Axiom fund adviser joins Schools in jail after eight-year sentence


Tenerife: Kennedy bought a villa with money from the fund

An investment manager at the heart of the Axiom Legal Financing Fund fraud has been jailed for eight years having being found guilty of fraudulent trading after a retrial.

David Kennedy, 71, joins Timothy Schools in jail, after the struck-off solicitor was sentenced to 14 years in 2022 – eight years for fraudulent trading and a further six for fraud itself.

The Cayman Islands-based fund they set up closed in October 2012 after four years in the wake of allegations of fraud, and went into receivership in February 2013 owing investors around £120m.

The fund provided loans to law firms pursuing conditional fee cases – generally personal injury but also housing disrepair – securing funds from approximately 500 investors, who were promised a secure and high return on their investment.

Whilst investors were told their loans would be provided to a panel of high-quality law firms to fund legal cases with a high likelihood of success, the majority of the funds (amounting to £40m) were paid to just three law firms – ATM, Ashton Fox and Bracewell’s – all of which Mr Schools either owned or held undisclosed interests in.

Preston firm ATM Solicitors was given its name because Mr Schools used it as “his personal cash machine”, Southwark Crown Court was told at his trial.

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.

The SFO said loans were siphoned off. Mr Schools received £19.5m from the fund, using some of it to pay for an estate in Cumbria.

The Serious Fraud Office (SFO) found that Mr Kennedy diverted over £5.8m from Axiom to pay for items such as a Swiss ski resort chalet, a Tenerife villa and renovations to his home in Hull.

The SFO had to follow a complex web of companies and bank accounts to eight countries around the world, from England to the Marshall Islands in the South Pacific, in a bid to trace the money, but the cost of the process wiped out most of what it found.

Speaking after Mr Kennedy’s conviction last month, SFO director Nick Ephgrave said: “This individual’s criminal actions flooded the legal system with unwinnable cases affecting hundreds of people who suffered financial loss and significant anxiety as a result. This criminality also served to undermine trust and confidence in the legal profession more widely.

“Our specialist team used their expertise to unpick a complex trail of payments, including into Kennedy’s personal accounts, to secure justice for victims today.”

Mr Schools faces a three-day confiscation hearing in September 2024, with the SFO now starting confiscation proceedings against Mr Kennedy too.

Mr Schools, who was struck off in 2014 for unrelated reasons, failed in his appeal against sentence last year.




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