A corrupt solicitor who lived a life of luxury on an estate in Cumbria as he fleeced investors out of more than £25m is facing jail.
Southwark Crown Court heard how Timothy Schools, 61, ran a scheme financing loans to law firms in 'no win no fee' cases between December 2008 and October 2012.
The jury reached a verdict on the case after 28 hours' deliberation.
He stands to be sentenced at Southwark Crown Court on Thursday 18th August and remains in custody until that date.
I simply don’t trust you to turn up. I refuse bail and you will remain in custody until Thursday.Judge BeddoeJudge Martin Beddoe said: "You have been convicted of the most egregious and persistent crime involving huge sums of money. You are now facing a very lengthy period of imprisonment with consecutive sentences.
"I am sure you would have prepared your family already. I cannot believe what has happened today has come as any real surprise. Granting you bail would make things harder for your family and harder for you.
"I simply don’t trust you to turn up. I refuse bail and you will remain in custody until Thursday."
More than 500 investors sank cash into the The Axiom Legal Financing Fund scheme, which claimed to insure lenders against unfinished cases or solicitors going bankrupt.
Schools received £19.5mn from the Cayman Islands-registered fund, using some of the money to pay for an estate in Cumbria.
He also had a £45,000 corporate box at Blackpool FC’s home ground, claiming it was a business expense for the purpose of corporate hospitality.
Schools owned Preston firm ATM Solicitors, given its name because he used it as ‘his personal cash machine’, Southwark Crown Court heard.
He claimed it was a ‘cashpoint’ for clients to withdraw cash, conduct their litigation and get them compensation, hence the name.
The lawyer had insisted the company was providing a valuable service to fill the 'black hole' left in the market following the Payment Protection Insurance Scandal in 2009.
He ran the scheme with Richard Emmett, 48, and David Kennedy, 69.
Schools, of Sedbergh, Cumbria, denied but was convicted of three counts of fraudulent trading, one count of fraud and one count of transferring criminal property.
Emmett, received just over £1m through his firm Emmetts Solicitors, while Kennedy made more than £5m, some of which went on property in the Swiss Alps and Tenerife.
He was cleared of fraudulent trading and facilitating criminal property, charges he had denied.
Kennedy, of Houghton-le-Spring, Tyne and Wear, denied one count of fraudulent trading.
The jury could not reach a verdict in his case and he is facing a possible retrial.
As Schools was led off to custody to await sentence he was told by the judge he was guilty of 'egregious and persistent crime involving huge sums of money.'
£100mn investment scam
Axiom's marketing material claimed investors' cash would be held in the Cayman Islands and forwarded to an 'independent panel' of law firms who would pay it back with 15 per cent interest.
Miranda Moore, QC, prosecuting, said investors were persuaded it was a good bet.
‘It convinced a lot of investors. It was very popular and over £100m was invested by individuals. People were investing their savings, their pension pots.
But Schools only loaned money to a very limited number of firms.
‘In reality, from 2008 until December 2011 there was no genuine independent panel of law firms getting these loans. It was just Schools’ firms,’ the prosecutor said.
‘Funds like this don’t run without reports being sent back to independent directors and they were being sent, saying solicitors were winning cases, so the fund grew.'
Axiom did at its inception in September 2009 highlight the conflict of interest in Schools owning or having shares in law firms they were lending to, such as ATM.
‘He pretended to those at the fund that he had divested himself of ATM to avoid the conflict,’ Ms Moore said.
The fund began to collapse in August 2012 the fund began to collapse after an article appeared in Offshore Alert.
‘It is a business whistleblowing website and the report was under the headline: Head of Cayman fund group Tim Schools accused of serious misconduct in the UK,’ Ms Moore said.
‘Similar articles appeared in the same publication in October of that year. Following this there was widespread withdrawals from investors.
‘To prevent a run on the fund there was a suspension. £109mn had gone in.’
An investigation by accountants KPMG found that 11 solicitors’ firms owed Axiom more than £123mn, with the largest debt coming from Ashton Fox.
The company owed £60mn plus interest and was forecast to pay only £65,000 by the time the loan repayments were due in October 2013.
It went bust and the investor's cash vanished.
‘There were offshore entities that were hiding the funds that had to be proved that they belonged to the defendants,' the prosecutor said.
‘Although £25m was retraced, the costs incurred in all the litigation and tracing meant that of all the money, only £1m was recovered. So the investors effectively lost everything.’
Only £3.1m at most could be repaid to the fund by all the panel law firms by that same deadline.
‘Most of the firms went under,’ said Ms Moore.
Background
The court heard Schools had been struck off as a solicitor back in 2014 for misconduct.
Before he became involved in Axiom he ran a Lancaster-based personal injury firm called Life Repair Group, previously called The Compensation Group, when it collapsed in 2003.
Emmett was struck off in 2018, following the collapse of Axiom.
Emmett denied one count of fraudulent trading and one count of facilitating criminal property and was found not guilty to both.
Schools, of Cumbria, denied three counts of fraudulent trading, one count of fraud and one count of transferring criminal property but was found guilty by an unanimous jury verdict.
Kennedy, of Houghton-le-Spring, Tyne and Wear, denied one count of fraudulent trading and the jury were not able to reach a decision in relation to this charge after 30 hours and 37 minutes deliberation.
The prosecution have 21 days to review their case and decide if they will seek a retrial.
In a statement, Emmett's solicitor Paul Schofield, said 'Richard and his family have had to endure enormous stress for almost five years.
'He has always protested his innocence, he has vigorously defended these proceedings and has now, at last, been vindicated by the correct verdicts returned by the jury and is delighted with the result.'
Eddie Beaver is a court reporter based at Southwark
