Consumers bought free-range and organic eggs from Britain’s biggest supermarkets, believing they were the best quality and that hens enjoyed the highest of standards.

But, for an 18-month period from June 2004, over 100 million of these supposedly “premium” eggs on sale in supermarkets, such as Tesco and Sainsbury, and corner shops were from chickens reared in battery cages.

The scale of the racket was described at Worcester Crown Court yesterday when Keith Owen, mastermind of the scam, former managing director of Heart of England Eggs of Bromsgrove, was jailed for three years and ordered to pay £3 million in confiscation of his assets after admitting three charges of false accounting.

If Owen fails to pay the sum within 12 months, he will have to serve a further six and a half years in custody.

He is also banned from serving as a company director for seven years.

But John Kelsey-Fry QC, Owen’s barrister, in mitigation in court, suggested that others in the industry may have been implicated in the fraud. He said: “It is not the case that all those to whom Mr Owen supplied eggs were concerned to ensure the provenance of egg supplies.” He said it was inappropriate to name names.

It is the biggest food fraud case to have been brought by the Department for Environment, Food and Rural Affairs and is estimated to have cost about £1 million.

Richard Jones, head of dairy, eggs and poultry at Defra, said: “The majority of eggs are marketed in compliance with the law, but it is important for us to work together with the industry and ensure that individuals who are criminally minded are brought to book.”

There was no response from the British Egg Industry Council.

Owen was dubbed by Mr Justice Hooper during sentencing as “the guiding mind” of a “serious and complex fraud.”

He said: “Heart of England eggs made very substantial profits at the expense of real-life victims, the purchasers who mistakenly believed they were buying eggs of quality when they were not.”

The judge told Owen: “Well-intentioned people chose eggs they believed to be free-range or organic because they believed in the quality of the egg. Your greed abused that well-intentioned public trust.

“By greed, you have corrupted and destroyed the once legitimate business which you have known all your life.”

Owen operated as a middleman in the egg industry, sourcing eggs from all types of farms around Britain, Northern Ireland, the Irish Republic, France, Germany and the Netherlands.

He also bought in battery-cage eggs rejected by former leading egg companies, Deans Farms Ltd and Stonegate Farms Ltd, which have since merged and now trade as Noble Foods, purportedly for other outlets.

Millions of eggs a year passed through his premises, which were protected by electric fences and thick fir trees.

Neighbours complained of the noise and diesel smell from the 44-tonne articulated lorries that regularly drove along the lane, but they did not suspect that this was the centre of a multimillion-pound fraud.

What was clear, however, was that Owen, who drove a Ferrari, BMW and Land Rover, was doing well and had also built up a lucrative property empire.

There was a shortage of free-range eggs in Britain at the time. Chickens had been affected by hot weather and laid fewer eggs while farmers could not afford to invest in free-range facilities.

These premium eggs were double the price of cage eggs at 70p a dozen for free-range, 90p for organic and 35p for factory-farmed eggs at wholesale. Owen spotted the potential and his greed intensified.

New rules came into force in the European Union in 2003 and every egg to be sold in retail and catering outlets had to be stamped with country of origin and a code for method of production. This was the number 3 for cage eggs, 1 for free-range and 0 for organic.

Lorry drivers were banned from the loading areas at Owen’s plant and would spend hours waiting outside. Eventually, they became suspicious they were returning the same load of eggs to their depots.

The only difference was that, instead of being packed in grey pallets, which meant they were cage eggs, they were packed in blue trays for free-range or pink for organic. Defra was alerted to their concerns, which coincided with their own suspicions.

Egg marketing inspectors were already checking on compliance with the new labelling rules and routine checks showed possible discrepancies with Heart of England eggs.

Inspections were made at the firm to scrutinise paperwork and ensure production records tallied with supplies. Officers soon discovered that papers relating to egg producers were false. Some were dead, some had given up the business, others were farming chickens and turkeys, not eggs.

These gaps prompted scrutiny of the eggs themselves. It is impossible for the naked eye to distinguish a free-range or organic egg from a cage egg. Using ultraviolet light, however, inspectors were able to pick out marks on the shell, rather like a doctor reading an X-ray.

They quickly proved that substitution of eggs was taking place. There were lines on many egg surfaces at 2.5cm intervals, which indicated chickens had laid their eggs on wire surfaces, which are used on battery-cage farms.

Police were brought in and a raid took place at Heart of England eggs on October 18, 2006.

Investigators, the industry and supermarkets are anxious that consumers should not lose faith in eggs. Labelling errors, however, still occur and, this week, Derbyshire trading standards officers revealed they had conducted tests on 50 eggs from different stalls.

Some 40 per cent, 19 eggs, failed in quality and labelling. It is perhaps no coincidence that three new people are now being trained to join Defra’s team of 26 egg marketing inspectors.

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