If the cases below worry you, two resources you can start with are Action Fraud to understand types of fraud and to report actual or attempted fraud, and the Charity Commission's recently updated detailed guide Protect your charity from fraud, which is also relevant to non-charities.
As background, fraud is a form of dishonesty, involving false representation, failure to disclose information and/or abuse of position, undertaken in order to make a gain or cause loss to someone. Theft is dishonestly appropriating property belonging to someone with the intention of permanently depriving that person or organisation of it. Fraud generally involves theft, but they are separate criminal offences, and may relate not only to financial assets, but also to other assets such as databases and information.
The cases below all involve insider fraud carried out by staff, volunteers or trustees, and are listed by amount taken from the organisation. I have only included cases where the perpetrator(s) pleaded guilty or were found guilty between March 2017 and March 2018, as reported in Third Sector and/or Civil Society magazines. These magazines have distressingly frequent articles about fraud within charities and other voluntary organisations. For more information about these cases, search on the organisation's and individual's name via Google or any search engine.
- Morris Cerullo World Evangelism: £2.5 million. Stephen Ashton, an accountant at the charity for 16 years, defrauded it of £2.5 million to fund his mistress and a lavish life style – and when arrested by police at Birmingham airport, had just bought a one-way ticket to Tenerife. His massive falsification of invoices and accounts was discovered in April 2017 when another employee realised he had been manipulating reports. Ashton pleaded guilty to fraud by abuse of position and false accounting, and on 7 March 2018 was sentenced to five years and seven months in prison. At the time of sentencing the charity said the police are investigating the recovery of assets, and the Charity Commission has said it has "serious regulatory concerns". In reporting the sentencing, the BBC said that Ashton had previously been jailed for three years in 1992, for 11 counts of theft by an employee and two counts of false accounting.
- Cyrenians Cymru: £1.343 million. Cyrenians Cymru, a charity for homeless people based in Swansea, went into liquidation in May 2015, following a "systematic and extensive" fraud and the dismissal and arrest of finance director Robert Mark Davies and another employee. The fraud, with 271 cheques paid into Davies' personal account, took place between 2008 and 2014 and was discovered after the board and senior management commissioned an independent review. Davies pleaded guilty to one count of fraud by abuse of position and was sentenced to five years in prison on 21 July 2017, and in November 2017 was ordered to repay £51,745 to the charity.
- St Margaret's Hospice, Somerset and NHS trusts: more than £1 million. Jon Andrewes, whose only academic qualification was a diploma in social work, claimed to have a PhD in management, an MBA and a master's degree. With these false qualifications he became chief executive of St Margaret's Hospice in Somerset for 10 years and chair of two NHS trusts, earning over £1 million between 2004 and 2016. He pleaded guilty to obtaining a pecuniary advantage by deception in relation to the hospice role, and two counts of dishonestly making a false representation in relation to gain when applying for the NHS posts. He was sentenced in March 2017 to two years on each count, to be served concurrently.
- Birmingham Dogs Home: more than £900,000. Chief executive Simon Price paid nearly £400,000 proceeds from the sale of one of the charity's properties into his own bank account, and created fake invoices from solicitors, construction companies and marketing firms with the payments going into his own bank account. His wife Alayna Price, who was commercial manager and head of fundraising for the charity, took more than £250,000 in legacies which had been left to the charity. Fraud was initially discovered in 2016, after the property had been sold and trustees noticed irregularities in the charity's accounts. The Prices pleaded guilty and were sentenced in December 2017 – Simon Price to five years in prison for 10 counts of fraud by abuse of position, Alayna Price to a two-year suspended sentence for five counts of fraud by abuse of position. West Midlands police seized two properties belonging to the couple which were to be sold with the proceeds being returned to the charity. Alayna Price had already returned £130,000.
- British Red Cross: nearly £359,551. Between 2008 and 2015 payroll manager Mary Booth, who had been employed by the Red Cross in London and then Scotland for 33 years, made payments of nearly £360,000 supposedly to current and former employees, but deposited to accounts in her own name. The fraud was discovered by other staff after she retired in 2015. She pleaded guilty to embezzling money and was sentenced in August 2017 to two years and three months in prison.
- D.I.A.L. Lowestoft and Waveney: £212,639. Neil Payne, former treasurer of this Suffolk-based disability charity, made 277 transactions from the charity's bank account to his own between 2010 and 2017. The fraud was discovered in February 2017 when the charity's four employees complained to the chairperson that they had not been paid. Payne was nowhere to be found, and when the chair went to the bank the charity's accounts showed there was £289 in the current account and 8p in the savings account, when there should have been over £10,000, and the charity's reserves which should have been £54,000 were only £2,000.Payne pleaded guilty to one count of fraud by abuse of position and in July 2017 was jailed for four and a half years. Suffolk Constabulary has a fascinating and depressing press release on how the fraud was discovered and investigated at https://www.suffolk.police.uk/news/latest-news/man-jailed-defrauding-lowestoft-charity.
