The founder of the now-defunct charity African Aids Action has been found guilty of a £100,000 Gift Aid scam.
A jury at the Old Bailey in London yesterday found Eyob Sellassie, 45, of Rainham in Essex, guilty of two counts of fraud by false representation.
The court found that Sellassie had invented more than £415,000 of bogus donations to the charity in order to claim Gift Aid payments of more than £100,000.
Sellassie was the founder and chair of the charity, which registered with the commission in 2001 and had objects of the "relief of sickness of people suffering from HIV" in Africa, the Caribbean and elsewhere.
The court found he had used the details of more than 1,000 people bought from a marketing agency as part of the scam.
Investigators found that some of the people who supposedly donated were dead, while others said they had not given money to Sellassie's charity.
Sellassie claimed £104,008.25 in Gift Aid tax relief in two claims made in June last year. A successful claim for £150 in Gift Aid was processed by HM Revenue & Customs in May 2013, but suspicions were raised when the charity claimed to have had a huge spike in donations just a month later.
The prosecutor, William Hays, said that when Sellassie was arrested and interviewed in September last year, he blamed a lodger called Tesfai Teckle.
"I did not claim them and had no knowledge the claims had been made," he told the investigator, Janet Callanan. "The claims were submitted by Tesfai Teckle, who used to live with me."
Sellassie said he argued with his flatmate and called HMRC to withdraw the claims that had been made.
Callanan said she could find no trace of Teckle at Sellassie's home in Rainham, Essex, or anyone of that name connected to the charity.
"I asked him who is this person, what were the connections he had to the charity, and I said to Mr Sellassie that if someone was blaming me for fraud, I would certainly be more than willing to give HMRC their names, addresses, and details," she said.
"I asked for his whereabouts or if he had left the country, and I think I asked about a description, but all I got was no comment."
A database of 5,000 names supplied by a marketing data firm was recovered from Sellassie's home, which was also the registered address of African Aids Action.
The charity was removed from the Charity Commission's register on 7 September last year, three days after Sellassie was arrested, the court heard.
The judge, Recorder Sallie Bennett-Jenkins QC, adjourned sentencing until 10 October so that a probation report on Sellassie could be completed. She told him: "You have now been convicted by this jury of two counts of fraud by false representation, which concerned a substantial amount of money.
"I am only just persuaded to order a pre-sentence report in your case because you are a man of previous good character and relatively mature years.
"I want to make it clear that the ordering of that report is in no way indicative of the sentence I will pass: all sentencing options are open."
African Aids Action was at the centre of a dispute between the commission and one of its former case workers, David Orbison, over the regulator’s actions towards the charity.
Orbison, who was asked to investigate the charity by the commission, made a complaint under the Public Interest Disclosure Act that the regulator was breaching its statutory duty by failing to take sufficiently robust action against the charity.
He subsequently resigned from the commission and brought a case against it at the employment tribunal for claims including constructive dismissal and discrimination.
Orbison told Third Sector today that the verdict on the Sellassie case vindicated his concerns about the charity and called for an independent investigation into the regulator’s handling of the case.
"In February 2009 I found evidence of fraud and that this was a sham charity, and recommended that it be shut down," he said. "Senior management intervened and gave the charity ‘advice and guidance’. I blew the whistle over this, but an internal investigation concluded that all was well and that I was wrong.
"The commission has spent nearly £200,000 rubbishing my concerns and defending the employment tribunal claim, and now the state has had to fund a further expensive trial in the Old Bailey.
"They claimed that I was obsessed, wrong and had acted entirely in bad faith."