It has long been feared that clubs in non-league football are prey to being taken over by criminals and used to launder ill-gotten money, but Croydon Athletic, now in the Ryman League Premier Division, stands as the first where an owner has apparently confessed to doing so.

Mazhar Majeed, the Croydon-based businessman filmed by the News of the World bragging about fixing Pakistan Test matches, was also quoted as having said "the only reason" he bought Croydon Athletic was to launder the money made from match-fixing.

Majeed, who was arrested by the Metropolitan Police on Sunday on suspicion of conspiracy to defraud bookmakers, is understood to have also been arrested by HM Revenue and Customs as part of an investigation into possible money laundering at Croydon Athletic. A 35-year-old woman and a 49-year-old man who were not named were also arrested by HMRC as part of that money-laundering investigation.

Croydon Athletic, formed in 1986 as a merger between Norwood and Wandsworth football clubs in south London, have been financed to unprecedented success since Majeed took over – as co-owner, according to the club, on 1 July 2008. The club immediately installed an electronic scoreboard of a quality not usually deemed necessary for the Ryman League First Division, hired a manager, Tim O'Shea, and signed players who took Croydon to the 2009 London Senior Cup Final where they lost on penalties to Hendon Town.

O'Shea's side began last season by hammering Ashford Town 7-0 and finished as champions, promoted to the Ryman League Premier Division for the first time. Throughout, the club has denied paying huge money to O'Shea or to attract players, but acknowledged that their improved fortunes have come from the money Majeed has invested. David LeCluse, described on the club's website as its chairman, confirmed yesterday that Majeed, who appointed him, was putting money into the club.

LeCluse said he runs a pest-control business and struck up a friendship with Majeed when he was called to exterminate vermin at Majeed's property. He said Croydon's budget is "nothing out of the ordinary" and that he had "no idea" anything like a money-laundering investigation or match-fixing scandal could hit the club.

LeCluse said staff had been told Majeed was the 70% owner of the club until as recently as last Tuesday, 24 August, when Majeed told them he had taken over the remainder of the shares. Croydon Athletic does state on its website that Majeed is a director and the club's owner, but in official Companies House records, Majeed does not appear in any capacity. Jenna Manji, 29, giving her occupation as "consultant," is listed as the sole director and the 92% owner of the shares in Croydon Athletic Sports and Social Club Limited, the club company registered with the Ryman League. The minority stake of 8% was stated in April to be owned by the company secretary, Roy Price.

Manji, reported to be Majeed's sister-in-law, and Majeed both give as their address an office block in Finchley, north London, which is occupied by a firm of accountants Adler Shine. Nobody from Adler Shine returned a call about their relationship with Majeed and Manji. Majeed's own business history is checkered. A director in two active investment companies, 14 companies of which he was a director have been dissolved: one, Able Trading, is in liquidation owing £1.1m to the NatWest Bank, and another property company, Valeco, owned a property in Croydon which NatWest had put into receivership.

The Football Association, whose financial regulation department was established partly to oversee and help clean up non-league football, is understood to have investigated aspects of Croydon Athletic's affairs about 18 months ago but no charges have been brought. Then after the club won promotion in May, the department began to conduct a review of its finances, which the FA now does routinely with clubs at non-league level.

With the FA investigators having been in for just a month, Croydon's previous chairman, Dean Fisher, was sent to prison for three years for defrauding the company for which he worked, TCS Media in Bayswater, of £525,825. Prosecutors told the court that Fisher had issued false invoices to the company and diverted their payments to his own accounts, and that he poured £260,000 of it into the club. Croydon denied that but acknowledged in a statement that Fisher had bankrolled spending "until he was refunded at the end of each month".

That fraud conviction in the middle of a financial review clearly gave the FA's investigators reason to think all may not have been exactly as it should be at Croydon Athletic, and it is understood the review was still going on when the revelations about Majeed broke on Sunday. The FA would not confirm any details, saying: "As this is part of an ongoing potentially criminal investigation we cannot make any comment at all."

The club's accounts, for the year to 30 June 2009, the first in which Majeed was stated to own the club, show that it owed almost £500,000, an increase in its debt of £307,000 during the year.

Non-league football has for years been considered vulnerable to money laundering because clubs are often in financial difficulties but nevertheless have cash flowing through them from the gate, programmes, catering and bars. The FA's financial regulation department has as one of its primary functions to encourage non-league clubs to keep better records, pay their tax and VAT and manage their money better. But while many have become more professional and are run by dedicated staff and platoons of volunteers, the semi-professional game is still blighted by insolvencies.

Stephen Vaughan, when the owner of Barrow, in the Unibond league, said himself that he had been arrested in the late-1990s by HMRC, who were investigating the alleged laundering of "millions of pounds of supposed drug money" on behalf of the convicted Liverpool drug baron Curtis Warren. In Warren's biography, Cocky, Warren was said to have flown on a helicopter over Barrow's ground, and told the pilot: "I own that."

No charges were ever brought against Vaughan, who admitted he was a friend of Warren's but "categorically and strenuously" denied involvement in money laundering. Vaughan was banned from being a company director for 11 years – and from involvement in football – last year after admitting an unconnected £500,000 "carousel" VAT fraud.

Alan Turvey, the Ryman League's long-serving chairman, said of events at Croydon: "We will be seeking a meeting with the club, working closely with the FA and authorities, and doing everything necessary to protect the integrity of the league and its clubs."