Commission announces class inquiry following money laundering sentencing
The Charity Commission has announced a class statutory inquiry into a group of charities alleged to be involved in money laundering.
The Charity Commission has announced a class statutory inquiry into Chabad UK, Havenpoint Worldwide Limited, Or Simcha, Ozer Dalim, Pikuach Nefesh, Worldwide Hatzala and Havenpoint Limited, over concerns that they were involved in a scheme to launder £10 million.
The commission has been investigating the charities since June 2014 when it was notified of a Metropolitan Police investigation into them. After assessing the available information, the commission found a pattern of regulatory concerns, including signs of fraud and mismanagement.
On 26 June 2019, Edward Cohen, the administrator of Chabad UK and the person who operated the financial accounts, was convicted of laundering money through the charities, as well as for supplying false information to the commission. He was sentenced at Southwark Crown Court on 4 July 2019.
The London Regional Asset Recovery Team (London RART), part of the Met’s Specialist Crime Command, launched an investigation in March 2013, after receiving information about the sale and purchase of counterfeit, unlicensed medication from a number of online internet pharmacies.
A large number of websites offering erectile dysfunction medication and slimming aids – primarily aimed at customers in Austria, Germany, Switzerland and France – were identified.
Moreover, following the analysis of the bank accounts linked to Chabad UK, investigators found that from March 2012, the number of transactions dramatically increased and the majority were payments from overseas accounts.
The number of “chargebacks” on these merchant accounts – when the customer requests a refund of the card payment, often due to goods being faulty or not received – linked to the sale of the medication also saw a large rise from this period.
From March 2012, 14 bank accounts that received payments from the merchant accounts were opened in the names of charities and companies associated with Chabad UK.
Between March 2012 and September 2014, nine companies of the Chabad UK group – seven of which were registered charities – processed over £10.3 million. A very small proportion of which were confirmed as legitimate charitable donations.
During the same period, £8,601,299 was transferred to foreign exchange accounts, and £1,676,011 was transferred to a number of Money Service Bureaus. Thousands of pounds were also transferred to the defendants’ personal accounts.
Links were also identified between this operation and investigations being conducted in a number of European countries into online pharmacies supplying of counterfeit medication.
Amy Spiller, head of investigations team at the Charity Commission, said, "This case has involved a dishonest abuse of charity and we welcome the sentence. Charities exist to do good and strengthen society, so abuse of position of this kind has no place in charity. It is right that the individual has been held to account for his actions through the conviction."
The commission will now progress the final stages of its inquiry and report on its findings and conclusions in due course.