Kanubhai Patel, 53, accumulated a portfolio of 15 properties in South London between 1992 and 2002, which is now worth nearly £4 million. His assets include a spectacular villa in Streatham with its own swimming pool, which has a market value of just under £1 million.

Although the cash value of the income support and housing benefit that Mr Patel fraudulently claimed came to £69,000, a court has ordered that the benefit to him of his crime, once increasing property prices have been taken into account, was closer to £2.5 million.

Once mortgages on the properties have been repaid, the value is £1.6 million. Mr Patel has now been given 12 months to hand over this money to the asset recovery unit at the Department for Work and Pensions (DWP).

He has already been given a two-year jail sentence for the fraud. If he fails to repay the money he could face a further six years in jail and will still be required to repay the money, this time with interest.

It is the biggest compensation order to be secured by the DWP, which usually manages to recover around £2 million a year from benefit fraudsters. James Plaskitt, the Anti-Fraud Minister at the DWP, said: “This cheat’s £69,000 fraud cost him over £1.6 million — that’s 25 times what he stole from taxpayers’ pockets. It sends a clear message that fraud doesn’t pay.

Mr Patel, who came to live in England from India in the 1970s, was convicted for fraud in October 2003 along with three accomplices, but it has taken investigators eighteen months to unravel his financial empire and to finalise the confiscation order, which was made at Kingston Crown Court last week.

Mr Patel’s fraudulent activities began in 1992 when he claimed income support, housing benefit and council tax benefit on the grounds that he had separated from his wife and was the sole carer of his children. He falsely declared his only source of income to be child benefit and then set out to become a property magnate.

Between 1992 and 2002, while in receipt of benefit, Mr Patel began to accumulate his portfolio of properties in South London. He obtained money to buy them by making fraudulent mortgage applications on which he claimed to be manager of the Shree Convenience Store in Balham, where he was known to be working while still claiming benefit.

Steve Cox, the investigator on the case, said that Mr Patel was able to meet his mortgage payments by placing tenants in his properties who were themselves claiming housing benefit.

“Effectively all his income came from the taxpayer, including the housing benefit that he fraudulently claimed and the housing benefit paid legitimately to his tenants, who then paid it to him via an account in his wife’s name,” Mr Cox said.

Mr Patel was finally caught after the Counter Fraud Investigation Service in south Surrey received a tip-off. He attempted to evade arrest in June 2003 by hiding under the bed in one of his houses in Croydon, but was arrested after police spotted his feet sticking out.

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