A trustee had £12,100 of charitable funds raised at Regent's Park mosque in London seized by police at Heathrow Airport, a Charity Commission inquiry found.
Subsequent investigations involving the anti-poverty charity Worldwide Ummah Aid discovered at least £99,000 of funds unaccounted for, according to the inquiry report, which was published yesterday.
It also revealed that charity funds had been used to pay back a loan on a Mercedes car, to buy a TV and a DVD player, and to pay for dental work.
The inquiry, which lasted almost five years, concluded that trustees at the now defunct charity were guilty of misconduct and mismanagement.
One trustee – named in the report as Trustee A – was automatically disqualified as a result of regulatory action after another statutory inquiry.
Two other trustees were removed from their posts.
Trustee A was the sole signatory of the charity’s bank account for transactions of up to £15,000.
Bank statements showed cash amounting to more than half of the charity’s total income had been withdrawn, with many transactions occurring in the days leading up to the cash being seized when the trustee was on his way to board a flight to Turkey.
Amy Spiller, head of the investigations team at the Charity Commission, said: "The trustees of WUA were reckless with charitable funds and acted against commission advice by carrying cash overseas.
"This practice is high risk and put valuable charitable funds in jeopardy.
"Through their misconduct and mismanagement the trustees jeopardised the trust that donors placed in those responsible for the charity."
Worldwide Ummah Aid was set up in 2012 to relieve poverty in eastern Europe and the Middle East.
Trustee A was travelling to Istanbul when he was found carrying the cash. Another trustee travelling with him said he was unaware how much money his colleague was carrying.
"It was not clear to the inquiry what the reasons were for the large cash transactions because Turkey has an established banking system and funds could have been transferred by electronic transfer," the report says.
The inquiry discovered that money spent between August 2012 and March 2015 was not accounted for and some invoices appeared to be for personal expenditure.
"The inquiry found that the charity was making loan repayments on a Mercedes car that was owned by Trustee A," the report said.
"Trustees B and C were unsure who the car belonged to but were in agreement that Trustee A should have the use of a car.
"They did not question the payments towards the loan and were unable to explain why such an expensive car was needed to carry out the charity’s activities."
The report said money was withdrawn and taken overseas "with no due diligence or checks on the end use of the charity’s funds".
WUA was removed from the commission’s register of charities in March last year.
Its remaining funds of £91,000 were redistributed to another charity, the Kashmir Relief & Development Foundation.