Captain Tom's daughter and her husband used the charity set up in her father's name to their "significant" personal benefit, an official inquiry has found.
Hannah Ingram-Moore and her husband Colin committed repeated acts of misconduct in their management of the Captain Tom Foundation, the Charity Commission ruled.
Failings found in the 30-page report include:
Ms Ingram-Moore had earlier been banned from holding a senior position in a charity or being a trustee for ten years, while her husband was barred for eight years.
David Holdsworth, who led the inquiry, said that the charity did not live up to Captain Tom's legacy.
"Our inquiry report details repeated failures of governance and integrity," he said.
“The public – and the law – rightly expect those involved in charities to make an unambiguous distinction between their personal interests, and those of the charity and the beneficiaries they are there to serve. This did not happen in the case of The Captain Tom Foundation.
"We found repeated instances of a blurring of boundaries between private and charitable interests, with Mr and Mrs Ingram-Moore receiving significant personal benefit. Together the failings amount to misconduct and/or mismanagement."
The commission set up the inquiry in 2021, and it became a statutory inquiry in 2022 as concerns grew about Mr and Ms Ingram-Moore's handling of the charity.
Ms Ingram-Moore was "disingenuous" in claiming that she had not been offered a six-figure sum to run the foundation, the inquiry found.
While this was technically correct, she had previously effectively asked for £150,000 and been rejected. She was later given a salary of £85,000 per year pro rata for nine months.
For Captain Tom's books, Club Nook, a company of which the Ingram-Moores are directors, were given an advance of nearly £1.5 million.
The commission said the public "would understandably feel misled" to learn that sales of his autobiography, Tomorrow Will Be A Good Day, did not benefit the charity.
The commission said that "to date the charity has not received any money from the first publishing agreement".
The report said that Club Nook was incorporated in April 2020, with Mr and Mrs Ingram-Moore as company directors who, in addition to their two children, hold shares in the company.
Literary agent Bev James, who represented Captain Tom, told the inquiry that her "understanding" was that the Ingram-Moores "were very clear that they did not want the money from the books to go to charity, but they would make a donation when the Captain Tom Foundation was set up".
The report said it "appears that Captain Tom himself believed or intended that (his book) Tomorrow Will Be A Good Day would in some way financially support the charity".
It references the book's prologue, which is attributed to Captain Tom, and reads: "Astonishingly at my age, with the offer to write this memoir I have also been given the chance to raise even more money for the charitable foundation now established in my name."
The report's authors say: "The inquiry cannot see how the first sentence in the above quote from Captain Tom can be interpreted as anything other than funds provided to Captain Tom for writing his memoir would flow to the charity to continue his charitable work."
They continued: "The inquiry formally wrote to Mr and Mrs Ingram-Moore on 4 October 2022 and 23 November 2022 setting out the information it had gathered, to provide them with an opportunity to rectify matters by making a donation to the charity in line with their original intentions as understood by those involved.
"On both occasions they declined to do so."
Ms Ingram-Moore appeared at a charity event held by Virgin Media, for which she was paid £18,000. Virgin Media donated £2,000 to the charity. She claimed this was in a personal capacity.
The commission disagreed, saying there was no evidence to support this.
On the spa and pool complex, which was demolished earlier this year, the couple said the use of the foundation's name in the application had been an error while they were both "busy undertaking 'global media work'".
The block was torn down after the family lost an appeal against Central Bedfordshire Council's order for it to be torn down.
The commission has not called on the foundation to close, but a lawyer for the family has previously indicated the charity might shut down.
The foundation stopped taking donations in summer 2023.
The millions raised by the late Sir Tom and donated to NHS Charities Together before the foundation was formed were not part of the commission's inquiry.
A spokesperson for the Captain Tom Foundation said: "The Captain Tom Foundation is pleased with the Charity Commission's unequivocal findings regarding the Ingram-Moores' misconduct.
"We join the Charity Commission in imploring the Ingram-Moores to rectify matters by returning the funds due to the Foundation, so that they can be donated to well-deserving charities as intended by the late Captain Sir Tom Moore.
"We hope they do so immediately and without the need for further action."
Captain Sir Tom Moore's family said they were treated "unfairly and unjustly" in the report into their association with the charity set up in his name.
The Ingram-Moore family said the Charity Commission's two-year inquiry has taken a "serious toll" on the family's health, "unfairly tarnishing" their name.
They described the process as "unjust and excessive", adding that the charities watchdog had a "predetermined agenda".
