Two charity trustees have been disqualified by the Charity Commission for their role in a £1.6m benefit fraud scheme in east London.
Having carried out an investigation, the commission also removed from the register two charities, the disabled people and orphans charity Families for Survival and the older people’s charity Save the Age, after the trustees’ convictions for fraud.
Chowdhury Muyeed and his wife Asma Khanam were both jailed in 2016 for five-and-a-half years and three-and-a-half years respectively for their role in a benefit fraud involving Italian immigrants of Bangladeshi origin. A third person was also convicted.
The commission said today it had been monitoring Families for Survival since February 2014, when concerns were raised about the charity’s fundraising practices. The commission then uncovered the link to Save the Age.
An investigation by the Metropolitan Police, Redbridge Council and the Department for Work and Pensions into suspected housing benefit and society security benefit fraud led to the trustees’ arrest in May 2015.
This led the Charity Commission to become concerned about the misuse of the charities, potential unauthorised payments to the trustees, a lack of evidence of charitable expenditure and dubious fundraising activities.
It opened a statutory inquiry into both charities and a protective order to freeze Save the Age’s bank account.
The commission said that further joint agency investigations found that the names of a number of the listed trustees, apart from the two founders, had been "hijacked" and they "did not have a connection with the charities".
Muyeed and Khanam’s convictions automatically disqualified them as trustees, the commission said.
The commission’s investigation found that the two trustees had instructed their own accountancy firms to review the charities’ accounts. The regulator said that because both trustees benefited financially from this arrangement, there was a serious unmanaged conflict of interest.
The commission also identified £14,000 in unauthorised private benefit paid to the trustees and false information in the charities’ annual accounts.
The accounts were signed off by independent examiners, one of whom could not be traced. The other name was an alias for one of the founding trustees, the commission said.
Families for Survival UK had an income of £316,532 in the year to the end of March 2014, up from £32,501 two years previously.
Save the Age had an income of £18,608 in the year to the end of March 2014, down from £45,219 in the previous year.
Redbridge Council found no evidence of charitable activity at the two charities after scrutinising their accounts and records.
Both charities have been removed from the register after the commission deemed there had been serious misconduct and mismanagement in their administration.
Harvey Grenville, head of investigations and enforcement at the Charity Commission, said: "This case highlights a cynical abuse of trusteeship by two individuals who used the good name of charity to further unlawful personal motives. They have proven themselves wholly unfit to serve as trustees.
"Close cooperation between different agencies has been critical to the outcome of this case. Our intervention has upheld key principles of charity law and helped criminal proceedings in bringing these individuals to justice."