SFO convicts of £100m litigation financing fund fraud

A former lawyer who pocketed almost £20m from a ‘no win no fee’ litigation financing fund has been found guilty following an investigation by the Serious Fraud Office.

Timothy School, 61, was found guilty at Southwark Crown Court on Tuesday of all five counts of using cash from the Cayman Islands Axiom Legal Financing Fund to finance a luxury lifestyle, including a shooting estate in the Lake District, a ski hotel and a boat motorboat.

The school set up Axiom in 2009 to lend to law firms pursuing no-win, no-fee cases, and has raised around £100m from 500 investors.

The fund was suspended after three years and the school was cancelled in 2014. He will be sentenced on Thursday.

According to Wednesday’s SFO update, investors were told their loans were funding a series of cases that were likely to succeed at multiple law firms. However, only £40m was paid to three companies in which the school owns or holds undisclosed interests. The loans were then siphoned off to the school, which paid itself more than £1m in salaries and other benefits.

According to the SFO investigation, the ex-lawyer made £19.6m from the scam, of which more than £5.7m came from audit and administration fees he dishonestly added to the law firm’s loans. The cash was used to pay for a £5m shooting range in Cumbria acquired through an offshore company, as well as a stake in the French luxury ski resort.

The school was found guilty of fraudulent transactions, abuse of power fraud and money laundering. Two others, former financial adviser David Kennedy, 69, from Tyne and Wear, and former lawyer Richard Emmett, 49, from Lancashire, have also been charged. The jury failed to find Kennedy and acquitted Emmet of all charges.

SFO director Lisa Osofsky said: “The school deliberately abused his position of trust to enrich itself. Through a complex web of lies, he sought to hide his fraudulent activities while spending others’ hard-earned money.”

The case is the second successful SFO prosecution in two weeks. The agency also identified the conviction of David Ames, 70, the former chairman of Caribbean holiday company Harlequin Group in Wickford, Essex, who defrauded more than 8,000 investors in a £226m scam.

Ames was convicted last week of two counts of fraud for abusing his position and offered no evidence in his defense, according to the SFO’s latest update. Ames convinced investors that they were investing in properties that had never been built in the Caribbean and made themselves £6.2 million.

By the time Harlequin entered management in 2013, it had sold about 9,000 properties to investors and had fewer than 200 under construction. Ames will be sentenced in September.

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