A charity that lost more than £250,000 and had its property repossessed when it failed to meet the repayment terms on a loan is being investigated by the Charity Commission.
Chessed L'Yisroel, based in Manchester, also appears to have miscalculated its income and expenditure by more than half a million pounds after handing to the commission two conflicting sets of accounts.
The charity, which aims to relieve poverty and advance the Jewish Orthodox faith, was added to the commission’s double-defaulter class inquiry in June 2014 after failing to submit accounts for the previous four financial years.
In a statement published today, the commission said it had opened a statutory inquiry on 21 July 2016 after the accounts submitted as part of the class inquiry raised further concerns.
The investigation will examine the reliability and accuracy of the charity’s financial reporting, whether the charity’s financial management controls were inadequate and, if so, whether this had resulted in a substantial level of charity funds being lost, misappropriated or misapplied.
The commission statement said an analysis of the charity’s bank statements "highlighted a significant discrepancy" when compared with the £140,000 income and the expenditure of £139,000 declared in the charity’s accounts for 2011.
When the charity resubmitted its accounts, its estimated income had increased to £632,000 and its expenditure had shot up to £724,000.
The same year, the accounts revealed that the charity had failed to meet repayment obligations on a loan from the Yorkshire Bank and had thereby lost £256,000 when its investment properties were repossessed and sold off.
The charity took out a loan of £131,500 in 2011, which has not been repaid, the commission said.
It added: "The charity has failed to adequately explain why it did not make its repayment obligations or what it did with the money it borrowed."
The accounts for 2011 also listed "wedding expenditure" under the direct charitable expenditure grants made in line with the charity’s objects, although the commission statement did not say it was investigating this.
A commission spokesman said the investigation would also be exploring to what extent the charity was still active because, according to figures submitted by the charity to the commission website, it had no income and spent £373 in the year to 31 December 2014.
The charity did not respond to Third Sector’s request for comment.