However, after reviewing its financial statements, a forensic accountant for Internal Affairs found that the trust had entered into a management agreement with Cosgrave's company, Integrated Commercial Solutions.
"The agreement was drawn up, under Mr Cosgrave's instructions, on favourable terms to ICS providing for compensation of $681,584.10 should the trust cease gambling operations."
Many of the costs paid to Cosgrave and ICS were not "actual, reasonable and necessary" expenses incurred in conducting gambling.
They included costs for Cosgrave's pub and restaurant, the Clendon Inn in Manukau City, and the lease of a vehicle by ICS.
Internal Affairs' gambling compliance director Debbie Despard welcomed the conviction.
"Gaming machine society trustees are responsible for ensuring that the maximum amount possible is returned to the community. The money involved in this case should have been distributed as grants to the community.
"The Gambling Act makes it clear ... those involved with running gaming machines in pubs and clubs are entitled only to costs that are actual, reasonable and necessary."
In April last year a High Court judge ordered Cosgrave and ICS to repay to the Secretary of Internal Affairs $975,629.39 after the department took a civil action under the Gambling Act to recover money improperly paid.
Cosgrave, 66, will be sentenced on the theft charges on September 28.
Brian Corbett, executive director at the Community Gaming Association, said it was unfortunate that the case had got to this stage.
"Any conviction in regard to any kind of fraudulent activity in the gaming industry is not helpful to our industry at all."
However, the chief executive officer of the Problem Gambling Foundation of New Zealand, Graeme Ramsey, said the current system of pokie trusts needed to be reformed.
"This is not an isolated incident, it's just the last in a long history of rorts."
