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SFO secures conviction in £100mn litigation finance fund fraud

A former solicitor who funneled almost £20mn from a “no win no fee” litigation finance fund into his own pocket has been convicted following a Serious Fraud Office probe.

Timothy Schools, 61, was found guilty of all five counts against him at Southwark Crown Court on Tuesday for using cash from the Cayman Islands-based Axiom Legal Financing Fund to fund a luxury lifestyle including a shooting estate in the Lake District, a ski hotel and a motor boat.

Schools set up Axiom in 2009, which purported to provide loans to law firms pursuing no-win-no-fee cases, and built up some £100mn from 500 investors.

The fund was suspended three years later and schools were struck off in 2014. He will be sentenced on Thursday.

According to an SFO update on Wednesday, investors were told their loans were funding a portfolio of cases with a good chance of success across a number of law firms. However, £40mn was paid to just three firms, which Schools either owned or held an undisclosed interest in. The loans were then siphoned off to Schools, who paid themselves more than £1mn in salary and other benefits.

The former lawyer earned £19.6mn from the scam, according to the SFO investigation, including more than £5.7mn from audit and management fees he had dishonestly added to the law firm loans. The cash was used to pay for a £5mn shooting estate in Cumbria, acquired through an offshore company, as well as shares in a luxury French ski resort.

Schools was found guilty on counts of fraudulent trading, fraud by abuse of position and money laundering. Two other individuals, 69-year-old former financial adviser David Kennedy, from Tyne & Wear, and 49-year-old former solicitor Richard Emmett, from Lancashire, were also charged. The jury failed to reach a verdict for Kennedy, and acquitted Emmett on all charges.

SFO director Lisa Osofsky said: “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.”

The case is the second successful prosecution brought by the SFO in two weeks. The agency also secured the conviction of 70-year-old David Ames, former chairman of Caribbean resort company Harlequin Group, from Wickford, Essex, who deceived more than 8,000 investors in a £226mn scam.

Ames was convicted on two counts of fraud by abuse of position last week and offered no evidence in his defense, according to an SFO update. Ames convinced investors they were investing in Caribbean properties that were never built, and enriched himself by £6.2mn.

By the time Harlequin went into administration in 2013, it had sold about 9,000 properties to investors with less than 200 ever being constructed. Ames will be sentenced in September.

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