A complaint by a former organiser of the Melton Poppy Appeal over how some of the proceeds were being spent has led to an investigation being carried out at the town branch of the Royal British Legion.
David Bloom took over the running of the appeal in January, but he quit just a few months later after being unhappy that some of the fund collected locally was being donated to community groups.
Residents in the Melton area contribute around £25,000 every year and Mr Bloom insisted that it should all be spent on serving and former members of the armed forces and their families as it was set up to do by the charity.
After resigning as Poppy Appeal organiser, he complained to the head office of the legion, The Charity Commission and the police.
The legion launched an investigation and vice-chairman Malcolm Bryson was suspended for three months as a matter of routine.
Mr Bryson, who ran the appeal for nine years, has now been reinstated but he declined to comment this week.
The money which had gone into a community fund has now been paid back into the general Poppy Appeal fund.
Mr Bloom, who served in the military for more than 20 years, told the Melton Times: “This will not be the end of the matter, as although the money put in the community fund has been put back in the Poppy Appeal fund, other money donated by the public to veterans has been spent by the committee on things such as the building of Holwell Scout camp and has not been recovered.
“Monies donated by the public for veterans has been misdirected to various local causes under the guise of this community fund, money that was actually donated to help veterans.”
A Leicestershire Police spokeswoman said officers worked with the organisation to investigate an allegation of fraud.
She said: “Following this, in September, a resolution, which included the fraudulent money having been repaid, was established. This resolution was deemed suitable and proportionate to the circumstances of the case by the officers involved.
“A complaint has since been made to Leicestershire Police regarding this outcome, which is currently being looked into.
“We are therefore unable to comment any further at this time.”