The NHS’s former head of equality has been warned she faces a jail sentence after she admitted swindling £11,000 by diverting funds to her husband.

Paula Vasco-Knight was one of the most prominent black executives in Britain but left court in a broken woman and in tears after a dramatic change of plea on the second day of her trial.

She used £11,072 of NHS cash to pay her husband Stephen for work on an equality and diversity publication called Transform which never existed.

He ran a one-man graphic design business out of his garden shed and had already been paid £9,000 for work on three newsletters which Vasco-Knight commissioned in her capacity as the NHS’s lead on equality and diversity.

She told officials to pay him a further £11,074 for work on the Transform document which in reality had never been done.

Stephen Vasco-Knight later knocked up a ’sham’ version of it. Much of this was cut and pasted from a research paper by the Kings Fund charity.

It was exposed as a fake when investigators discovered the report which it had been lifted from had actually been published after the date when Transform had supposedly been finished and months after it had been paid for.

Some of the money siphoned off to her husband came from a special bursary of £10,000 to Vasco-Knight from the NHS’s Leadership Academy to further her work on equality.

Former nurse Vasco-Knight enjoyed a meteoric rise through the NHS management chain which led to her being the deputy chief executive at Derriford Hospital in Plymouth before being appointed as the CEO at the South Devon NHS Foundation Trust.

The trust runs Torbay Hospital and a number of other smaller facilities throughout South Devon, including Dartmouth and Totnes hospitals. She combined this job with her one-day a week role as the NHS’s head of equality and diversity until resigning in 2014.

She shook and sobbed uncontrollably as she changed her plea to one of the two charges of fraud she faced at Exeter Crown Court. Her husband Stephen also admitted fraud.

Recorder Mr Don Tait adjourned sentence until March, ordered a pre-sentence report, and released her and her husband on bail.

He said: ’It has been a momentous decision to plead guilty. I know very little about their personal circumstances. I am sure they appreciate the significance of their guilty pleas and that an immediate custodial sentence is a distinct possibility.’

He told the jury: ’As far as Mrs Vasco-Knight is concerned, she has fallen a long way, hasn’t she, but that is her responsibility.’

Vasco-Knight, aged 52, of The Seasons, Runcorn, and her husband Stephen, aged 45, of the same address, both admitted a single count of fraud, which relates to an £11,072 for work on the Transform document.

The prosecution offered no evidence on a second count of fraud which related to the £9,000 paid for the newsletters.

Vasco-Knight’s former assistant at the NHS equality unit Habib Naqvi, aged 28, of Wells Road, Bristol, was cleared of two counts of aiding and abetting.

The court was told the prosecution had been planning to withdraw the case against him regardless of the other pleas.

Vasco-Knight’s decision came on the second day of her trial and after the jury had been taken through a huge volume of e-mails which showed how she ordered officials to pay the £11,072 to her husband.

Mr Gareth Evans, prosecuting, said her behaviour was ’dishonest in the extreme and a massive breach of trust and abuse of her position’.

Vasco-Knight should have declared an interest before giving any work to her husband and the details should have been recorded in the annual accounts and audit.

The offences dated back to 2013-4 and arose from her one-day a week equalities job, in which she had control over a £200,000 annual budget.

Mr Evans said her husband Stephen was a graphic designer. He said: ’He runs a business called Thinking Caps of which he is the only employee. When interviewed he said it was a one man show run from his garden shed.

’We say Mrs Vasco-Knight avoided making any declaration of interest when her husband was contracted to produce work.

’This is a very simple case. Vasco-Knight breached the standing financial instructions massively by causing her husband to be paid with no declaration of interest made.

’She must have known that she, of all people, as chief executive officer must obey the financial instructions.

’The Transform document is a complete sham. No proper document was ever produced yet Vasco-Knight’s husband was paid £11,072 for work which was never done.

’That is fraud and it is dishonest in the extreme. On her part it was a massive breach of trust and abuse of her position as chief executive.’

Mr Lloyd Morgan, for Vasco-Knight, said the Recorder would be assisted by a full probation pre-sentence report when the case returns for sentence in March.