Majid Hussain claimed the sum in income support and housing and council tax benefit over 13 years, Exeter Crown Court (pictured) heard.
But Malcolm Galloway, prosecuting, said Hussain was not entitled to the handouts because he had a secret bank account with up to £36,000 in it.
When the RBS account was discovered, the 62-year-old said he did not declare it because, in line with Muslim “belief”, the cash was being kept for his children.
Mr Galloway told the jury that, in fact, Hussain had dipped into the pot himself, withdrawing £15,000 for his use.
“He did not notify the Department for Works and Pensions of some of the money under his control because it was left to him on strict Islamic terms by a relative for the sole use of his children.
“In accordance with Islamic belief and law, there was no possibility or option for it ever to be used for his own use and as such there was no intention to deceive.”
But the prosecutor added: “This case is not about religion or culture. It is to do with honesty and dishonesty.
“He is not a man who likes to give a straight answer. He goes round and round looking for excuses.”
The court heard that Hussain came to Britain in 1986, as an unmarried student with no children, studied at Exeter University for 10 years, and has not worked since.
Mr Galloway said he signed forms every year declaring that he did not have any bank accounts, and jurors were shown copies of the documents.
He said the sum left with the RBS had increased from £18,000 to £36,000 during the period he claimed benefits.
When it came to light, Hussain told the DWP investigators the money was saved from his student grants. The cash was allegedly left over from the scholarship he received from the Iraqi government when he came to Exeter.
But Mr Galloway said that later, in a defence statement, he maintained that the cash was left to him by his father for the purpose of educating his children.
Hussain who married a British woman 21 years ago and has four children, aged nine to 18, said his father died 15 years ago.
He added: “I promised him on the Koran. I read the Koran and you have a duty to obey your parents. It is part of Islamic culture and tribal culture.
“Allah commands you to render back your trust to those to whom they are due and not to break your oath. I had to carry out this agreement in the name of God.
“This money was not mine. It was from my father to my children for when they go to university. It was not my money and it did not cross my mind when I signed the forms.
“I was not acting dishonestly. It was not my money at all. I never thought about the money in my account. This is my belief and my faith.”
Asked why he withdrew money once he had been found out by the DWP he said he had to because his benefits had been stopped.
“They stopped by benefit. They withdrew their duty of care. I did not want to see my children struggling or losing their home. I am a responsible father.”
Although he left university 15 years ago, illness has prevented him working and he receives disability benefit for Crohn’s disease, kidney problems and muscle pain.
Hussain, of Exeter, denied three counts of dishonestly claiming a total of more than £35,000 between 1997 and 2010.
At the end of a two-day trial, the jury was unable to reach a verdict despite four hours of deliberation.
The jury was discharged and a retrial ordered at a date to be fixed.