

Martin McCarthy, for Bazrcar, told how she suffered from a 'troubled' mental state after the trial, requiring her to undergo treatment.

Nicholson's sister-in-law, Kerry Butler, 46, was found not guilty of a single count of money laundering but will face a retrial in November in respect of a charge of conspiracy to defraud, after the jury failed to reach a verdict.

His ex-wife, Sheila Butler, was cleared of involvement in the scheme on Judge Sanders' direction.

Nicholson, of Bexleyheath, Kent, denied misconduct in a public office and five counts of conspiracy to defraud.

Judge Neil Sanders directed a not guilty verdict against Nicholson on the misconduct offence.

Bazrcar, of Lynwood Gardens, Hook, Hampshire, was convicted of three counts of conspiracy to defraud and one of money laundering.

David Tuck, of West Woodside, Bexley, Kent, was convicted of three counts of conspiracy to defraud and one of money laundering.

His wife Lorna Tuck, 45, of the same address, was cleared of two counts of conspiracy to defraud.

Christopher Smith, 48, of Glendale Road, Erith, Kent, was cleared of a single count of conspiracy to defraud.

Earlier Judge Sanders had directed the jury to clear Sheila Butler of Abbey Wood, southeast London, of conspiracy to defraud.