Liverpool police seized £200,000 from a property belonging to developer Elliot Lawless, who was arrested on suspicion of fraud at the end of last year and subsequently released on bail.
It is understood that the money was found during a search when Lawless was arrested on 18 December along with Nick Kavanagh, head of regeneration at Liverpool City Council.
But the find was only made public later, following a magistrate’s court hearing at which police successfully applied to retain the assets pending an investigation.
Lawless said in a statement: “At a recent court hearing, it was set out that a large sum of money was seized from one of my properties. This money was from various cash businesses that I operate, as well as bank deposits, and was receipted and properly accounted for.
“I’ve provided the necessary details to the police and fully expect it to be returned in due course once police finish their inquiries. I do not propose to comment further on the investigation at this stage.”
Lawless and Kavanagh were arrested in December on suspicion of conspiracy to defraud, bribery and corruption. Both men were released on conditional bail. No charges have been brought and a police investigation is ongoing.
Lawless is founder of developer Elliot Group, which is involved in around 20 residential developments across the North West, mainly in Liverpool.
Projects include the £170m redevelopment of Heap’s Rice Mill, the £100m Wolstenholme Square, the £100m Aura student scheme on the edge of the Knowledge Quarter, and the 1,000-apartment scheme Infinity on Leeds Street.
The developer also has a project in Greater Manchester – the 34-storey The Residence at Greengate in Salford, which is due to complete next year.
Earlier this week, contractor Vermont said it had stopped construction on two Elliot Group projects it was working on in Liverpool, Aura and Infinity, while the police investigation is ongoing. The contractor was on site with the first phase of Infinity, a 38-storey tower comprising 416 apartments, and the first block in a development that has consent for 1,000 apartments.
Kavanagh joined the council in 2010 and was appointed director in 2011.
Both men deny the allegations.