ONE of the customers of an ailing business has told of her horror at learning from The Northern Echo that its boss is a convicted fraudster.

Maternity clothing entrepreneur Michelle Bayliss said her initial contact with Michael Smallman at his County Durham HQ was impressive.

Miss Bayliss described him as "seemingly enthusiastic, knowledgeable and capable" and had no worries at that point - the summer of 2013.

But when a series of emails went unanswered and prototypes of a dress, skirt, trousers and jacket did not arrive, she became concerned.

She carried out some internet research and found out Smallman had been jailed for fraud and his new business venture was in trouble.

Miss Bayliss - who works as a barrister and part-time judge - said yesterday (Tuesday, May 10): "That's when I realised I had lost my money."

A jury at Teesside Crown Court heard how she paid Newton Aycliffe-based APM Clothing Development Ltd £2,160 for the prototypes and designs.

The lawyer said she received some good-quality computer-drawn designs promptly, but anxiously waited weeks for ten bits of fabric - which arrived in a hand-written envelope, with no cover-note, prices or explanation.

Gambling addict Smallman, 52, of Castle Hill, Richmond, North Yorkshire, denies nine charges of fraud and two of theft, and faces a four-week trial.

Prosecutor Liam O'Brien told the jury: "The Crown will ultimately ask you to consider whether - against a backdrop of failing to deliver orders time and time again - the defendant was behaving dishonestly by continuing to tell prospective customers he could do things he had failed to do so many times previously.

"Was it dishonest to for the defendant, for instance, to tell Michelle Bayliss he could provide prototypes of business suits for pregnant women in two months when he had not been able to do anything like that in the past?

"Did he really believe what he was saying or was he being dishonest?"

Mr O'Brien said more than half of Miss Bayliss's money - "a potential lifeline for the defendant's business" - was transferred into his Ladbrokes betting account.

That month, Smallman lost more than £10,000 gambling while his company account was overdrawn, the jury was told.

Giving evidence over a live video-link from Birmingham, Miss Bayliss told the court she saw a gap in the market for formal maternity wear for professional women.

She said she had searched for a company capable of producing the garments.

Under cross-examination from defence barrister William Byrne, Miss Bayliss agreed that her first impressions of the business and Smallman were that of a "professional operation".

"He seemed knowledgeable, he seemed enthusiastic which endeared me to him, and he was giving good ideas for marketing my product," she told the court.

"He seemed to have the know-how and capabilities to produce exactly what I was looking for . . . I absolutely believed him."

The trial continues.