On the first day of a long-awaited trial, in which Ms Jackson is accused of wrongfully spending almost $1.4 million of her union's funds, the Health Services Union has argued the one-time whistleblower set up an off-the-books fund known as the National Health Development Account (NHDA) in a deliberate bid to avoid financial scrutiny.

"It was an account opened by her, operated by her, not audited or accounted for in any of the financial records of the union," union barrister Mark Irving said.

"It was as good as in her pocket."

The union claims Ms Jackson, its former national secretary, misused her office and stole about $250,000 of members' money from the secret NHDA account, which she controlled. She is also accused of large-scale improper spending on union-issued credit cards.

A detailed financial analysis reveals funds from the NHDA account were funnelled into Ms Jackson's home mortgage repayments, personal credit card debt, overseas vacations and luxury expenses such as goods from boutique Italian jewellery brand Bulgari, according to the HSU.

The Federal Court trial will also include subpoenaed evidence from Qantas and Virgin airlines, American Express, George Calombaris' Press Club restaurant and and various retail outlets where Ms Jackson is accused of spending union funds on herself.

"Once it left the union's account and went into the NHDA, it became Ms Jackson's money," Mr Irving said.

The NHDA slush fund was set up after a $250,000 payment from the Peter MacCallum cancer hospital in 2003 to Ms Jackson's HSU No. 3 branch. The payment was to settle a back-pay dispute at the hospital, but instead was used as seed money for the slush fund from which she withdrew large sums of money for her own personal use and $50,000 to her ex-husband as part of a suspected divorce settlement. The hospital workers received nothing.

Subpoenaed records show that, in 2004, Ms Jackson began marking a string of withdrawals from the NHDA account at ATMs in Las Vegas. Over a three-week period, a total of $6500 was withdrawn from the account in cities including Las Vegas, San Francisco, Washington DC and London, the court was told.

Mr Irving said the financial statements clearly revealed Ms Jackson intended "from the very beginning" to use the fund on personal expenses.

Ms Jackson has previously claimed she had authorisation from her HSU branch committee to use the unaudited account as she saw fit for union interests, including $4000 a year in addition to her salary for her own use. She claimed that allowance was compensation for not receiving $100 "sitting fees" given to other branch committee members from an $8000 cash kitty. She denies any improper or unauthorised payments.

Ms Jackson shot to prominence as a whistleblower on corruption within the HSU involving former national president Michael Williamson, who is now in jail, and disgraced former federal MP Craig Thomson. But she has come under fire over her own conduct and now faces similar allegations of wrongdoing in the large-scale lawsuit against her.

The union is seeking about $2.5 million from Ms Jackson including compensation, interest and costs.

The case is no longer receiving submissions from Ms Jackson after she suddenly declared bankruptcy on the eve of her trial last week.

Ms Jackson is also being investigated by Victoria Police for alleged criminal theft and fraud.