Russell Northe, 57, was the independent member for Morwell in the state's east in 2020 when the Independent Broad-based Anti-Corruption Commission began investigating his conduct.
Northe was required to have his finances independently audited so the Victorian Electoral Commission knew how much money was used for actual expenses and what needed to be paid back.
Investigators found in 2018 and 2019, Northe gave his auditor false receipts and bank statements, claiming he paid for administrative assistants through a labour hire firm, bought a new printer and paid $3100 per month in office rent.
The auditor signed off on his claims, believing they were legitimate.
In the end, Northe claimed $192,863.40 in expenses across the two years, with $175,813.40 being falsely made.
IBAC charged Northe in September last year, a couple of months before he confirmed he would not recontest his seat at the state election.
The 57-year-old was on Wednesday sentenced in the Victorian County Court to 21 months in jail, after pleading guilty to two charges of misconduct in public office.
He will be eligible for parole after one year.
Judge Michael McInerney accepted Northe committed his crimes in the depths of an alcohol and gambling addiction.
Between July 2018 and October 2019, Northe lost more than $223,000 through gambling.
The judge also accepted Northe's already poor mental health had deteriorated significantly in the lead up to his sentence hearing, with the 57-year-old last week admitted into a psychiatric facility.
"A sentence of jail would way more heavily on you than someone in normal health," Judge McInerney told the court.
"There's a serious risk that jail will have a significant adverse affect on your mental health."
But the judge said the crimes were "sophisticated, protracted and brazen," and Northe's moral culpability was high.
There needed to be just punishment and denunciation for such serious offending, Judge McInnes said.
Northe sat with his head in his hands throughout the hearing, quietly sobbing at different times.
Judge McInnes wished him luck after delivering his jail sentence, also advising a prison guard to place Northe on suicide watch.
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