The former Charlton Athletic footballer Richard Rufus is under investigation by the City of London Police for an alleged fraud regarding a £5m investment he was later found to have mismanaged when he was the trustee of a Christian charity.
The Kingsway International Christian Centre invested £5m with Rufus between June 2009 and June 2010, which resulted in a net loss of £3.9m.
The investment was investigated by the Charity Commission and a report issued at the end of 2016 criticised the KICC’s trustees for investing the funds through Rufus, who resigned as a trustee of the charity on 17 May 2011.
Rufus, who was declared bankrupt in 2013, was forbidden from running any company for 15 years by an Insolvency Service civil hearing on 5 November 2015 for his financial misconduct between May 2007 and February 2011, when he took a total of £16.2m from investors, including the £5m from the KICC, and claimed to have invested it all.
The Charity Commission report said the charity had failed to exercise sufficient care when investing the charity’s funds through Rufus.
The report said the commission was alerted after the charity’s accounts for the year to 31 March 2010 referred to £3m of investments made with a trustee, who the accounts said was a qualified independent trader who could act as an investment manager.
The report said the commission was concerned that the money for the investments was paid into Rufus’s personal bank account and the investments "appeared speculative and high-risk in nature".
After the commission contacted the Financial Conduct Authority about the 2010 accounts, it was told Rufus was not authorised "to carry on regulated activities in a personal capacity".
The FSA began civil proceedings against Rufus in February 2011 and managed to freeze his assets up to the value of £6.85m.
The commission also found that Rufus had promised the charity a 5 per cent return on investment each month except August and December, when returns of 2.5 per cent were anticipated.
The report said that because the rate of return proposed was so high, independent professional advice should have been sought.
The commission’s inquiry also found that there was a lack of investment experience among the charity’s board members, except for Rufus.
In a statement released after the Charity Commission’s report was published, the KICC trustees acknowledged "the seriousness of the mistake that was made" and said the trustees at the time "believed they were acting in the best interests of the charity and had not benefited personally".
The statement said: "None of the current trustees were involved in the decision-making regarding the investments with the now ex-trustee. Since then, we have worked with the commission and our professional advisers to put robust controls in place that would prevent any reoccurrence.
"With the benefit of hindsight it is clear that the former trustees’ decision to invest was not a prudent one. The charity has since continued to operate and successfully carry out its charitable objectives to the community and looks forward to continuing to do so."