A smuggler at the centre of a bid to recover more than £900,000 said to have been generated from smuggling admitted lying over finances in the past but said: “I have not got a penny now.”

Sandor Nyari, aged 49, of Brereton Road, Willenhall, was involved in illegally bringing hundreds of millions of cigarettes into the UK, Wolverhampton crown court heard.

He was jailed twice for carbon copy smuggling offences in the past nine years and his wife had £210,000 seized by investigators, Timothy Hannam, for HM Revenue and Customs told a proceeds of crime hearing yesterday.

“She was trying to launder the money by buying a house and despite the seizure was able to invest tens of thousands more just four months later,” said Mr Hannam. A further £55,000 was a deposit on a £200,000 house in Bloxwich Road North that was sold three years later, in 2006, at a £49,000 profit, the court heard.

Nyari, who admitted making almost £350,000 from smuggling over the years and was jailed on the second occasion after being extradited from Hungary, said: “I have spent all my money. I do not know why you think I have millions. My wife wears three-year-old jumpers and I owe almost £3,000 rent on my flat in Budapest.

Nyari said the Willenhall home belonged to his mother-in-law. He said a restaurant in Hungary and a cafe in this country, run by his family, had closed. He was jailed for three years in Chelmsford in August 2002 for smuggling hundreds of millions of cigarettes into the UK without paying duty.

He got involved in a similar racket after his release and was imprisoned for a second time after being extradited from Hungary where he fled in a bid to escape capture in February 2006 .

He has completed that sentence and is fighting a customs bid to recover £914,000 in unpaid duty from him and Dean Jackson, 33, of Pritchard Avenue, Wednesfield. They were part of a gang bringing cigarettes into the UK from Turkey and Slovakia hidden on lorries.

The hearing was to continue today.