Potential scam - anyone au fait with Companies House/Charities Commission stuff?

Name changed:

It's actually very easy to do, and very hard to prove. I left a charity fairly recently where two people were misusing grants.
One of them was charismatic to people he thought he could use (and a bully to others) and very dominating and manipulative. He'd protect the other one at all costs even if evidence of wrongdoing was put in front of him. People were afraid to stand up to him.
The things I saw included:

1. Getting grants for specific purposes and not buying the stuff
2. Using buzz words (eg inclusive) to imply something they weren't (I saw one group promoted as having the purpose of "community relations" which was actually their dc and friends)
3. Getting grants and also getting the item donated
4. Buying things with grants which would miraculously disappear into boot of their car never to be seen again. (I suspect sold on Fb marketplace or similar)
5. Getting grants for things that would do a publicity shot then never used (and clearly wouldn't be used)
6. When they saw a potential grant they'd look for the most expensive items of that type for applying, and then buy the cheapest.
7. I also know at least one occasion where something currently in use and perfectly fine was inexplicably suddenly broken and they applied for a grant 3x the item's value to get another.

I suspect, although I have no proof, that they'd claim the grant, tell the treasurer they were buying the item, with a screenshot of the expensive item they were buying. The treasurer would transfer the money for them to buy it, then they'd pocket the difference, whether that was because it wasn't bought or they bought a cheaper version.

The problem is that without a proper investigation which the trustees were unwilling to do, it's actually fairly difficult to prove. These were the sort of excuses:

1. We thought it was a good idea, but decided against it when we looked into it and we so we bought <x> instead.
2. "Oh, that is the reason for the group. We decided at X committee" (X committee consisted of those two and their spouses and one other person who might as well have been a puppet.)
3. You're getting mixed up. They didn't donate it in the end.
4. They were broken and I took them to the tip (funny how it was always the 2 week old one broken and not the 15 yo one)
5. Of course we'll use the specialist horse stabling kit regularly. A horse hasn't walked past this town since the 1940s only because they haven't had this in place.
6. We didn't have time to look at different items before we applied.
7. It just broke and we desperately needed another one and we didn't know how much it would be.

The trustees blindly believed everything he said because any who might have stood up to him he got rid of.
He would tell the receiver verbally how wonderful the item was. The only times they came and checked was if they were doing publicity photos. At times the item was out of the building days after the photo had been taken.
When I raised concerns nothing was done. But to get proof, you would need to look at the grants received, and the receipts and the items (if you could find them).

And trying to report is very difficult unless the trustees are listening. All response I got was that the trustees should investigate first.

It does sound dodgy. Please report it.

At best is poor governance practice, at worst it's fraud and they're profiting through the guise of a charity.

2 kids attending per day so 30 overall (maybe fewer if it's the same 2 kids multiple times) when the grants they were awarded were geared to catering for 2,000?
That is a shocking utilisation of public and charitable funds.
Agree with reporting to Charity Commission and CIC regulator. They are slow to take action and if these guys have form, they may well dissolve and do their best to disappear again, but at least it's a start. If you know who the funding bodies are you could write to them as well. Usually fundees have to write a report to the grant awarder explaining how the funds were spent and how their aims were achieved. Often the actual money isn't transferred until after such a report has been delivered so by raising a flag that pretty much nothing was delivered, you may be able to help prevent some of the finds being paid across to the scammers.

If you think it's a financial scam report to Action Fraud (police). The charity commission is a civil regulator and does not investigate fraud.

If you have evidence of significant payments going to trustees or unmanaged conflicts of interest then you may get the interest of the charity commission. But they are small and can only really look at high risk/significant issues.

The regulator of CICs is very small and I don't think acts more that a registry of CICs. Not sure it even has much of an investigation resource.

Yes this sounds like a huge scam by someone who is good at playing the system. And hiding behind their colour/ race when questioned.
I’d request to have this investigated further but I have no idea how you would do that.
2 children on a summer scheme kicking a ball and having food provided by a company owned by someone also involved in the summer scheme screams fraud.

