Police will tomorrow morning make a court application to retain the £500,000 seized from former Darlington Football Club owner George Reynolds pending further investigations.

Mr Reynolds, his cousin Richard Tennick and personal assistant Ian Robinson were all arrested on suspicion of money laundering in a police swoop on Monday afternoon.

But today, minutes after lodging documents with members of the Regional Asset Recovery Team based at Durham's Police Headquarters in Aykley Heads, Mr Reynolds declared: "They can do what they like, they know and I know I am whiter than white.''

The application, under the Proceeds of Crime Act, involves £500,000 in banknotes, which were recovered by officers after Mr Reynolds' car was stopped in an intelligence-led operation at High Etherley, near Bishop Auckland, County Durham.

Mr Reynolds and Mr Robinson both from the Wear Valley area and Mr Tennick from North Yorkshire were taken to Bishop Auckland Police station for questioning and later released on police bail pending further inquiries.

A defiant Mr Reynolds, has now vowed to clear his name along with Mr Tennick's and Mr Robinson's.

After many troubled months at Darlington Football Club, he said, a final agreement had been reached with the Quaker's new owners the Sterling Consortium in the presence of a High Court Judge and solicitors.

The deal, which was agreed by both sides, he said, included Sterling: "taking over all my liabilities, debts and personal guarantees.''

In addition the consortium also agreed to buy Mr Reynolds lavish Witton Hall home and much of its contents.

Last Thursday, he said, a part payment for the hall was made to himself via a bankers draft and was collected in Leeds by Mr Robinson.

The money, he said, was deposited in the Co-op bank in Darlington from where on Monday he withdrew £500,000 from the account.

"I have always dealt in cash and the money was legally transferred to me with all relevant payments made on it such as Stamp Duty.''

He added: "The money is mine and I am perfectly entitled to take it out if I wish. The police described it as a large amount of cash but for someone like me who is used to dealing in millions it is small.''

He continued: "I have not the slightest doubt that I will be cleared of this allegation but I am concerned that two men who have never been in trouble with the police in their lives have had their homes turned over and have been left in a very distressed state.''

Following his handing in of documents yesterday, Mr Reynolds said he had been told by officers that they would be seeking to hold onto the half a million pounds until at least November.

When asked if he intended to appear at the hearing tomorrow morning he replied: "I wouldn't miss it for the world.''