The Sun newspaper reported this morning that the ex-Plymouth-based broker was sacked by his employer in August last year after working for them on a commission basis for just 10 months.
Police were subsequently called in to investigate several suspected cases of mortgage fraud and, after a year, Farrell was arrested and questioned in connection to his alleged involvement.
The BBC, which broadcasts The Apprentice, was contacted by police four days ago and informed that Farrell was on police bail until the 27th October this year, three weeks after the show begins.
Farrell, formerly a sniper in the Royal Marines, is also accused of hiding a criminal record from the TV show’s makers after it emerged that he had been forced to pay £847 costs and given a two-year conditional discharge by Plymouth crown court for possession of offensive weapons.
Farrell had claimed that a knuckleduster and extendable baton, found in his Mercedes’ glove box, were “trinkets” but was found guilty in September last year.
Police came across the weapons after being called to his home to investigate claims that he had assaulted his wife Claire. She did not press charges though claimed Farrell had hit her with the knuckleduster.
In court, Farrell contradicted his former mortgage boss by saying he had been bought out of a financial services partnership but his boss said Farrell had been fired.
Talkback Thames, the production company that makes The Apprentice for the BBC, said Farrell was uncontactable as he is currently abroad, but added: "We carry out police CRB checks on all candidates during the Apprentice application process in common with standard TV industry practice.
"The CRB checks, which were conducted in late August 2009, revealed no irregularities for any of the candidates for the upcoming series.
"Candidates are asked to disclose any criminal convictions as part of their application.
"The court case and the current fraud investigation was not disclosed on Chris Farrell's application form and he has not at any point brought this matter to our attention."
