A SHAMED businessman is facing jail and financial ruin after confessing to masterminding a substantial European funding fraud.

The admission by company director Thomas Farrier yesterday led to charges being dropped against four members of his family.

Farrier’s wife and two daughters sobbed as the 63- year-old pleaded guilty to two charges of fraudulent trading at Teesside Crown Court.

All four were accused, along with the businessman’s son-in-law, of being part of a £1m fraud involving two County Durham companies, which, it was said at an earlier hearing, were paid to provide training courses to help disadvantaged people in the North-East find work.

Farrier was the director of Development and Research Initiatives Limited and Meteor Enterprises Limited at the time of the offences.

All five were arrested after a long-running investigation by detectives from Durham Police’s economic crime unit.

They were among eight people originally held following a series of raids on houses and company premises in the Durham City area.

The others were released without charge after the swoops in December 2007, and no further action will be taken against them.

No evidence will be offered against Mary Farrier, Melanie Farrier, 24, James Tunney, 33, and Melissa Tunney, 31, after yesterday’s development.

All five were due to start a trial estimated to last up to ten weeks, before Farrier pleaded guilty to two of the charges he faced.

He consoled one of his daughters while Mr Tunney comforted another after the judge warned Farrier that he faced a prison sentence.

Amanda Rippon, prosecuting, told Judge Peter Armstrong that the minimum amount he used for his own gain or that of others was £600,000.

Farrier, who lives with his wife, Mary, 58, at Wood View, Cornsay Colliery, County Durham, was given bail until sentencing on July 16.

Originally, all five were accused of conspiracy to launder money, and Farrier and his daughter, Melissa – also a director – faced charges of fraud.

The two companies were said to have been paid £986,031 in grants from the European Social Fund and European Regional Development Fund to provide the training courses across the North-East.

Instead, the cash was alleged to have been used to buy land, houses and finance building work.

A large amount of cash was also said to have been transferred abroad.

Farrier pleaded guilty to making false claims about the costs of resources and staff, and false representations about available match-funding.

Farrier, who hid his face as he left court yesterday, also admitted transferring assets from Meteor Enterprises Ltd elsewhere, with the intention of defrauding creditors of that company and Development and Research Initiatives Ltd.

Miss Rippon said police would start confiscation proceedings to retrieve the illegally-obtained money at the next hearing.

Adam Kane, for Farrier, said he was a man of professional background with no previous convictions.

At the next hearing, no evidence will be offered against Mrs Farrier, her daughter, Melanie, of Priestburn Close, Esh Winning, or Mr and Mrs Tunney, from Welby Drive, Ushaw Moor.