A key ally of Al Carns is a convicted fraudster who posed as Harry Potter to steal £1million from the taxpayer, The Mail on Sunday can reveal.

Paul Cadman, an ex-nightclub bouncer who was jailed for five years over the scam in 2005, is helping the wannabe Prime Minister in his bid for No 10.

The Birmingham-based entrepreneur created bogus student profiles, using names including Bill Clinton, the entire England football team and James Bond, to take £1million from a government apprenticeship scheme.

After being banned from being a director for ten years, he now has that role at dozens of companies.

This includes the apprenticeship charity, Steps to Work, where he is the CEO. It is going into voluntary liquidation with £24,000 left in the bank despite receiving £23million in income in the last year before it went bust, according to Companies House.

Administrators raised red flags over the transfer of the most valuable assets to a subsidiary company owned by Cadman for £1 while leaving a £2million trail of debts. Cadman denies any financial impropriety.

After Mr Carns resigned as the Government's Armed Forces minister on Thursday following a row with Prime Minister Keir Starmer over funding for defence, he said he would go for the leadership 'if the ball came loose from the back of the scrum', adding: 'I'm good at rugby.' 

But this revelation will raise serious questions about his judgment.

The former Royal Marine endorsed a defence conference Mr Cadman put on this week – something he is said to be anticipating an 'honour from the Navy for'.

Despite the Government having to change procurement laws because of the scam Mr Cadman perpetrated, Mr Carns said: 'I strongly support this initiative and encourage businesses to take advantage of the practical guidance, insight and connections it offers.'

In return, the former nightclub bouncer has endorsed Mr Carns to be the next PM. In a glowing piece in the local news, Mr Cadman said the MP is an 'experienced professional who brings judgment shaped by real-world responsibility, not political apprenticeship or procedural expertise', and 'the kind of leader Westminster has been missing'.

The Birmingham Selly Oak MP uses Mr Cadman to introduce him to influential figures at events, according to Birmingham sources. 

The two men share a member of staff, who does PR and online content for both. One of her videos shows the Labour MP in a pull-up competition against a fireman. They regularly go on visits as a pair as well as donating blood plasma together.

Mr Carns said: 'I wanted to take a moment to formally thank you [Cadman] for your LEGENDARY 200th [blood] donation. It is a remarkable milestone.'

Birmingham City Council sources say 'the council as an organisation has effectively banned Cadman from the building. We want nothing to do with him'.

Some insiders say it's because he might be linked to the botched IT system, Oracle, which was implemented when Mr Cadman's sister was chief executive and has cost Birmingham City Council £144million to fix.

Nevertheless, he and Mr Carns have been spotted going to Warwickshire cricket matches and Birmingham City football games together, where Mr Cadman is a director.

Local sources have responded to their 'friendship' with incredulity. One said he was 'repeatedly warned' about getting close to Mr Cadman and 'it beggars belief that Al Carns hasn't been told the same. It is more than naivety, it must be wilful ignorance.'

Mr Cadman was involved in a fracas at an awards ceremony where he hospitalised a business associate during a dispute. No charges were brought after the CCTV footage failed to capture the incident. He has since made a family crest with an inscribed Latin motto that translates as 'No one attacks me with impunity'.

Last night, Mr Carns declined to comment. But a source close to him said: 'As a popular former minister and local MP he is proud to meet as many people as possible in and around the Birmingham area.'

Mr Cadman said: 'I've made mistakes in the past, all of which I've learned from, turning my life around and helping others along the way.'