Serious Fraud Office of the UK obtains conviction in £100 million investment fraud scheme

A conviction was obtained against an investment manager in a £100 million (€118 million) no-win no-fee fraud scheme by the UK's Serious Fraud Office (SFO).

On five counts of fraudulent trading, fraud by abuse of position, and money laundering, the investment manager was found guilty by a jury at the Southwark Crown Court on Tuesday.

The Cayman Island-based Axiom Legal Financing Fund's former investment manager, Timothy Schools, was charged with utilizing millions of pounds in investor funds to support his opulent lifestyle.

Mr. Schools founded the Axiom Fund in 2009 to offer loans to law firms pursuing "no-win-no-fee" cases after securing more than £100M from 500 investors.

According to a statement from the SFO, investors were informed that their loans would be given to a group of "high quality law firms" to finance legal cases that had a good chance of succeeding.

The majority of the money (£40M), however, was given to three law firms that Mr. Schools either owned outright or had undisclosed stakes in.

"The loans provided to these law firms were siphoned off by Mr Schools. He used funds received by ATM Solicitors to pay himself over £1M in salary, consultancy fees and other personal benefits," according to the SFO.

The legal cases that Axiom funded frequently went to trial without success, did not pay out when they did not, and were not independently verified. According to reports, Mr. Schools set up the repayment of old loans with new ones in order to conceal these failures.

Directors, administrators, and auditors received a false impression from this that the law firms had won their cases and that investors had received a return on their investment.

The SFO discovered Mr. Schools obtained over £19.6 million from the Axiom loan funds dishonestly, including more than £5.7 million in audit and management fees.

The money was transferred and concealed in offshore bank accounts held within intricate foreign trusts, used to buy shares in a five-star ski resort in France, a motorboat, high-end vehicles, and a £5 million fishing and shooting estate through an offshore company.

Director of the Serious Fraud Office Lisa Osofsky issued a statement in which she stated: "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."

Mr. Schools will receive his punishment on Thursday.

By fLEXI tEAM