Harman Banger, who represents East Park on Wolverhampton Council, has been charged with fraud by false representation after it is alleged he fraudulently claimed that his wife’s business, Pizza Plus in Bilston, was eligible for a small business grant of £10,000 in March 2020.
His wife, Neena Kumari, is also charged with fraud by false representation.
Banger, 40, and Kumari, 37, both of Bilston Road in Wolverhampton, appeared at Walsall Magistrates Court yesterday.
Both deny the charges against them.
Prosecutor Daniel Oscroft said Banger had been actively involved in helping businesses in his ward apply for grants, and notified the council that a number of companies wished to make the claim - one of which being Pizza Plus, owned by his wife.
Mr Oscroft told the court: "The claim was fraudulent from the outset.
"No premises licence had been paid for four years. The premises was visited in February/March 2020 and it was in a state of disrepair and boarded up.
"The premises were filthy and must have been unused for some significant time. I’m not talking weeks, but months or years.
"It was in such a state of disrepair that no reasonable person would believe it was being used in March 2020. There was no evidence of recent trading."
While Pizza Plus was owned by Kumari, the landlord of the property, based at 1 The Orchard, was JSB Properties - a company owned by Banger.
The court heard that on his arrest, Banger's phone was searched and he was found to be in 'financial difficulties' with a business lender.
Mr Oscroft added: "It may have been there was never any plan to trade from the premises. It may have been that there was some plan to trade from there in the future, and seeing an opportunity Mr Banger and his wife took advantage of the scheme to get a £10,000 up front bump to get the business started. Or it may have been that having realised they had been caught in a fraud, they desperately tried to make it look like the business was legitimate by doing things after the fact, in April, May and June 2020.
"But the critical point is this; to claim for this business there had to be a running business on 11 March 2020 and there was not."
Small business grants were being handed out across the country by the government to help companies struggling during the coronavirus pandemic.
Labour councillor Banger stood down from his role as the city’s economy cabinet member after the allegations emerged in June last year. He was arrested by West Midlands Police in June 2020 “on suspicion of fraud offences” and was released pending a full enquiry.
He has also been administratively suspended from the Labour group in the city pending the outcome of an internal party investigation.
The trial continues.