Neil Williams, of business crime solicitors Rahman Ravelli, outlines the case and why it should be seen as a warning to charities.
A man is on the run after being sentenced to ten years in prison after laundering more than £10M through bank accounts linked to a major charity.
Edward Cohen, 67, was convicted of running websites selling counterfeit medication across Europe and then using his position as administrator of the Chabad UK group of charities to launder the proceeds. As Chabad UK's administrator, Cohen operated its financial accounts.
He was found guilty in his absence at Southwark Crown Court of two charges of money laundering, one charge of theft and one charge of supplying false information to the Charity Commission. He was sentenced to seven-and-a-half years for money laundering and theft offences and two years and three months for benefit fraud.
From March 2012, 14 bank 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 processed more than £10.3M; of which very little was legitimate charitable donations.
During this period, £8.6M was transferred to foreign exchange accounts and £1.7M to money service bureaux. Cohen's activities were reported to police after pharmaceutical companies received complaints from customers who received counterfeit medication.
Given the nature of the offending, confiscation proceedings will follow. It is likely that the prosecution will argue that Cohen has led a criminal lifestyle – as outlined in the Proceeds of Crime Act 2002 – and can, therefore, be the subject of such proceedings. It will then be for the court to determine how he benefitted from his offending.
But while such proceedings may see Cohen stripped of his ill-gotten gains, the case outlines how vulnerable charities can be to financial crime – and why they must take all necessary precautions.
Further reading: A Brief Summary Of Money Laundering And How To Respond To Allegations by Rahman Ravelli can be read here.
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