Marion Kinley sued Jim Devine, 60, the former Labour MP for Livingston in West Lothian, who was jailed for false accounting involving £8365 expenses claims, maintaining she had been defamed by him.
Both Ms Kinley, 50, and Mr Devine represented themselves at the hearing earlier this year. During it she maintained he had made damaging statements about her to "cover up his own actions".
The former office manager told the Court of Session in Edinburgh it had been said she was being investigated by the police and Special Branch. She added: "He also stated I had helped myself to bonus money I was not entitled to. I had stolen significant sums of money while office manager... because I had a serious gambling problem."
A judge agreed that Ms Kinley, of Bishopbriggs, Glasgow, had been defamed by the former MP. Lord Bannatyne said: "I am satisfied the pursuer has suffered significant distress as a result of these allegations."
He added that "without any difficulty" he had found Ms Kinley and another witness, Eilidh McDonald, a former parliamentary researcher for the politician, to be credible and reliable in their evidence.
He added: "Equally without any difficulty I found the defender not to be a credible or reliable witness."
Ms Kinley had raised an action originally suing Mr Devine, who was jailed for 16 months in 2011, for £75,000 over false allegations.
Lord Bannatyne said of the former MP's testimony: "It made no sense; it was implausible; it was not consistent; and when sub-jected to cross-examination the defender was shown not to have been accurate."
Lord Bannatyne granted £17,816 to Ms Kinley but rejected making an award for disadvantage in the labour market.