Serious Fraud Office
Serious Fraud Office secures conviction in £100 million no-win-no-fee fraud
The Serious Fraud Office (SFO) has secured the conviction of an investment manager who used millions of pounds of investors’ money to fund his luxury lifestyle, which included purchasing a fishing and shooting estate in the Lake District, a ski hotel and a motor boat.
Timothy Schools (61), the investment manager for the Cayman Island-based Axiom Legal Financing Fund, was convicted by a jury at Southwark Crown Court on 5 counts of fraudulent trading, fraud by abuse of position and money laundering.
Sentencing will take place tomorrow, on Thursday 11 August.
The Axiom Fund was set up in 2009 by Mr Schools to provide loans to law firms pursuing no-win-no-fee cases. The Axiom Fund secured over £100 million from approximately 500 investors, who were promised a secure return on their investment.
Whilst investors were told their loans would be provided to a panel of high quality law firms to fund legal cases with a high likelihood of success, the majority of the funds (amounting to £40 million) were paid to just three law firms – ATM, Ashton Fox and Bracewell’s – all of which Mr Schools either owned or held undisclosed interest in.
The loans provided to these law firms were siphoned off by Mr Schools. He used funds received by ATM Solicitors to pay himself over £1 million in salary, consultancy fees and other personal benefits.
The cases Axiom funded were not independently vetted, often failed at court and case insurance policies failed to pay out when cases did not succeed. Mr Schools covered up these failures by arranging for the repayments of old loans with new Axiom loans. This gave the false impression to directors, administrators and auditors that law firms were successfully repaying their loans and achieving returns on investment.
The SFO investigation found Mr Schools dishonestly acquired over £19.6 million from the Axiom loan monies, including more than £5.7 million from audit and management fees he dishonestly added to the law firm loans. The monies were transferred and hidden in offshore bank accounts held within complex overseas trusts, and used to finance a lifestyle that included the purchase of shares in a luxury ski hotel in France, a motor boat, luxury cars and a £5 million fishing and shooting estate in the Lake District, bought through an offshore company.
Lisa Osofsky, Director, Serious Fraud Office, said: “Mr Schools deliberately abused his position of trust to enrich himself. Through a complex web of lies, he attempted to hide his fraudulent activity, while spending other people’s hard earned money.”
Notes to editors:
- The Serious Fraud Office fights complex financial crime to deliver justice for victims and protect the UK’s reputation as a safe place to do business. We investigate and prosecute the most serious or complex cases of fraud, bribery and corruption.
- On 10 August 2020 Timothy Schools, David Kennedy and Richard Emmett were charged with carrying out a fraudulent scheme to divert money from the Axiom Legal Financing Fund, for their own financial benefit.
- The jury failed to reach a verdict for a second defendant Mr Kennedy, and acquitted a third defendant Mr Emmett on all charges.
- Timothy Schools (DOB 19.03.1961), a former solicitor, was charged with three counts of fraudulent trading, contrary to Section 993(1) of the Companies Act 2006, one count of fraud, contrary to Section 1 and 4 of the Fraud Act 2006, and one count of transferring criminal property, contrary to Section 327(1)(d) of the Proceeds of Crime Act 2002.
- David Kennedy (DOB 07.01.1953), a former independent financial adviser, was charged with one count of fraudulent trading, contrary to Section 993(1) of the Companies Act 2006.
- Richard Emmett (DOB 02.07.1973), a former solicitor, was charged with one count of fraudulent trading, contrary to Section 993(1) of the Companies Act 2006, and one count of being concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by another, contrary to Section 328(1) of the Proceeds of Crime Act 2002.
- The SFO is represented by Miranda Moore QC, Paul Raudnitz QC, and Aparna Rao.
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