Founder misappropriated £420K from dog rescue charity
The founder of a charity dedicated to rescuing abandoned or mistreated dogs misappropriated two legacy donations totalling more than £420,000 by paying the monies into a private bank account, according to an inquiry by the Charity Commission
23 Dec 2016
A subsequent enquiry resulted in 98% of the funds being recovered.
In April 2013 the Commission began an investigation into the Cavalier King Charles Spaniel Rescue Welfare charity [registered charity no 1104112], based near Peterborough, after receiving a complaint from the executor of a will that a legacy of £382,460 had been left to the charity in 2005 and had not been recorded in the charity’s accounts.
The Commission found that there were three trustees, but only one (the founder Joan Pagan) was in control of the charity’s finances. After scrutinising the charity’s banking records the Commission found that two legacies (of £382,460 and £44,957) had been placed in several bank accounts held in the name of the founding trustee and another person who was not a trustee.
The inquiry also reported what had happened, the evidence found, and its concerns about the misappropriation of funds to the police and provided support to a subsequent criminal investigation. The police investigation was halted due to insufficient evidence when the founding trustee died in 2015.
The inquiry also established that part of the donations were used by Pagan to invest in properties not owned by the charity, an improper use of charitable funds.
The Commission took action to freeze six bank accounts where charitable funds had been moved to, protecting £378,000 of charitable funds.
The subsequent inquiry concluded that funds had been misappropriated for personal benefit and this happened after the other trustees moved away and the founding trustee effectively took over the sole control of the charity and its affairs.
The regulator found that the actions of the founding trustee amounted to misconduct and mismanagement in the administration of the charity. The other trustees had also failed to adequately and fully discharge their duties as charity trustees.
Once the issues came to light, the other trustees took control of the charity and its finances, recruited additional trustees and sought legal assistance which enabled them to recover a substantial amount of the misappropriated funds.
The Commission says it has seen evidence that around £300,000 has been recovered, and there have been assurances that a further £120,000 was repaid by the founding trustee.
Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said: ‘This is a shocking case where donors’ legacies were misappropriated and abused for private gain.
‘All trustees share the same duties and responsibilities and must not let one trustee have sole control of the charity’s funds and activities.’
The charity contines to operate as a registered charity governed by the Charity Commission and none of the current team were involved in any way. The Cavalier King Charles Spaniel Rescue Welfare website is here