Up to 20 hopeful immigrants were said to have been duped into paying £20,000 each to Xiang Li, 29, after a function in the heart of Westminster supposedly welcoming them to Britain.
Mr Li’s gang allegedly hired a film crew and other actors to play immigration officials, security guards and members of the audience to convince attendees it was genuine.
The Chinese nationals watched in awe as the fake Home Secretary gave a greeting speech before they all sang God Save the Queen, a court heard.
The ceremony took place in the Central Methodist Hall, which was decorated with a picture of the Queen and a Union Jack flag, just yards from the Houses of Parliament and the new Supreme Court.
At the end of the event, the participants, who genuinely believed they were being made British citizens, were allegedly handed false passports, visas and other documents.
It was only when they tried to use their crudely forged passports that they realised they were fakes.
The gang set up two bogus law firms, called Lombards and Borough de Law, and advertised their services in the Chinese language press in Britain, Southwark Crown Court heard.
Those who attended the rented offices at various addresses on Lombard Street, close to the Bank of England, were given a presentation and asked for a deposit of up to £2,000, it was claimed.
In the months that followed they allegedly received confirmation that their citizenship applications had been successful and were invited to the ceremony on December 7, 2007 at the imposing venue.
Describing the ceremony, prosecutor Simon Clarke said: “There was a large picture of the Queen, the Union flag was on display, an oath was taken by those present and the national anthem was played.
“The Methodist Central Hall had been hired as a realistic venue, actors had been retained to play the roles of Home Secretary and Immigration department officials and a film crew were present to record the proceedings.
“Any foreign national new to citizenship would have no reason to doubt the authenticity of that ceremony. No doubt a new citizen would perhaps have been proud and honoured to have participated.
“Convincing as it was for those present this was not a genuine ceremony.
“What in fact happened is this, a criminal gang, which this defendant has admitted he was a part of, duped individual Chinese immigrants who wanted British citizenship or residence into believing they could be provided, for a fee, with a service which culminated in the obtaining of either British citizenship or indefinite leave to remain in the UK.”
Mr Clarke added that the actors and film crews had also been deceived, believing they were making a promotional video welcoming Chinese nationals into Britain.
Mr Li, of Stratford, east London, admits two counts of assisting unlawful entry into an EU member state, two counts of fraud by misrepresentation, and one count of money laundering.
Mr Li denies a charge of assisting entry and one of fraud by misrepresentation in relation to a customer who wasn’t required to attend the ceremony but was charged £10,000 for indefinite leave to remain in Britain.
The trial continues.