Founder of flagship free school and two staff treated public money “as their own” in alleged £150,000 fraud

The principal, financial director and teacher at a flagship free school defrauded the government out of £150,000 and treated public money “as their own”, a court heard.

Sajid Husain Raza, 43, Daud Khan, 44, and Shabana Hussain, 40, are charged with fraudulently obtaining the cash from Department for Education (DfE) grants to set up Kings Science Academy, in Bradford – one of the first wave of free schools to open in 2011.

Raza, the founder and principal of the school, his sister Hussain, a teacher, and Khan, former finance director, were accused of “paying themselves what they wanted whether they were entitled to it or not” at the first day of the trial at Leeds Crown Court yesterday.

The court heard Raza spent some of the cash on mortgage repayments.

Concerns were raised by DfE civil servants, the jury was told, but Raza was allegedly dismissive in meetings – “plucking financial figures from the air” – and threatened to phone Michael Gove, the then secretary of state, when challenged over finances. Despite this, he was approved as principal in early 2011, the court was told.

Simon Kealey, prosecuting, told the jury that in a period of just over three years the defendants, who deny all charges, committed fraud by “dishonestly obtaining public money intended for the school”.

This money came from grants given to them by the DfE to set up and run the school.

Kealey said: “In summary, the prosecution allege these defendants treated public money as their own, paying themselves what they wanted whether they were entitled to it or not.

“And when challenged to provide proof of expenditure, created or fabricated documents in order to cover their tracks.”

He told the court the total amount of public money involved was around £150,000.

The court heard Raza owned several properties, but by 2008 he was making mortgage repayments irregularly or via credit card. “This continued for several years, including the time he was employed as principal for Kings Science Academy,” Kealey told the court.

During this period, Raza also faced a series of county court judgments, Leeds Crown Court heard.

In June 2010, Raza applied to set up a 500-place academy, to open in September 2011 – and the proposal was approved. The court heard that money, in the form of a business case grant, was then paid to KIFSA Ltd to set up the project.

This money came with strict guidelines to how it should be spent, including admin costs, room rental and travel expenses, but no provision for salary, the prosecutor said.

The jury heard that withdrawals were made by Raza on three occasions, and that money is “simply unaccounted for”.

There were also payments going into Hussain’s account and no records as to what it was for.

An application for a Lead In grant, to provide salaries for the teaching staff, of more than £196,000 was made by Khan and approved, the jury heard. It is alleged Raza overpaid himself from this. The court heard it was agreed he would be paid £75,000 a year, but he had agreed to take half that for the first year.

The court heard that in another count of false accounting, invoices had been falsely created and submitted for several teachers’ salaries. The teacher would submit their valid invoices but then allegedly Khan would write a false invoice, over-inflating the money and submit that instead.

Kealey also told the court Raza had opened an account at the Co-Op bank. In July 2011, this account peaked with £28,000 “made up of three large credits from the Kings Science Academy and about half the balance was used in the same manner to make large mortgage re-payments”.

Kealey added: “In short, Sajid Raza, through Daud Khan a financial director, was paying himself what he wanted not what he was legally entitled to.”

Raza is charged with four counts of fraud, three counts of false accounting and two counts of obtaining money transfer by deception.

Hussain is charged with one count of fraud and one count of obtaining property by deception.

Khan is charged with two counts of fraud and three counts of false accounting.

The defendants, all from Bradford, deny the charges.

The trial continues.

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