A charity that lent £2m to a business connected to its sole trustee is appealing to the charity tribunal over Charity Commission orders to hand the money to the Official Custodian of Charities.
Jacob Plitnick, the trustee of the poverty relief and education charity the Reb Moishe Foundation, has lodged an appeal after an internal review by the commission found the regulator was right to issue two orders to force him to hand over funds as part of its statutory inquiry into the charity.
The commission opened a statutory inquiry into the charity in May 2015 after HM Revenue & Customs raised concerns about a loan of £2m that the charity made to Gladstar Ltd in 2006, of which Plitnick has since become a director.
The charity’s accounts for 2014 show Gladstar still owed the charity £2,491,405. According to Companies House, Plitnick has been secretary of Gladstar since 1995 and a director since 2010.
The charity had an income of £224,200 in the year to 31 December 2014 and spent £64,200, accounts filed with the commission show. It is 30 days overdue in filing its accounts for the year to 31 December 2015, according to the regulator’s website.
On 5 July 2016, as part of the commission’s investigation, it ordered Plitnick to transfer an undisclosed sum from the company’s account to the Official Custodian of Charities, a holding service that protects disputed charitable property.
Plitnick made a "partial payment" of the funds, according to the commission, and on 21 July the regulator issued a second order for him to transfer the rest.
The commission carried out separate reviews of the two orders and decided they should remain in place, and it is these decisions that Plitnick is contesting in two separate appeals, although they will be heard by the tribunal together.
The commission has until 19 December to respond to the appeal.
In the meantime, the statutory inquiry continues. It is examining whether loans made by the charity were in furtherance of the charity’s objects, decision-making by trustees in connection with the £2m loan and whether trustees received unauthorised public benefits and had complied with legal duties.
When it announced the inquiry in August 2015, the commission said it was also concerned about an apparent lack of charitable expenditure, contradictory information provided in the charity’s accounts and the fact that the trustee board had too few members.
In 2015, Plitnick told Third Sector the charity had appointed two new trustees, but he is still the sole trustee listed on the charity’s entry on the register of charities.
Plitnick and solicitors representing him declined to comment on the tribunal appeal.