The court found Lalu Prasad Yadav and 15 others guilty of conspiracy to defraud the Bihar state government of 8.45 million rupees ($130,000). Judge Shivpal Singh sentenced all the convicts to prison terms ranging from three-and-a-half to seven years.
Yadav's conviction will be challenged in an appeals court, his son Tej Pratap Yadav said after the court's decision in Ranchi, the capital of Jharkhand state.
Yadav already is serving a five-year prison sentence on a conviction in a related case for fraudulently withdrawing 378m rupees ($5.8 million) from the Bihar state government treasury for fictitious medicines and fodder for cattle. Yadav has been barred from contesting elections.
Yadav spent two months in jail in 2013 before he got bail from the Supreme Court as he challenged his conviction. He was taken to the prison again after his conviction in the second case on December 23.
Corruption is endemic in Indian politics. Judges are now expediting trials of politicians following a Supreme Court order to reach verdicts within one year in cases in which lawmakers are accused of serious crimes.
The Supreme Court order is part of its attempt to clean up India's electoral system by making it more difficult for politicians with criminal cases to contest elections. Indian lawmakers are now barred from running in elections if they are found guilty of offences carrying a jail term of at least two years.
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