A BUSINESSMAN who masterminded a scam which centred on home study or “distance learning” courses will pay back only a fraction of his fraudulent earnings.

Michael Smallman was ordered to pay £209,301 – said to be his realisable assets – by Judge George Moorhouse following a hearing at Teesside Crown Court.

He was said to have benefited to the tune of £16,593,197 from the fraud, with the Crown Prosecution Service admitting that the money had been spent.

Smallman, 48, advertised computer and business courses offered by his Middlesbrough-based company, the National Distance Learning College, which were falsely said to be accredited to legitimate organisations such as City and Guilds.

But the vast majority of the estimated 80,000 students who signed up failed to gain any recognised qualifications.

Meanwhile, Smallman pocketed loans and Government grants that were intended to pay for and promote the courses. He was convicted of three charges of fraudulent trading and one of transferring criminal property was and jailed for seven years in 2008.

His wife, Angela, was convicted of four money laundering charges and jailed for 15 months.

Smallman was present in court and appeared relaxed.

He is serving his jail sentence at Kirklevington, an open prison near Yarm, Stockton, but it is understood he is to be released in a matter of days.

The confiscation order imposed on him means he has to pay the money back within six months or face up to two years jail.

Smallman’s 45-year-old wife, who lives in Richmond, North Yorkshire, was ordered to pay £4,910. Her benefit from the distance learning fraud was £38,157.

She was given three months to meet the confiscation order or face two months in prison.

Police have described the businessman as living a high-roller lifestyle, which included splashing out on expensive properties at home and abroad and buying and training expensive racehorses.

He also set up several failed ventures, including a television production company and had investments in clothing companies in Vietnam.

Detective Chief Inspector Lisa Atkinson, head of the North- East asset recovery team, said: “The students involved in this case obtained the required loans and grants to further their education and received nothing in return.

“There are many innocent victims that unwittingly funded Smallman’s lavish lifestyle.”

Detective Inspector Dave Turnbull, head of economic crime at Cleveland Police, said the proceedings brought to an end an investigation which originally began in 2002 and represented a satisfactory conclusion.