To add, in the case of the charity I previously mentioned, the Charity Commission investigated but the action it took was to write to the trustees and ‘give advice’. To quote:

“This includes advice around how to prepare annual accounts, and the importance of filing these on time, as well as around managing any conflict of interest.”

if the trustees are also directors of companies which the charity is contracting out services to, then this is a potential conflict of interest and should be disclosed in the accounts as a related party transaction.

Late accounts filing will ultimately trigger the attention of charity commission, but this can take a while. i would raised concerns with charity commission if you think trustees are financially benefiting through their involvement as this would likely a breach of their duties.

Ultimately the charity commission has the power to investigate and freeze funds/replace trustees as they see fit.

This sounds very dodgy.
I have worked in the third sector in the past providing this sort of offering and others. What strikes me is whenever I have delivered targeted services for particular groups we had put lots of thought and time into getting the events extremely well advertised in the right places. So summer activities for kids on FSM would of course be sent to every school in the right area, posters in local shops, nurseries, food bank and so on, put on local fb groups. I can't see any justification for not doing this.
Though it can be hard to get you target people to use your services theres ALWAYS been accountability. I've never had a situation where I could have such a low engagement with the project without funding being pulled or a dialoge with the funders about why uptake was so low where it was evidenced everything had been done that could be done to make the events well attended. In that case too, it would be expected that the portion of money used on the failed events would be transparently accounted for and any left over money could be used for another project agreed by the funders or returned.

Interesting. There were not dissimilar questions raised about a charity that was in the news in 2022, following an encounter at a royal residence. There was long thread on Twitter about it all, with someone giving a lot of detail about the existence of closely related organisations.

However i) the Charity Commission’s powers are relatively limited and ii) be prepared for this to backfire with people asking why you are raising concerns, or making false assumptions about your motives.

I work in this sector and I would report if you're suspicious. Ultimately any grant providers should be requesting receipts for everything provided and any unused funds should be returned as per contract. It's not uncommon to apply for funding based on large numbers attending, and then have a drop off especially when working with vulnerable people, but in that instance at least some of the funds should be returned as stipulated by the company. Eg if I apply for 13 teens to go go karting but only 8 turn up on the day I need to return the cost for the 5 who didn't attend and would need to provide evidence that the other 8 did attend. If they're forging documentation and being fraudulent then they're essentially taking money out of the pockets of other organisations who can put it to better use.

What country is the project based?

Why the 2nd post about this?

This is your second post on this subject. Just take some action and you'll feel better for it.b

Since there are charities and CICs involved, you could complain both to the Charity Commission and to the Regulator of Community Interest Companies.
I believe that the insolvency service also investigates complaints about company malpractice (not just relating to insolvency, but with a wider remit).
Companies House itself also seems to be taking a more pro-active investigative stance, though I think its remit might be limited to the accuracy of information submitted by companies.
I've added links to the Regulator of Community Interest Companies and the insolvency service's investigative role.
https://www.gov.uk/government/organisations/office-of-the-regulator-of-community-interest-companies/about/complaints-procedure#how-to-complain-about-a-cic
https://www.gov.uk/government/publications/reporting-misconduct-by-companies-directors-and-bankrupts-to-the-insolvency-service/reporting-misconduct-by-companies-directors-and-bankrupts-to-the-insolvency-service

worked in the sector for 20+ years
overdue accounts is a major red flat
have been grantmaker in private foundations and national and national lottery funds - would not award to and org with seriously overdue filing - even a week or so, I'd be seeking an explanation of why late.

what's your position in this - have you been approached for funding, or just aware of the operation (or lack of operation) and concerned?

best thing sounds like raising your concerned with CC.

Raising Concerns · Starter Portal (charitycommission.gov.uk)

Contact your local newspaper. They can investigate who the grants came from and what they were contracted to deliver. The council will also be interested if public funds are being misappropriated.

If it's on a large or largish scale I'd be tempted to contact an investigative journo if some description and suggest they do some digging. One that's either locally related or interested in the thing the charity is supposed to do

It doea sound potentially dodgy

From what you've described, OP, I think the concerns are potentially legitimate, although it's obviously impossible to tell without all of the detail. In your position, I would flag your concerns with the Charity Commission, with as much evidence as you are able to provide, and let them investigate if they consider it appropriate.

Try contacting You and Yours at the BBC, they love a good scam investigation

From how you have described it, it sounds suspicious and like a scam to me too.