A neighbour of Tia Sharp's grandmother claimed he saw the schoolgirl walk towards a bus stop while he was having a cigarette in his front garden.
The court was read a statement given to police by Meehan, in which he said: "From the time I saw Tia I didn't take my eyes off her."
He added: "I think we're all willing and hoping to find Tia safe, more than anything else."
After his arrest, Meehan told officers: "I definitely saw her leave the house. Whether she came back I don't know."
Meehan denies causing wasteful employment of the police by making a false report that he had information linked to an inquiry on August 6.
Prosecutors said neighbour Paul Meehan gave Tia Sharp's family "false hope" by telling police he had seen the dead schoolgirl.
Jocelyn Ledward, prosecuting, told the court: "He described her outfit and person in detail."
Miss Ledward said Meehan's claim had the result of "compounding the family's false hope" that she was still alive.
But she told the court: "There is absolutely no suggestion Mr Meehan was in league with Stuart Hazell."
She suggested that he made the report "perhaps in order to increase his importance in the investigation".
A neighbour of the grandmother of murdered schoolgirl Tia Sharp told police that he had seen her when she was already dead, a court heard today.
Bus driver Paul Meehan, 40, from Croydon, south London, is on trial charged with wasting police time.
He was the neighbour of Christine Sharp, whose boyfriend Stuart Hazell was jailed in May for a minimum of 38 years for killing Tia 12.
The court heard that Meehan initially told police he had not seen Tia on Friday 3 August last year, but later claimed he was "100% sure" he watched her walk past his home at around noon on that date.
A neighbour of the grandmother of murdered schoolgirl Tia Sharp is due to stand trial today charged with wasting police time.
Paul Meehan, 40, from Croydon, south London, will appear at Croydon Magistrates' Court.
He is the neighbour of Christine Sharp, whose boyfriend, Stuart Hazell, was jailed in May for a minimum of 38 years for killing the 12-year-old.
Meehan is accused of causing wasteful employment of the police by making a false report that he had information linked to an inquiry on August 6 last year.
His trial is expected to last for one day.