The Serious Fraud Office has secured the conviction of an investment manager who took £100m from investors to help pay for a luxury lifestyle including a fishing and shooting estate, a ski hotel and a motor boat.
Fraudster Timothy Schools (61) has been convicted by a jury at Southwark Crown Court on five counts of fraudulent trading, fraud by abuse of position and money laundering.
He was investment manager for the Cayman Island-based Axiom Legal Financing Fund which funded law firms’ ‘no win, no fee’ cases however many of the cases failed and the law firms were often part or fully owned by him.
The court heard that Mr Schools convinced hundreds of investors to invest millions of pounds into his fund to pay for a luxury lifestyle. He bought a fishing and shooting estate in the Lake District, a ski hotel and a motor boat and enjoyed a privileged lifestyle.
The Axiom Fund was established by Mr Schools in 2009 to fund loans to law firms pursuing no-win, no-fee cases. The fund raised over £100 million from 500 investors, who were promised a secure return on their money.
Investors were told that the loans would fund a panel of ‘high quality’ law firms to pay for legal cases with a high likelihood of success. Most of the money (about £40 million) was paid to three law firms – ATM, Ashton Fox and Bracewell’s. Mr Schools either owned or held undisclosed interest in each of these firms which was not disclosed fully to investors.
The loans provided to the 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 SFO said 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 repayment of old loans with new Axiom loans. This gave a false impression to directors, administrators and auditors that the law firms were successfully repaying their loans and achieving returns on investment, the SFO said.
The SFO investigation found that Mr Schools dishonestly acquired over £19.6 million from the Axiom loan monies. This included 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 pay for 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.”
Sentencing of Mr Schools is due to take place tomorrow, Thursday 11 August.
