Lambeth, Kingston, and Barking and Dagenham councils were cheated out of £1m by a group of housing benefit assessors who used dummy claimants, a court has heard.
They allegedly paid the cash into bank accounts opened with false passports in a decade-long fraud, Southwark Crown Court was told.
Menelik Cowan, his then-girlfriend Natasha Francis, 38, his brother Hugh Small, 39, Cassandra Johnson, 37, Jessica Bartley, 35, Rahel Asfaha, 36, and Alexander Williams, 39, were working for the local authorities at the time.
They put through a vast number of false claims using fake identities, according to the prosecution, in a 'fraudulent business on a grand scale and against the public purse, in particular against local housing benefits offices'.
Cowan, from Enfield, denies three counts of fraud and laundering £150,759.92 of the £289,469 he is accused of taking while working at Lambeth Council.
He has admitted one count of possession of identification documents with improper intention.
Asfaha, of Poplar, denies four counts of fraud, two counts of possession of identification documents with improper intent and two counts of money laundering.
She is accused of fraudulently claiming £82,331 while working for Lambeth Council and £182,907 at Barking and Dagenham Council.
Jessica Bartley, of Stockwell, worked for Lambeth Council and is said to have claimed £71,600.
She denies two counts of fraud, laundering £51,155 into bank accounts and possession of fake identity documents.
Natasha Francis, of Walworth, South London, denies fraud while at Lambeth Council and possession of fake identity documents.
Cassandra Johnson, of Brixton, denies two counts of fraud by abuse of position, possession of fake identity documents, and money laundering.
She is accused of hiding £57,514 of illicit housing benefit, and claiming £179,078 from Lambeth Council.
Hugh Small, of Fulham, worked for Kingston Council and is charged with fraud by abuse of position, possession of fake identity documents and money laundering.
He has pleaded guilty to money laundering and another count of fraud.
Alexander Williams, Brixton, denies fraud by abuse of position, possession of fake identity documents and money laundering.
He is accused of illegally claiming £240,345 while working for Barking and Dagenham Council.
Donna Francis and Derek Williams, both of Brixton, deny concealing criminal property.
The trial continues.