The Charity Commission has disqualified three people from holding senior positions in charities after a £10m money-laundering scam involving fake erectile dysfunction and slimming pills was linked to eight charities.
The regulator said it was “considering its options around the recovery of charity funds” as it published the report of its inquiry into Chabad UK and seven related charities.
It said two trustees had been removed and disqualified and the manager of the charities, named last year as Edward Cohen, had been automatically disqualified after he was convicted of laundering money through the sale of counterfeit medication and supplying false information to the commission.
Cohen was also found guilty of stealing £165,000 from the group of charities and companies and was sentenced last year to seven and a half years in prison.
Chabad UK was connected through shared trustees to the other six charities – Havenpoint Worldwide Limited, Mamosh Worldwide Limited, Or Simcha, Ozer Dalim Limited, Pikuach Nefesh Ltd and Worldwide Hatzala Ltd – plus the removed charity Havenpoint Limited.
The charities’ objects include humanitarian efforts, relief of poverty, education and the Jewish faith, according to their entries on the commission register.
According to the Metropolitan Police, nine companies in the Chabad UK group, including the seven registered charities, processed £10.3m into 14 bank accounts between March 2012 and September 2014.
A small proportion of these payments were confirmed as legitimate charitable donations, police said last year, but many of them came from overseas accounts and were connected to a large number of websites offering what turned out to be fake erectile dysfunction medication and slimming aids to customers in Austria, Germany, Switzerland and France.
The commission said it had found that more than £9m had passed through the charities’ bank accounts over a similar period, but most of the charities’ annual returns declared no income or expenditure.
It found that more than £60,000 was paid out of the charities’ bank accounts to an unnamed trustee between 2007 and 2015.
A statement from the regulator said it was considering what action it might be able to take to recover funds held in some of the charities’ bank accounts that were restrained under the Proceeds of Crime Act 2002.
It said it would ensure that any charitable funds recovered would be transferred to another charity with similar charitable objects.
The regulator said Chabad UK was not connected to Chabad Lubavitch UK, a separate registered charity.