Jim McCormick's claims about his range of detection devices were extraordinary. He said the Advanced Detecting Equipment (ADE) he developed at his Somerset farm could pick up the most minuscule traces of explosives, drugs, ivory and even money. They were so good they could spot target substances from as far away as 1,000 metres, deep underground and even through lead-lined rooms. If their plastic grips and waggling antennae bore a passing resemblance to a £15 novelty golf ball finder, that was no coincidence. The 57-year-old businessman had used the jokey product sourced from the US as a starting point for an enterprise that made him a multimillion-pound fortune but placed lives at risk around the world.

To make his devices seem more credible, McCormick claimed that his company, ATSC, had four laboratories in Romania and two in the UK, each working in isolation to protect the secret behind his amazing sensors. He boasted of a super-clever expert in the background, "like Q in James Bond", who turned his concepts into reality.

It was all nonsense, albeit potentially lethal for the people of Iraq, where 6,000 of the fraudulent gadgets formed a first line of defence against car bombs and suicide bombers at checkpoints. When the devices were opened, it emerged that cable sockets were unconnected and supposed data cards were linked to nothing. One scientist told the jury who on Tuesday convicted McCormick of three counts of fraud that the antenna intended to point to suspect substances was "no more a radio antenna than a nine-inch nail".

One of the ADE devices in a briefcase

It is thought hundreds of lives could have been lost as a result of the failure of the devices, whose detection powers were no better than a random check. One truckload of rockets reportedly went through 23 checkpoints in Baghdad equipped with one of McCormick's devices without being spotted once.

Inspector general Aqil al-Turehi of the Iraqi interior ministry, who since 2009 has been in charge of an investigation into corruption around the deals, has told a BBC Newsnight investigation that for every bomb that was stopped at a Baghdad checkpoint, four got through and exploded.

It is now alleged that a key reason such a business could make tens of millions of pounds is the corruption of Iraqi officials. McCormick's success was fuelled by the payment of tens of millions of pounds in bribes to Iraqi officials and middlemen, it is claimed. Turehi told Newsnight that he is aware of at least eight senior Iraqis who took bribes, while a whistleblower who worked with McCormick says he saw accounts set up in false names to pay bribes to 15 Iraqis.

General Jihad al-Jabiri, who ran the Baghdad bomb squad, has been jailed for corruption as a result of the inquiry along with two others. Police sources said Jabiri was paid millions to purchase the ADE 651 and publicly defend it. More Iraqi officials are under investigation. A whistleblower who used to work with McCormick said they "don't care if people live or die"; the only thing they care about is "how much am I going to get back – cashback".

The whistleblower walked away from the operation when he grew suspicious about the device's effectiveness. When he challenged McCormick, he replied: "It does exactly what it's meant to." When the source asked what that meant, McCormick said: "It makes money."

An ADE fake bomb detector. Photograph: SWNS.com

The British government unwittingly gave McCormick a shield of respectability. His detectors were marketed at government-backed trade fairs. He used the logos of the International Association of Bomb Technicians and the Essex Chamber of Commerce, though he had no right to. He began to house the device in Pelican rigid cases of the type that are used to carry genuine military products and sourced official-looking stickers that warned users not to open up the detectors.

It took the government over a year to cotton on to the problems. In November 2008, a whistleblower wrote to Ian Pearson, a minister in the business department, urging him to shut down the trade in fake explosive detectors, but nothing was done. In January 2009, the whistleblower, who does not want to be named, sent a dossier detailing the scam that began with a hard-hitting title – "Dowsing rods endanger lives" – to James Arbuthnot, the chairman of the Commons defence select committee.

Arbuthnot promised to raise the matter with the minister for defence equipment and support but it was not until 12 months later that their export was banned on the basis that they were a danger to British and allied troops. By then, McCormick had made a fortune on the back of contracts with Iraqis, who paid $85m (£55m) for the bogus devices.

Jim McCormick's property in Bath

McCormick is married with two children, and his family have the run of a farmhouse deep in the Somerset countryside, a £3.5m townhouse in Bath with a basement swimming pool that was previously owned by the Hollywood actor Nicolas Cage, and a holiday home in Cyprus. McCormick also bought his father a place in Florida, a £600,000 Sunseeker yacht called Aesthete, and three dressage horses for one of his daughters, who has ambitions of making the British equestrian team for the Olympics in Rio.

