This smear is mainly spread by Tenzin Peljor. He’s stated this smear on several websites including Wikipedia under the name Kt66. Finally, a detailed explanation of how the Manjushri Institute separated from the FPMT is available on the internet for anyone who is confused about this history of events.
The refutation of this smear from the New Kadampa Truth website:
Truth: Geshe Kelsang was the first Resident Teacher at Manjushri Institute. He later accepted Lama Yeshe’s request for him to step down and had made plans to return to India and then to live at Madhyamaka Centre in York. However, the community at Manjushri all petitioned him to stay.
The community of Manjushri Institute wished to save their building, Conishead Priory, from being sold to make funds available for suspect business dealings in Hong Kong. This meant they needed to separate from the FPMT. On the other hand, they wished Lama Yeshe to stay as their Spiritual Director. After continual discussions on how to solve the problem, also involving two representatives from the Dalai Lama, the Institute’s managers – then called the ‘Priory Group’ – decided to take steps to separate Manjushri Institute from FPMT.
Read the full article about the smear: Geshe Kelsang Stole Manjushri Institute from FPMT