Timothy Schools of Axiom Legal convicted over role in £100m fraud scheme

Aug 10, 2022. The UK Serious Fraud Office (SFO) has secured the conviction of an investment manager for his role in setting up a fraudulent Cayman Islands-based fund.

Timothy Schools created the Axiom Legal Financing Fund in 2009 to provide loans to law firms pursuing no-win-no-fee cases. He managed to secure over £100m ($121m, €118m) from around 500 investors, who were promised returns on the money they had put in the fund.

The SFO explained investors were told their money would have been loaned to a panel of “high quality law firms to fund legal cases with a high likelihood of success”. But £40m were paid to just three law firms – namely ATM Solicitors, Ashton Fox and Bracewell’s – which were either owned by Schools or he held undisclosed interest in.

According to the SFO, the loans were then siphoned off by the investment manager. He used funds given to ATM Solicitors to pay himself over £1m in salary, consultancy fees and other personal benefits.

The Serious Fraud Office added that the cases the Axiom Fund financed were not independently vetted, they often failed at court and insurance policies did not pay out when cases didn’t succeed.

Schools covered up these failures by “arranging for the repayments of old loans with new Axiom loans”, the SFO added, which gave the “false impression to directors, administrators and auditors that law firms were successfully repaying their loans and achieving returns on investment”.

Luxury lifestyle

Investigators found that the investment manager acquired over £19.6m from the Axiom loans, including more than £5.7m from audit and management fees he “dishonestly added” to the law firm loans.

The money was then transferred and hidden in offshore bank accounts held within complex overseas trusts and was used to finance his lavish lifestyle.

This included the purchase of shares in a luxury ski hotel in France, a motor boat, luxury cars and a £5m fishing and shooting estate in the Lake District, bought via an offshore company.

Lisa Osofsky, director at the 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.”

Schools was charged in August 2020 alongside two others – David Kennedy, a former financial adviser, and Richard Emmett, an ex-solicitor – with carrying out a fraudulent scheme to divert money from the Axiom Legal Financing Fund.

The jury failed to reach a verdict for Kennedy and acquitted Emmett.

The SFO confirmed to International Adviser Schools has been found guilty but is due to be sentenced on 11 August. Judge Martin Beddoe said the investment manager was guilty of “the most egregious and persistent offending involving huge sums of money” and is now facing “a lengthy period of imprisonment”.

International Adviser