Two people have been arrested in connection with allegations of financial irregularities at a residents association in Hartlepool.
It was reported locally that Angela Wilcox, manager of Manor Residents Association, and her daughter, Sarah Stead, were arrested by Cleveland Police on Tuesday.
They were released on bail pending further investigation.
The charity, which provides courses, advice and children’s services in Hartlepool, County Durham, is being investigated by Cleveland Police’s economic crime unit after concerns were raised by Hartlepool Borough Council.
A spokeswoman for the police said she could not confirm the names of the two women, but said: "Two Hartlepool women, aged 50 and 26 years old, were arrested by detectives from Cleveland Police economic crime unit who are investigating complaints of financial irregularities at Hartlepool Manor Residents Association.
"The two women, who were arrested on suspicion of conspiracy to steal and false accounting, have been bailed pending further investigation."
In April this year the charity was ordered by an employment tribunal to pay £8,800 to its former cleaner, Lynda Gooding, after it failed to pay her the minimum wage and repeatedly did not pay her on time.
But the charity failed to pay Gooding, and in August it unsuccessfully tried to suspend a bailiff order that she had raised in an attempt to retrieve the funds.
A spokeswoman for the Charity Commission said the regulator was aware of the ongoing police inquiry. "We are in communication with the police and are continuing to monitor the situation before deciding what regulatory action to take with the charity," she said.
"As always, it will be important for us to work closely with the police and make sure that any action we take does not jeopardise their criminal investigation."
Third Sector telephoned Manor Residents Association but was told that the charity had no comment to make.