Fifty-seven year old Paul Whittaker of Craiglea Drive, Edinburgh, had denied embezzling 11,921.22 from Smart City Hostels in Blackfriars Street on August 21, 2007 and forging the signature of another director on a cheque for that amount.
Whittaker was dismissed from the company in November 2008 and it went into liquidation the following month.
Two other former directors of the company, Alexander Stewart and Vincent O'Donoghue, told the court that it was a requirement of the bank that any cheque for over 1000 had to be signed by two directors and that if a director wanted a loan from the company it had to be agreed by another.
They both told Sheriff Nigel Morrison QC that they had neither signed the cheque not granted Whittaker a loan for the amount taken.
The cheque was made out to Scott & Co, a firm of Sheriffs Officers. An official of that company, Steven Newman, said that between 2003 and 2007 Whittaker had built up arrears in his Council Tax payment of 11,921.22.
In a letter to them in June 2007, Whittaker said it was his intention to clear the arrears in one lump sum.
The accountant for Smart City Hostels, Eamonn Smart said one of the signatures on the cheque was that of Whittaker, but he did not recognise the other signature, although it loosely resembled Mr Stewart's.
In his evidence, Whittaker said he could not remember if it was Mr Stewart or Mr O'Donoghue that he had spoken to about getting a loan to pay his tax arrears.
Fiscal Depute, Malcolm Stewart, asked him: "Are you saying this amount was a director's loan?"
He replied: "Yes".
Mr Stewart then pointed out that such a loan had to be approved by fellow directors and they had denied it.
"I have to suggest you were in financial trouble, not just with the company, but with your own personal circumstances" said Mr Stewart. "You were faced with bankruptcy and forged this cheque".
Whittaker answered: "In all the years we had worked we had never ever refused a Directors' Loan".
Finding Whittaker, a first offender, guilty of both charges, Sheriff Morrison deferred sentence on him until January for background reports.