THE founders of Newport’s Life Music Foundation - who were accused of conspiracy to defraud the charity - have had all charges against them dropped by a judge.

Daniel O’Connell, of Newport, and Clayton Richards, of Cwmbran, walked free from Newport Crown Court and told the Argus how they were arrested in front of their families, and kept in police cells for several hours before being interviewed for a crime they had not committed.

Two others, former rugby player Gareth Williams, and Mr O’Connell’s wife Nikki, had the same charges against them dropped in November last year.

In court, prosecuting barrister Marian Lewis admitted the process of sending the defendants to court was “flawed” and that the charges against them were “invalid”.

Before dropping the charges against Mr O’Connell and Mr Richards, Judge Stephen Hopkins QC said it was “not the prosecution’s finest hour”, and told the defendants: “You both leave here without a stain upon your characters.”

The charges related to a star-studded charity dinner at the Celtic Manor Resort back in July 2012. Following the event, the police received a report alleging that there had been some suspicious running of the dinner.

Gwent Police investigated and, in November 2013, charged the four defendants who were accused of using profits from the charity night for their own means.

Speaking exclusively to the Argus after the court hearing, Mr O’Connell, of Ridgeway Park Road in Newport, said: “The worst thing [the police] did was to try and drag my wife into this investigation.

“I’d like to pay tribute to Gareth Williams, Clayton Richards and Nikki my wife – she has been a rock and I’m a better human being for knowing her.”

Mr O’Connell, 39, recalled how he was woken up at his home in the early hours of the morning and his two children watched him being taken in a police car to Ystrad Mynach police station.

Mr Clayton, aged 39, of Ty Bwca Road in Pontnewydd, said he was also taken away in a police car in front of his wife and two young children.

Following his court appearance on Thursday, he said: “We spent four years building a charity from nothing and at the height of it we were giving out free music tuition six days a week to underprivileged children. It absolutely changed children’s lives, and this is what happened to us for doing it.”

Both Mr O’Connell and Mr Richards claimed to have given £70,000 of their own money into the Life Music Foundation, which had to fold midway through the investigation.

The charity was set up in 2010 to help young people with no financial means to access instruments and receive music tuition.

Ex-Wales rugby captain Gareth Thomas became patron of the charity and attended the dinner at the Celtic Manor in July 2012, along with musicians, rugby legends, television stars, and Hollywood actor Mickey Rourke, to help raise funds for the charity.

A host of celebrities and TV personalities were interviewed as witnesses by police relating to the investigation, including news presenter Lucy Owen, singer Wynne Evans, ex-rugby international Derwyn Jones, singer Dane Bowers, naturalist Iolo Williams, and glamour model Nicole Mclean.

Mr O’Connell’s defence barrister, Andrew Taylor, said: “The Crown [Prosecution Service] have had nearly three years to get their act together and it was floundering from day one.

“It begs the question as to how much public money has been expended on this hopeless investigation that never had a realistic prospect of succeeding. It has wasted valuable police time.

“And now that the criminal prosecution has been dismissed, the conduct of both the prosecution and the police must be brought under the spotlight.”

Mr Taylor believes the three-year long case may have cost in the region of £2 million of public money.

“There’s now inevitably going to be a consideration of civil litigation," he added. "Daniel O’Connell has been on the back foot for over two years but is now going to be on the front foot from this point on.”

A spokesman for Gwent Police said: "Charging decisions are made by the CPS and in most complex trials are reviewed by counsel, this case has been subject to the same level of scrutiny.

"We will review all the relevant information in relation to the decision before deciding on the appropriate course of action. Until then it would be inappropriate to comment further at this time."

The Crown Prosecution Service were contacted for comment.