To clergy and parishioners, senior church official Martin Sargeant seemed to have a gift for financial enterprise, forging new links with business and helping to breathe new life into historic buildings.

Sargeant, a former head of operations at the Diocese of London, part of the Church of England, helped spearhead projects to help churches in the City of London which had tiny congregations and were badly in need of money and revitalisation.

Richard Chartres, the former Bishop of London, once praised the influential church administrator for his knack of “turning ideas into profitable ventures”.

But as Sargeant crisscrossed the Square Mile, distributing funds and negotiating agreements with City financiers, developers and the church, he was hiding a secret that would end up unravelling his life and draining parishes of money.

Sargeant was a gambling addict, and had been hooked on fruit machines since he was a teenager. He fuelled his addiction with stolen Church of England funds.

On 19 December, at Southwark crown court in central London, Sargeant, 53, was sentenced to five years in jail for the offence of fraud by abuse of his position. He had stolen £5.21m in charitable church funds between January 2009 and December 2019.

Giorgina Venturella of the Crown Prosecution Service said: “Sargeant completely abused his position of trust and power to satisfy his own selfish purposes. He took money to fund an expensive lifestyle, including flying around the world and bankrolling a gambling habit.”

The conclusion to Sargeant’s case came as police consider the wider rollout of a project to identify suspects with gambling addictions. While there have been various estimates of the cost of crime linked to drink and drug addiction – which is put in excess of £24bn a year – there is limited data on the extent of gambling-fuelled crime.

In Sargeant’s case, the judge, Michael Grieve KC, heard how betting firms had plied the accused with gifts, including watches, food hampers and travel vouchers. The judge concluded the gambling did offer “some form of mitigation” in the case.

Documents obtained by the Observer reveal that over 12 years Sargeant staked more than £12.2m with just one betting brand.

The industry is now facing calls for stricter affordability checks.

The prosecution said the church administrator had been motivated mainly by greed, but Mark Ruffell, defending Sargeant, said gambling was at the core of the crime. “It’s the poor cousin of addiction and it is being understood more recently,” he said.

The court was read a statement from Professor Henrietta Bowden-Jones, Royal College of Psychiatrists lead on behavioural addictions, which said “we must acknowledge gambling disorder as a mental illness”. While on bail, Sargeant had been receiving residential treatment for gambling addiction from the Gordon Moody charity.

Sargeant, originally from Bournemouth, had a troubled childhood and started playing fruit machines as a teenager. He turned to crime to fund the habit, and was given a community order in 1992 for stealing from an employer. In 1995 he was jailed for 21 months for theft and other offences.

On his release from prison he embarked on a successful career with the Church of England, but the hidden addiction plagued his life. He maintained that he had told his employer about his convictions in the 1990s, but the diocese said last week that it learned of the offences from the police during their investigation.

Sargeant would travel to meetings in taxis so he could maintain phone reception and ensure the virtual fruit machine reels would keep on spinning. On some days, he would play for up to 18 hours and lose up to £20,000.

As his losses mounted, he diverted funds intended for restoring the fortunes of London’s churches into his personal bank accounts. Over a 11-year period, he betted millions with more than 100 gambling websites while diverting grants from the City Church Fund for his sprees.

Ruffell said there was no excuse for fraud, but the crimes had been “elevated” by the gambling addiction.

Documents obtained by the Observer from one betting brand, Jackpotjoy, shows that between 2004 and 2016 Sargeant deposited £983,250 and withdrew £513,143, which meant he lost £470,107.

His total wagers were £12.27m, which is many times higher than his deposits, because he would repeatedly gamble away his winnings and bonuses offered during games, effectively staking the money again many times over, with mounting losses.

Sargeant, who earned £86,000 a year, was made a “VIP” player by the betting company. He met his “VIP agent” at top hotels in the capital, including the Soho Hotel and the London Marriott Canary Wharf.

He was given several gifts by the betting outlet, including an Omega watch that retails at £7,597. He was also given Louis Vuitton luggage, Apple computers and electronics including an iPhone 7, Ray-Ban sunglasses and a Montblanc watch.

In May 2016, as Sargeant travelled the world on stolen funds, his VIP manager emailed him, saying: “How was Las Vegas? I was going to propose sourcing the [Porte-Documents] bag from Louis Vuitton and the Microsoft surface pro 4 (with pencil)?”

At this time, Sargeant was gambling across multiple accounts with many of the major betting brands, but the illicit funds flowing through his accounts do not appear to have raised any red flags with the authorities. All gambling businesses are required to report suspicious activity under the Proceeds of Crime Act 2002.

In 2019 Sargeant left his job and two years later irregularities in the allocation of funds were discovered at one of the parishes, Saint Stephen Walbrook, and he was arrested. He confessed in his first police interview to the fraud, telling the officers he was a gambling addict. He pleaded guilty to the fraud offence.

During his case, a small group of observers sat quietly at the back of the court for each hearing. They were reformed gambling addicts who had come to support him.

Several police forces are working on projects to help establish the scale of gambling-linked crime and provide early support for those who need it.

Brian Faint, a former police officer who works for the charity Beacon Counselling Trust, helped develop the screening initiative after he discovered in 2015 that half of the major financial crimes under investigation by his team at Cheshire Constabulary were linked to gambling.

He said: “I was not only surprised but also concerned that Cheshire had so many. I didn’t think it was unique to Cheshire, but it was much more widespread. It’s a very hidden addiction.”

Faint helped develop the first pilot project in 2017 with Beacon Counselling Trust and Cheshire police. This has since been rolled out to nine other forces. At least seven more forces hope to launch similar screening policies. The Association of Police and Crime Commissioners has said it would like to see a national rollout of such schemes.

The commission on crime and gambling-related harms, launched by the Howard League for Penal Reform, says: “Despite problem gambling being a recognised mental health disorder, the criminal justice system is not responding to related offending in an appropriate way.”

In a statement released after Sargeant was jailed, the Diocese of London said it had reported concerns in 2021 after a parish had raised questions about funds it had been expecting. The statement said: “With the legal proceedings now concluded, we are continuing to work with the police to secure the defrauded funds.”

A spokesperson for Gamesys Group, which owns the Jackpotjoy brand, said: “While we can’t comment on the activity of individual accounts, we have been part of a sustained and committed industry effort to improve player protection. The industry continually makes investments in responsible play and anti-money-laundering systems, tools and processes.”

A spokesperson for the Betting and Gaming Council (BGC), said a stricter code of conduct for VIP schemes has seen the number of players enrolled in them reduced by 70%. It said its members also devoted a fifth of television advertising to safer gambling messages.

They added: “The UK sector is one of the best regulated in the world, with problem gambling rates among the lowest in Europe at 0.3%, according to the independent regulator.”