A forger set up a multi-million pound counterfeiting factory while on the run from a six-year prison sentence.

Peter Blackbourn, was jailed in 2000 for a £1 million currency scam he ran from his rented bungalow in Noel Rise, Burgess Hill.

He had served less than a year of the sentence when he absconded from Ford Open Prison in Littlehampton and set up an even bigger operation. But officers from the Crawley branch of the The National Crime Squad smashed Blackbourn's latest money-making factory in an undercover investigation codenamed Operation Russet.

As officers burst in to an industrial unit in Canning Town, London, they caught Blackbourn using a magnifying glass to examine items rolling off a printing press.

In another room they discovered £25,000 worth of counterfeiting machinery including computers for copying images of notes, machines for creating printing plates and a guillotine to chop up the finished A3 sheets.

There was even a machine used for transferring the metallic foil onto the paper. Counterfeit notes were found in various stages of completion.

Stacked in a three-foot-high pile were reams of A3 paper that contained partly and fully completed counterfeit £20 notes.

Some had watermarks and metallic strips.

Although there were only 12 complete notes the remainder were at advanced stages.

The face value of completed and part-completed sheets was £921,000 but police also found a large quantity of unopened packs of A3 paper.

They calculated the potential value of counterfeit £20 notes was £7,440,000.

Blackbourn, 50, and accomplice Robert Deanus, 63, from Islington, London, pleaded guilty to producing counterfeit currency when they appeared at Snaresbrook Crown Court, London.

Detective Inspector Alwyn Evans of the NCS said: "Our operation disrupted a sophisticated counterfeiting enterprise and prevented any notes from going into circulation."

Before his arrest Blackbourn lived alone in Burgess Hill and was occasionally visited by his two young children.

He ran his own computer firm and once worked as a Ministry of Defence consultant.

A neighbour, who lived next door at the time of Blackbourn's first trial, said when told of the counterfeiting: "Is that what he used to get up to? We often wondered what he used to do with himself there.

"I thought he was into computers. He seemed to keep changing cars. I would have imagined he must have rented them, the amount of times he had different ones.

"We didn't talk to discuss anything much. He would just say hello over the garden fence. I didn't even know his surname. I only knew him as Pete."

The pair are due to be sentenced next month.