Senior Jewish Labour Movement figures have urged Jeremy Newmark to step down from his role leading the group following revelations in the JC.
But it is understood Mr Newmark has refused to resign as national movement chair.
Senior members of the group are now believed to be deeply concerned about the potential for reputational damage to the JLM if he remains in charge.
It emerged on Thursday that Mr Newmark, the former chief executive of the Jewish Leadership Council, was the subject of an internal audit into his conduct at the JLC.
The report alleged he had deceived the organisation out of tens of thousands of pounds and misled charities about the cost of the projects he worked on.
Following the revelations, JLM national executive committee members held an emergency conference call on Thursday night to discuss his future.
Only two of the JLM’s 18 NEC members are backing him and it is understood MPs in the group all believe he should go.
A senior source close to the JLM executive told the JC: “Following discussions, an overwhelming majority of the JLM NEC have concluded that Jeremy Newmark should resign.
“This was put to him on Thursday night. He refused to resign.
“A complaint about his conduct has been received from a JLM member and is now being processed.”
The JC understands that there are no claims of wrongdoing by Mr Newmark during his time leading the group. It is two years tomorrow since he was elected as the group’s chair.
JLM activists were unaware of the allegations against him from his time at the JLC until the details were made public yesterday.
The group is made up of hundreds of grassroots activists, many of whom are young volunteers. Of the leading activists, many are in their 30s and were brought into the group by Mr Newmark, who has been seen as a mentor figure.
One JLM source said: “We are really proud of our work. Jeremy is part of that, but is not responsible for all of it.”
In a statement to the JC on Wednesday, Mr Newmark, 45, denied that he had misused JLC funds or claimed inappropriate expenses.
He also denied any wrongdoing surrounding the commissioning of his wife’s consultancy firm for a JLC project or the leasing of a £46,000 luxury car.
The Times reported today that the Charity Commission was now aware of the allegations of financial impropriety at the JLC and had “serious potential regulatory concerns”.
The commission is said to be assessing the claims and will contact the JLC “as a matter of urgency”.
The Conservative Party has not responded to repeated requests for a comment on the involvement of Sir Mick Davis, the former chair of the JLC’s trustees and the current chief executive of the party.
Sir Mick told the JC on Wednesday that he had “at all times acted with the full knowledge and support of the trustees.
“As soon as the board of trustees became aware of the issues, it acted immediately and in accordance with the advice it received.
“Individual trustees ensured that the JLC’s accounts were made good and whole. Jeremy resigned due to ill health and the trustees agreed, with due regard to his welfare and that of his family, that no further action was warranted.”
The Labour Party has not commented on the allegations, and the JC understands Jeremy Corbyn and fellow senior figures were also unaware of the claims against Mr Newmark until yesterday.
The party was not thought to have received a complaint about Mr Newmark by Thursday afternoon, and would not investigate him unless it did so.
His future as a general election candidate would be for a local constituency party to consider should he apply to stand, it is understood.
Yesterday, the leader of Hertsmere Borough Council, where Mr Newmark serves as a local councillor, said he had requested an “urgent meeting” with him to discuss the allegations.
Adam Wagner, a leading human rights lawyer, called on the JLC to open an independent investigation into the matter.