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The grants were given to set up Kings Science Academy in Bradford in It opened in The three were found guilty at Leeds Crown Court following a six-week trial. The jury heard a number of meetings took place between Raza and the DfE, at which he was said to be "incredibly rude and dismissive" and appeared to "pluck financial figures out of the air". Analysis by BBC Education Editor Branwen Jeffreys By the time Sajid Raza applied in to open a free school under a new flagship government policy he was a man with growing financial problems.

There was already one court judgement against him for a small debt, the first of ten for missed payments of various kinds. Raza had already made false claims on mortgage applications for rental properties. But within two months in his initial proposal to open a free school had been approved by the Department for Education and the first grants were paid into the company account. Some civil servants raised concerns but the process continued. The court was told that when he was challenged, Raza threatened to call the then Education Secretary, Michael Gove.

By later that year Raza was transferring public money into a personal account and using some of that money to pay the mortgage on his rental properties. The school opened in September in Bradford and the jury heard it was run as a family business. Among those employed by the school was his sister in law Shabana Hussein also convicted today of receiving a fraudulent payment.

The finance director, Daud Khaun, helped cover up the misuse of public money. The Department for Education says the allegations were investigated as soon as they were raised and the free schools system is designed to deal with such problems faster than local authorities.

But while the process of approving free schools has tightened up, this case raises a serious question about the early implementation of the policy. In the rush to approve applications, were short cuts taken and warning signs ignored?

In the same month, almost half the balance was used to make large mortgage repayments. Mr Mann said Raza had been motivated by "considerable financial difficulties" and he obtained the money by creating false invoices and submitting fraudulent expenses. He also inflated his salary and on two applications "claimed to be a consultant surgeon", he said. Raza, the founder and principal, was found guilty of four counts of fraud, three counts of false accounting and two counts of obtaining money by deception.

Khan, the financial director at the school, was found guilty of two counts of fraud and three counts of false accounting.

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