Fraudster Timothy Schools, 61, who was behind a collapsed £100m investment scheme used to fund his luxury lifestyle and empire of ‘no fee, no win’ law firms, has been sentenced to 14 years in prison at Southwark Crown Court today.
The successful prosecution follows a major investigation and prosecution by the Serious Fraud Office (SFO).
Mr Schools, who acquired a £5m hunting and fishing estate, a motor boat and a luxury car among many expensive items, conned thousands of investors by persuading them to invest millions in his investment fund which was used to fund law firms’ mostly unsuccessful ‘no win, no fee’ claims.
He was convicted by a jury on five counts of fraudulent trading, fraud by abuse of position and money laundering.
Mr Schools was responsible for the Cayman Island-based Axiom Legal Financing Fund which raised over £100m from about 500 investors who were each promised a secure return on their money.
The number of clients whose legal cases were affected by the fraud is in the range of 35,000, the SFO said.
Much of the money raised (about £40m) was paid to only three law firms: ATM, Ashton Fox and Bracewell’s. All of the firms were either owned by Mr Schools or invested in by him.
The ‘loans’ provided to the law firms were creamed off by Mr Schools who used, for example, the money received by ATM Solicitors to pay himself over £1 million in salary, consultancy fees and other personal benefits. He also employed his family too.
The cases Axiom funded were not independently vetted, often failed at court and insurance policies failed to pay out when cases did not succeed.
Mr Schools covered up the legal funding gaps by arranging for the repayments of old loans with new Axiom loans, a technique often used in pyramid-style scams. The con gave the false impression to directors, administrators and auditors that the law firms were repaying their loans and achieving returns on investment.
The SFO investigation found that Mr Schools had 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 then hidden in offshore bank accounts held in complex overseas trusts, and used to finance a lifestyle that included 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 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.”
