Investment manager

Investment manager behind £100m no-gain, no-fee fraud jailed for 14 years

August 11, 2022 | Press Releases

Following a successful investigation and prosecution by the Serious Fraud Office (SFO), Timothy Schools, the investment manager who used millions of pounds of investors’ money to fund his luxury lifestyle, was sentenced to 14 years in prison, at a hearing at Southwark Crown Court today.

On Tuesday, Schools (61), the investment manager of Cayman Islands-based Axiom Legal Funding Fund, was found guilty by a jury of 5 counts of fraudulent trading, fraud by abuse of position and money laundering. ‘silver.

Fraud

The Axiom Fund was established in 2009 by Mr. Schools to provide loans to law firms pursuing business without gain or expense. The Axiom fund has secured over £100m from around 500 investors, who were promised a sure return on their investment.

While investors were told their loans would be given to a panel of high quality law firms to fund legal cases with a high probability of success, the majority of the funds (amounting to £40m) were paid to just three law firms – ATM, Ashton Fox and Bracewell’s – in which Mr Schools owned or held an undisclosed interest.

The loans made to these law firms were misappropriated by Mr. Schools. He used funds received from ATM Solicitors to pay himself over £1 million in salary, consultancy fees and other personal benefits.

Cases funded by Axiom were not independently reviewed, often failed in court, and case insurance policies failed to pay out when cases were unsuccessful. Mr Schools covered for these failures by arranging the repayment of old loans with new Axiom loans. This gave the false impression to directors, administrators and auditors that the law firms were successful in repaying their loans and earning returns on their investments.

The number of clients whose files have been affected by the fraud is around 35,000.

Financial benefits

The SFO investigation found that Mr Schools had dishonestly acquired more than £19.6million from Axiom’s loans, including more than £5.7million from audit and management fees that he he had dishonestly added to the loans from the law firm. The funds were transferred and stashed in offshore bank accounts held in complex foreign trusts and used to fund a lifestyle that included buying shares in a luxury ski hotel in France, a motor boat, fancy cars and a £5m fish and shoot. estate in the Lake District, purchased through an offshore company.

Lisa Osofsky, director of the Serious Fraud Office, said: “Mr. Schools deliberately abused his position of trust to enrich himself. Through an intricate 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 bring justice to 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 August 10, 2020, Timothy, David Kennedy, and Richard Emmett Schools were accused of executing a fraudulent scheme to divert money from the Axiom Legal Funding 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, of all charges.
  • Timothy Schools (DOB 19.03.1961), a former barrister, was charged with three counts of fraudulent trading, contrary to Section 993(1) of the Companies Act 2006, one count of fraud, contrary to sections 1 and 4 of the Fraud Act 2006, and one count of transfer of criminal property, in breach of section 327(1)(d) of the Proceeds of Crime Act 2002.
  • David Kennedy (DOB 01.07.1953), former independent financial adviser, was charged with one count of fraudulent transaction, contrary to Section 993(1) of the Companies Act of 2006.
  • Richard Emmett (DOB 02.07.1973), former barrister, was charged with one count of fraudulent operation, contrary to Section 993(1) of the Companies Act 2006, and one count of being involved in an arrangement which facilitates the acquisition, keeping, 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.