Black Velvet Travel's new owner Adam Smith was spared jail over possessing fake cash because his new staff depend on him for their jobs

A judge told Adam Smith he had only avoided being locked up because the jobs of staff at Velvet depended on him and the company owed the taxman almost £140,000.

Smith, who rescued Velvet after it went into administration in July, had originally denied possessing counterfeit notes but changed his plea to guilty just days before his trial was due to start.

Outside court, Smith told the Daily Echo he had been “stupid” but reassured both staff and customers at Velvet that the firm was in good hands.

Kingston-upon-Thames Crown Court heard how Smith, who appeared under his birth name of Paul Jones, had risen from being a bus driver to part-owner of London-based BETC Ltd, trading as Buses Etcetera, within a few years.

The court heard the 31-year-old, from Chapel Way, Epsom, Surrey, had listed one of the company's minibuses for sale on the Internet.

Prosecutor Roger Daniells-Smith said an interested buyer, believed to be from Birmingham, arranged to meet Smith to hand over £9,600 in cash.

But, he said, on meeting Smith the buyer “changed his mind” and ran off without the bus, leaving Smith with a plastic bag full of notes which he quickly discovered were fake.

He put the bag under his sofa at home, before deciding to spend some of it in a bar in Kingston when he met up with friends on August 16 last year.

Mr Daniells-Smith said: “He was overcome with temptation, didn't hand the money in and decided to go and spend it.”

Staff at the bar realised three £20 notes spent by Smith at the bar and put in a charity bucket were fakes and called the police.

At first Smith told bar staff the money had come from a nearby supermarket cash machine, but later admitted the truth to police.

Police searched his house and found the remaining notes under his sofa.

Philip Blunden, defending, told Judge Paul Dodgson that the not guilty plea was due to advice given to him by his previous solicitors.

After admitting spending three counterfeit notes when knowing they were not genuine and two counts of possessing fake notes, Judge Dodgson imposed a 16-month prison sentence, suspended for two years.

He said his decision was based on good references for Smith made by business associates, the fact police had not pressed a more serious charge of intending to spend all of the counterfeit money – which Smith had denied – and that the future of Velvet depended on him.

He said: “If I were to send you to prison then a number of people at Black Velvet would have their employment put into jeopardy.”

He also ordered Smith to do 150 hours’ unpaid work, pay £600 costs and a £100 surcharge.