Malcolm Macaskill, 65, filed bogus forms to HMRC which grossly overstated the sales from his sandwich businesses to reclaim more than £800,000.
Macaskill also laundered £200,000 of his ill-gotten gains through his local Conservative parties in Glasgow and Rutherglen where he was treasurer as well as deputy chairman.
Further cash was then funnelled through the bank accounts of his current and ex-wives.
Macaskill went on regular holidays, bought a Harley Davidson motorbike and also travelled to London for shopping trips to upmarket store Harrods.
He faced a number of charges including being involved in a fraudulent VAT scheme and receiving criminal property.
Macaskill, of Cambuslang was deemed unfit to stand trial due to him suffering from a brain tumour.
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An examination of facts hearing – without a jury – instead took place at Glasgow Sheriff Court to examine the circumstances of the case.
Sheriff Paul Reid concluded the facts against Macaskill had been “established”.
Macaskill was not present for most of the hearing. He remains living at his home.
The case was adjourned until later this year.
The scam occurred between February 2003 and March 2014.
Macaskill ran the Bigga Bites and Kwik Snax sandwich production companies from a factory in Cambuslang.
The court heard Macaskill submitted 34 false VAT return forms which authorised repayments of £864,971.72 through Bigga Bites.
He also made a bogus claim of an NHS contract with his business to get £88,543 in 2008 from a VAT return claim.
Macaskill then made cash deposits from the fraud into the bank accounts of the Rutherglen and Cambuslang Conservative Association and the Glasgow Conservative Campaingn Forum.
A total of 11 cheques were made out to Kwik Snax from The Rutherglen and Cambuslang Conservative Association general account with a value of £8,617.
A further 52 cheques totalling £193,790 were made out to Kwik Snax from the Glasgow Conservative Campaign Forum.
Two cheques worth £6,300 were also made out to Macaskill directly from the organisation.
Reporting on the case was delayed until the end of the trial of his current wife Louise Macaskill and ex-spouse Moya Macaskill.
Their charge of acquiring £864,961 of criminal property was found not proven against both after six days of evidence.
Louise told the court in her evidence that she “didn’t identify” that £104,554 across a period of four years and eight months had also entered her bank account from him until 2014.
The 64 year-old, who worked for Lloyds TSB and Clydesdale Bank, said: “I know I worked many hours and got a good wage, a pension and a flat.”
Louise admitted transferring Macaskill £20,000 to his business account which she claimed was to “help” him.
The trial heard there was £9,000 withdrawn in 2009 which was used to buy a Harley Davidson motorbike.
Louise stated she did not know the full extent of her husband’s fraud until the evidence came out in trial.
Prosecutor Jessica McGowan asked her if she felt regret by trusting Macaskill and she replied: “Very much.”
Macaskill’s ex-wife Moya, also 64, told jurors that she helped run his sandwich business but was not paid a wage as she was told by him that he would “help me out.”
The trial heard Moya received large sums which she said was used to cover her own and the business’ bills.
Despite separating in 2001, Moya continues to work for Macaskill despite them divorcing in 2010. She told the court she presently gets less than minimum wage.
She claimed there were “no financial arrangements” and matters worsened as she struggled to pay her mortgage as well as her council tax.
The woman’s home at one stage was on verge of being repossessed until she was bailed out by Macaskill, who was on a golfing trip in Florida at the time.
Her lawyer Allan Macleod asked her if she went on holidays, trips to Harrods or purchased Harley Davidson motorbikes and she replied: “No.”
Moya stated that she was unaware of the fraud and that she “would not have been happy” knowing that it had come from the proceeds of crime.
Macaskill had been set to stand trial with the women, but it emerged he was diagnosed with a tumour in the pituitary gland of his brain in 2022.
At the end of the examination of facts hearing, Sheriff Reid commented on the charges: “He did this deliberately to receive money which he was not entitled to.
“As far as the other charge is concerned, he clearly used the offices of a political party to launder considerable sums of money.
“I am satisfied beyond reasonable doubt that Macaskill acted in contrast to the legislation in the charge.”
Macaskill – an ex-district court judge – has previously been photographed alongside former Prime Minister David Cameron.
In 2012, he reportedly received an out of court settlement having been dumped by the Scottish Conservatives as a Holyrood election candidate.
His removal paved the way for future leader Ruth Davidson to get into parliament.
Macaskill later described the Scots Tories as “inept and morally corrupt”.
