Ade Orogbemi, 30, was jailed for six months after earlier admitting fraudulently claiming about £33,000 of disability benefits.
Liverpool Crown Court heard he told UK Sport he was not receiving benefits and so was given a larger grant.
He had been selected to lead the team at the Paralympic World Cup in May.
Orogbemi, of Little Parkfield Road, Liverpool, had pleaded guilty to three counts of fraud in January.
He was charged with two counts of making a false statement and of failing to notify a change of circumstances.
Liverpool Crown Court heard Orogbemi received an award from UK Sport in April 2001. But the grant, coming from the National Lottery to help train international athletes, was reduced because he honestly declared he claimed income support.
When his grant was up for renewal in January 2002, he changed his story to get extra cash - insisting he was no longer receiving benefits.
But during November 2003 and October 2004 alone, he received just under £22,000 funding as well as income support, housing benefit and council tax benefit he was dishonestly claiming.
The father-of-two, who plays for Wolverhampton Rhinos, began his career when he was spotted playing basketball on the streets in east London.
A UK Sport spokeswoman said: "UK Sport is reviewing the range of circumstances surrounding cases involving funded Paralympic athletes.
"This matter has been discussed at board level and we expect to report back to the UK Sport board with an update on the findings in May."
Orogbemi faces a proceeds of crime hearing on 17 July.
Great Britain Wheelchair Basketball Association chief executive Charlie Bethel added: "We were all surprised to hear the news, but nobody is beyond the law.
"As a sport we have a system in place to enable us to review the status of our athletes and their conduct."
BBC, 15th April 2009