A Charedi charity received more than half of its £18.7 million income from accounts used for sales – as opposed to donations – over an eight year period, a trial has heard.
Edward Cohen, 67, and his 38-year-old son, David Cohen, are accused of funnelling “huge sums of money” through an international network of firms, bank accounts and currency exchanges.
The men are on trial at Southwark Crown Court having both denied counts of supplying false or misleading information to the Charity Commission, becoming concerned in criminal property, acquiring criminal property and theft.
Edward Cohen, of Paget Road, Stamford Hill, faces another count of becoming concerned in criminal property, while his son, from Ashbourne Avenue, in Temple Fortune, denies a count of housing benefit fraud.
The trial partly concerns the financial activity of charity Chabad UK - which is entirely separate from Chabad Lubavitch UK, and not part of the official Chabad movement.
Data obtained by police investigators show that in one financial year – 2012/13 – Chabad UK’s income jumped from £1.26 million to just under £8 million, almost £7 million of which came from merchant accounts linked to sales.
The following year, Chabad received £2.85 million from merchant accounts, out of a total income of £3.4 million.
It contrasted with the period from 2008 until 2012, when merchant account proceeds accounted for 2.5 per cent of an income of £6.05 million.
Detective Inspector Neil Reynolds told the court that Chabad UK had only two main sources of income – donations and merchant account-linked revenue – which formed the basis of his investigations.
Last week the jury heard that Chabad UK’s premises, on Oldhill Street in Stamford Hill, North London, were raided by police officers on September 1, 2014.
As well as seizing electronics owned by the defendants, prosecutor James Dawes QC said they found “thousands of pages” of documents allegedly linking the charity to the sale of medication to customers in Germany, Austria, the Netherlands, Italy, Sweden and Switzerland.
Included in the paperwork, Mr Dawes said, was evidence of “merchant accounts and correspondence in relation to foreign-exchange transfers”, as well as an application to establish a company in Hong Kong.
Earlier on Wednesday Sarah Forshaw QC, representing Edward Cohen, argued that charity trustees would be entitled to “reimbursement or remuneration” for out-of-pocket expenditure incurred.
The trial, which began on April 15, is expected to run into June.
