William Collard, 38, from Horsley, claimed income support after he was diagnosed with a sleeping disorder.
He said he had no income, capital or assets but a probe into his accounts revealed he owned residential and business properties worth £3,075,000.
He received a two-year conditional discharge after admitting benefit fraud at Newcastle Crown Court.
Previous denials
Collard applied for income support for himself, partner and two children, because he was suffering a medical condition, Obstructive Sleep Apnoea Syndrome, the court heard.
By the time the fraud was uncovered, the company director had pocketed almost £6,000 between December 2003 and September 2004.
Collard had denied the charge at a string of appearances before magistrates but admitted to dishonestly making a false statement to obtain benefits when he appeared in crown court.
Judge David Hodson ordered him to pay the £2,000 costs, which his decision to take the case to the crown court had incurred.
'Out of hand'
He said: "You have at last had the good sense to admit this offence.
"This case has got completely and utterly out of hand. You have incurred further costs and there is absolutely no reason why you should not pay them."
Anti-fraud minister James Plaskitt said: "This is an excellent example of our success at tackling benefit fraud.
"We are taking a tough line on benefit fraudsters because they steal £20m a year in the North East - money that should be spent on those who really need it."
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