Last night, a police spokesman said: "We have continued inquiries into allegations over the running of the Louise Woodward Family Trust. Last Thursday, May 6, two people were arrested and bailed to return on July 1." Police would not name the two people arrested, though sources close to the investigation confirmed they were Louise's parents.
Louise, 21, from Elton, Cheshire, was convicted in November 1997 at a court in Boston, Massachusetts, of the second-degree murder of baby Matthew Eappen, who died while in her care. The verdict was reduced to manslaughter by the trial judge and Woodward returned to Britain last summer after losing an appeal against conviction in the Supreme Judicial Court.
Her parents, both 43, separated after her return to Britain and have been living apart in Cheshire. They were together last night when Mrs Woodward refused to comment on the reports. "I have got nothing to say. I don't speak to the press," she said. At the time of Woodward's trial, conviction and appeal, which gripped the country, contributions to the trust fund flooded into Elton, a village near Chester.
But last June, Cheshire police launched a joint investigation with the FBI into claims from an anonymous member of the public relating to an invoice for more than pounds 9,000, which Mrs Woodward submitted to the fund for accommodation at the home of the American lawyer Elaine Whitfield Sharp.
Mrs Woodward stayed with Mrs Sharp for seven months and was joined there by her daughter after her release from prison. Mrs Sharp has denied receiving any money. The police took the unusual step of confirming their investigation last October, after speculative reports in the American press.
Mrs Woodward has always denied any wrong-doing in connection with the fund, which raised pounds 250,000 to help to pay legal bills and living expenses for the duration of the trial and for the time spent in Boston awaiting the result of an appeal.
"I categorically deny any of the allegations which are being laid. I had no idea there was a police investigation. We just want to get on with our lives," she said at the time.
Last night her solicitor, Sean Sexton, issued a statement saying: "Susan Woodward has been informed by the police that they will seek advice from the Crown Prosecution Service once their inquiries are complete and she remains confident that she will be vindicated in due course."
Soon after her return to Britain, Louise Woodward left Cheshire to take up a law course at South Bank University in London.