Parade: John Handley (with blue folder) leading the 2012 Remebrance Sunday Parade in Basildon ahead of Mo Larkin in red dress
However, Det Chief Insp Keith Davies has referred the allegations of misconduct in public office back to Basildon Council after concluding there were allegations which needed further investigation.
Investigation: Det Chief Insp Keith Davies
Police were called by Basildon Labour group’s chief whip, Alan Bennett, after the Echo exposed Mr Handley’s past.
Mr Handley, of Eastern Esplanade, Southend, falsely claimed he was a Royal Navy veteran, a doctor of law and a United Nations official.
In his letter to Mr Bennett, Det Chief Insp Davies, head of the serious economic crime unit, says Mr Handley lied, but adds there is not enough evidence for a criminal prosecution.
Salute: John Handley saluting (third in from right) at 2012 parade
The letter said: “Taking all the facts together, a conclusion has been made there is no realistic prospect of conviction in this case and as such no further action will be taken.
“It is clear from the case law and Crown Prosecution Service guidance into the offence of misconduct in a public office this is a very serious offence and should only be used for serious breaches by public officials.
Sombre: Mo and Mr Handley (far right) at 2010 parade
“The facts of this case do not reach the threshold for a criminal prosecution.
“While his public claims have been established to be lies, that alone is not sufficient to bring any prosecution. Offences under other legislation have been considered, but again the threshold for charge is not met.”
However, he said the council should investigate the case against the Nolan Principles, which are seven standards of public office.
This is because it is alleged Mrs Larkin was alerted to Mr Handley’s bogus claims by members of his family, but still publicly used his false Naval background in a bid to save face when she was photographed fiddling with her mobile phone as troops saluted her in St Martin’s Square on Armed Forces Day last June.
The letter added: “This case will be referred back to the monitoring officer of Basildon Council to consider whether any of the facts alleged amount to breaches of the Nolan Principles as there are allegations which warrant further investigation via the internal discipline procedures already in place.”
Mr Bennett said: “We asked police to investigate if any law had been broken as a result of the Echo expose.
“The outcome of the investigation clearly backs up what Labour has said, that John Handley is a liar.
“In respect of the mayor, there are only two positions she could have found herself in. Either she was totally hoodwinked, which would call into question her judgment considering the various warnings she received, or she was complicit in his Walter Mitty lifestyle.”
That photo: Mrs Larkin fumbling with mobile phone on Armed Forces Day 2013
Mr Bennett said Labour may still refer the case to the council’s standards committee.
Mrs Larkin declined to comment.
A council spokesman said: “The monitoring officer will need to speak with senior Essex Police representatives to establish more detail before being able to give the matter further consideration