Whoever the money came from was, as John says, entitled to do with it whatever he wanted to do. And what he chose to do was announce a contest which was publicly represented to be legitimate, inducing a large number of people to take time out of their day to compose limericks under the expectation that they would be fairly considered for the prize. It was that announcement which turned out to be fraudulent. (I suspect that there are probably laws in Britain against that kind of fraud, by the way, though I'm sure that no one will lift a finger to enforce them, nor am I saying it's serious enough that this is a bad thing).
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