Police have identified £7m of McCormick's assets, which they intend to try to seize, but believe the fraudster has stashed at least that amount away from the eyes of the taxman and other authorities in Cyprus, Belize and Beirut.

McCormick had separate trading arrangements with other countries. In Lebanon, a UN agency and a luxury hotel were among purchasers. Devices were sold to Muammar Gaddafi's Libyan regime, Iran, China, Syria, Jordan, Georgia and Mexico. Some ended up in the US, Canada, Japan and Belgium. The broadcaster Stephen Fry saw Kenyan wildlife rangers using them while he was filming and told the BBC he thought it was "cynical, cruel and monstrous" that rangers – who were trying to track down poachers – had been told they could detect ivory at vast distances.

McCormick's beginnings had been modest: a handful of O-levels, a couple of years with Mersyside police and then sales jobs with technology companies in the US and UK. Then around the turn of the millennium he heard about a mysterious device which, it was claimed, could detect substances such as explosives and drugs. McCormick offered his services as a salesman, and access to his contacts book, helping peddle the product in Saudi Arabia, Mexico and China.

Aesthete, the yacht bought by Jim McCormick

He decided to try to make his own detector. By now the 9/11 attacks had happened and there were fortunes to be made in security. McCormick found a novelty device called the Golfinder "tuned to elements found in golf balls". The marketing blurb urged: "Don't laugh. It works when used properly," but added: "It's also a great novelty item that you should have fun with."

He bought 300 for just under $20 each and replaced the labels with his own. The ADE 100 was born. McCormick modified his device between 2005 and 2009 and it morphed into the ADE 101 with an asking price of around $7,000. A similar but more solid device was called the ADE 650.

Marketing efforts were not always successful. A trial in Romania to detect drugs in lorries produced a glut of false positives, which McCormick claimed was down to drugs in the lorry drivers' bloodstreams. The Royal Mounted Police in Canada decided against an order when they asked how it worked and McCormick replied: "It just works."

The ADE range includes a handle fitted with a retractable antenna on a pivot which moves, it was said, as a result of "electrostatic magnetic ion attraction". The handle is connected via a wire to a pouch. In the pouch is a card that is said to encode information about the substance to be detected. Typically within the card are the sort of coloured dots used on organising charts. McCormick "programmed" or "activated" these dots by placing them in a jar for a week to "absorb the vapours" of the target substance, whether it was explosives, drugs, ivory or even human tissue. When he began, McCormick used his own blood for the "human tissue" dots. When he got busier, police say he didn't even bother to "programme" the dots.

It didn't matter. Scientists have concluded there is no way the cards can contain any information about target substances. Even if they did, the aerial is not actually connected to the card – the handle is hollow and empty. And if they could somehow work as claimed, a device that could pick up a trillionth of a gram of the target substance would be too sensitive to be useful – it would pick up all sorts of material over an impractically wide zone. McCormick's explanation of the science behind the product shifted, but he perhaps got closest when he told one business partner it was down to "the bit with the magic in it".

By 2009, British and US soldiers in Basra and Baghdad were expressing "real concern" about the devices after x-raying them and finding no working parts inside. One brigadier told the Old Bailey jury "he had never seen the device detect anything". They compared them to divining rods or ouija boards. Soldiers reported going through checkpoints when they knew they were covered in traces of explosives. At one checkpoint McCormick's detectors might pick something up – but they would then sail through the next one.

McCormick was arrested in the UK in January 2010 and as part of the investigation a full double-blind trial of the devices at Cambridge's Cavendish laboratory found the results were no better than random. The device was right three out of 25 times. One scientist said McCormick's description of radio technology was "an affront".

But still the device continued to be used in Baghdad, Mosul and Basra. "We know it doesn't work and that it has been banned, but we are continuing to use it," an Iraqi army lieutenant told an AFP correspondent in the weeks after McCormick's arrest. "It is bullshit. But still we are lying about it."

During his six-week trial, McCormick continued to insist that the devices worked. He said his devices had been used to search a hotel before a visit to Europe by an American president and said he had even demonstrated one in a minefield in Niger – and found a live bomb with it. He argued that none of his clients had complained or asked for their money back.

"I'm confident people have lost their lives because of this," said Detective Superintendent Nigel Rock, who led the Avon and Somerset police investigation. "There are young Iraqi officials standing on checkpoints hoping this device is going to tell them if there's a bomb in that car or wrapped around that person. I find it incredible and diabolical. He knew what he was doing."