The Charity Commission is considering whether to try to recover funds from a network of charities used by a maverick Chasid to help launder millions of pounds from illegally selling Viagra and other pills.
Edward Cohen was sentenced to nine years and nine months' jail in his absence by Southwark Crown Court last year for fraud, theft and laundering more than £10 million.
His convictions included one for providing false and misleading information to the commission.
The charity regulator said it was considering options for the “recovery of charitable funds” from eight charities linked with Cohen.
They include one, Brocho Vhatzlocho Ltd, which was renamed in Chabad UK – a completely independent organisation from the mainstream Lubavitch charity, Chabad Lubavitch UK.
Six years ago the commission launched an investigation into Chabad UK and related charities, which included Or Simcha and Pikuach Nefesh Ltd, after receiving information from the Metropolitan Police’s regional asset recovery team.
But it suspended the inquiry in 2016 after police launched their own operation.
According to the charities’ bank records, £9 million passed through their accounts between January 2012 and May 2014.
“However, these sums had not all been accurately disclosed to the Commission in the charities’ annual returns for the relevant periods,” the commission said in a report published on Tuesday.
Between 2007 and 2014, one trustee received payments of more than £60,000. The commission saw “no evidence in the charities’ records to justify these payments, and no record of any repayment of these funds to the charities by the trustee.”
Two trustees of Chabad UK were removed by the commission in 2016 and disqualified from further trusteeships.
The charities, said the report, had been “used for a non-charitable purpose and as a conduit to launder the proceeds of crime,” amounting to serious mismanagement or misconduct.
Hackney-based Cohen, who was described by the commission as the manager of the charities, is thought to have fled the country before the trial.
He was an open advocate of acknowledging the last Lubavitcher Rebbe as the Messiah in waiting.
Amy Spiller, the commission’s head of investigations, said, “This case involved an unscrupulous pattern of dishonesty that has no place in charity.
“These charities were clearly misused for personal gain, and I am pleased that we have been able to work closely with.”