A former hospital trust chief executive faces jail after she pleaded guilty to fraudulently paying her husband more than £11,000.

Paula Vasco-Knight, the former head of Torbay and South Devon Foundation Trust, and her husband Stephen had pleaded not guilty to fraud at Exeter Crown Court but today changed their pleas.

Court recorder Don Tait told the former NHS England equalities lead she should expect jail time for her part in the fraud, which involved giving work to her husband’s graphic design business Thinking Caps.

The couple will be sentenced on 10 March.

Habib Naqvi, a senior equalities manager at NHS England, was acquitted of two charges of encouraging or assisting in the commission of an offence. The prosecutor decided not to bring evidence against Mr Naqvi because of lack of evidence.

In December 2012, Ms Vasco-Knight was awarded a £10,000 bursary for leadership development, the court heard.

In November 2013, Mr Vasco-Knight submitted an invoice to the NHS for £11,072, from the bursary funds, to produce a 200 page leadership improvement document Transform.

Ms Vasco-Knight then authorised the trust to pay her husband’s company.

Prosecutor Gareth Evans said Ms Vasco-Knight was legally bound to declare her interest in her husband’s company as part of the NHS’s standing financial instructions, but failed to do so.

Mr Evans said the document was never submitted to the NHS, with the couple showing investigators a “complete sham” as evidence in 2014.

Ms Vasco-Knight was also charged with another count of fraud for a £9,000 newsletter produced by her husband’s company. The prosecution, led by NHS Protect, offered no evidence for the other charge against her and she was found not guilty.

NHS Protect managing director Sue Frith said: “It will be a huge disappointment and shock to many that Paula Vasco-Knight, who has led on equality in the NHS and whose personal story was an inspiration to so many, has abused her position of trust and committed fraud against the NHS.

“Stephen Vasco-Knight’s offence is no less disappointing. Between them they defrauded over £11,000 of NHS money that is sorely needed.”

Mr Naqvi said: “It is a great relief, after all this time to know that I have been found not guilty. I was clear I had done nothing that could or should lead to any criminal charges or conviction. I had simply been carrying out my role to the very best of my ability. I am so pleased the court agreed.”