- Non Alliance Social Aid Foundation, £167,000. This charity's objects are the advancement of education in Bangladesh. During four years while he was a trustee, Mohammed Nazmul Alam diverted £167,000 which he had collected on railways around London to his own bank account and to the account of a fake Indian restaurant company he had set up. He and the charity's accountant, Mohammed Mohsin, were arrested by British Transport Police under Operation Sovereign, which targets fraudulent charity collecting on the railway network. BTP officers noticed in late 2016 that the charity had been collecting extensively, but their declared accounts to the Charity Commission did not look correct. In December 2017 Alam pleaded guilty to one count of fraud by abuse of position and was sentenced to three years in prison. Mohsin, who had signed off falsified accounts and sent fraudulent annual reports to the Charity Commission, pleaded guilty to supplying false or misleading information to the Commission and was sentenced to nine months in prison, suspended for 18 months.
- Mencap: £34,768. Asra Yildiz, former personal assistant to the chief executive of Mencap, fraudulently used the charity's credit card from 2012-2014, falsifying expenses and other claims. After originally pleading not guilty, she pleaded guilty and was sentenced in November 2017 to three months, suspended for 18 months.
- Cleethorpes Rescue Service: £24,500. Roxanna Bridgland "engineered the resignation" of the chairman and former treasurer, took over as treasurer, and from 2007 to 2012 claimed and kept £6,500 in gift aid, sold the charity's £13,000 lifeboat for £6,000 on eBay, and sold off the charity's property, including its mobile radios, in 53 visits to Cash Converters. She pleaded guilty to five counts of fraud by abuse of position and three of false accounting, and in March 2017 was sentenced to two years in prison. The charity was closed immediately after her sentencing.
- Main – Taking Autism Personally: £10,331. In a three-month period in 2016, former finance manager Henna Hussain defrauded this autism charity of more than £10,000, claiming she had paid £2.500 to Ofsted to stop the charity's closure, failing to bank almost £1,000 from a fundraising event, not providing bank statements when asked, and falsifying authorisations from a trustee for amounts she withdrew, ostensibly for training or expenses. She admitted one charge of fraud and in April 2017 was given an 15 month jail term suspended for two years, with the judge saying she had been under considerable stress with family and financial responsibilities, and "had started taking money to ease the burden".
In the pipeline
- Age UK South Tyneside: £724,076. Former chief executive John Briers, charged with eight counts of fraud by abuse of trust between 2007 and 2015, did not enter a plea at his hearing in May 2017. His case is scheduled for trial on 30 April 2018. Age UK South Tyneside closed on 31 August 2016 and transferred its work to a new organisation, Age Concern Tyneside South, with new trustees.
Two cases in the past year have been highlighted in the media because of regulatory inquiries, but so far do not appear to have resulted in any convictions.
Kids 'n' Cancer UK. The Charity Commission opened a statutory inquiry in March 2017 following the arrest of Mike Hyman, founder, trustee and salaried chief executive, and his wife on suspicion of theft. According to the BBC, it was claimed he made unexplained withdrawals each of up to £5,000 and falsely took credit for funding the treatment of at least two children. The Derbyshire Times reported on 31 January 2018 that Mr Hyman and his wife were still on bail, and the Charity Commission inquiry was ongoing.
Growth for Adolescents & Providing Support (GAPS NI). The Charity Commission for Northern Ireland's statutory inquiry into this charity was opened in June 2017 and published on 7 March 2018. It found that at least £51,359 cash noted as received by the charity could not be traced through the charity's accounts (this loss to the charity has been reported to the police); documents supplied to funders and CCNI were fraudulent; the CCNI found no evidence of charity activities furthering its purpose; and the trustees failed to maintain accurate records of meetings or decisions and failed to demonstrate proper financial control. An interim manager was appointed (in charity law this means an external solicitor or accountant, appointed by the regulator) and due to a lack of assets, the charity was closed. If you want some bedtime reading about a charity that in a very short time managed to get just about everything wrong, including having three separate governing documents and receiving a fraudulent "legacy" from a man who was still alive, read the CCNI report, via http://www.charitycommissionni.org.uk/concerns-and-decisions/statutory-inquiry-reports/.
These are only the recent thefts and frauds that reached the voluntary sector media. The vast majority may never be discovered, or are discovered and dealt with internally, or involve the Charity Commission, police or other authorities but are reported only locally or not at all.
And the cases above are only frauds and theft carried out within organisations. They do not include scams, or people fraudulently using the charity's name, or dozens of other types of fraud.
source sandy adirondack 03.04.18