A crooked Scottish company boss and three of his trusted employees, including his stepdaughter, were facing jail yesterday after being found guilty of defrauding the Ministry of Defence of almost £500,000.

James (Jimmy) McLaughlan, from Ayrshire, used a "simple" clocking-in scam to claim the wages of an army of almost 300 "ghost workers", during a huge upgrading of the Royal Navy's Devonport Dockyard in 2001-2002.

His 15-month scam saw up to 58 non-existent scaffolders at a time apparently working shifts at the Trident nuclear submarine facility in Plymouth. In reality, they were either at home, in the pub, no longer worked there, never had, or simply did not exist.

The "dead men" con was so blatant that even when everyone went on strike, many of the staff at McLaughlan's Scaffolding Ltd still managed to put in a full day's work - at least on paper.

McLaughlan was so convinced he would never be caught that subordinates were often seen lining up with other workers with lists of "ghosts" to clock in.

The scam netted up to £27,000 a week and became such an "open secret" it ended up immortalised "in numerous comments" on the walls of a toilet block at the facility.

London's Southwark Crown Court heard by the time it was ended by an anonymous tip-off to MoD police, £424,923 of public money had been defrauded.

Paul Garlic, QC, prosecuting, said: "It was an environment which was ripe for printing money but they did not have to print money.

"All they had to do was create false clock cards and false documents. The audacity of the fraud was astonishing."

McLaughlan, 58, from Kilwinning, had earlier admitted conspiring to defraud the Secretary of State for Defence by "dishonestly causing or allowing false invoicing for extra hours" between January 1, 2001, and March 31, 2002.

His 28-year-old stepdaughter, Rebekah Hart, whose address was not given but whose undergraduate boyfriend was one of the "ghosts", had also pled guilty earlier to two sample counts of false accounting.

Yesterday, the scaffolding company's site manager, Robert Burns, 38, from Ardrossan, Ayrshire, and assistant quantity surveyor Christopher Ackerman, 33, from Plymouth, were found guilty of the conspiracy.

Burns's supervisor, brother Mark, 34, from West Kilbride, Ayrshire, and junior supervisor, Matthew Gillies, 28, from Troon, Ayrshire, were cleared of taking part in the swindle.

Earlier in the trial two other men - John Tibbetts, 43, from Paignton, and Kevin Watkins, 60, from Pembrokeshire - were also cleared.

Adjourning the case for pre-sentence reports, Judge Andrew Goymer told the two convicted yesterday they could remain on bail until April 29 when he would sentence them with McLaughlan and his stepdaughter.