Neighbours claimed they had told British authorities where Norman Brennan was many times, but were ignored.
They said nothing had been done to try to extradite the 70-year-old after he moved into their community.
Brennan, a retired joiner from Merseyside, jumped bail in 2008 after admitting £120,000 of benefit fraud and fled to Mijas on the Costa del Sol.
He lived openly at the same address for five years - but was finally detained by police on Tuesday evening.
Sky News Crime Correspondent Martin Brunt confronted Brennan near his Spanish home earlier this month but he refused to discuss his life on the run.
He appeared to live alone with his dog, spending his evenings drinking in a local bar.
It is believed Brennan was receiving his old age pension in Spain and, astonishingly, even got mail from the Department for Work and Pensions (DWP) in London.
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