Southwark Crown Court: Retrial set for March 2024
A former independent financial adviser alleged to have been part of the Axiom Legal Financing Fund fraud is to face a retrial after a jury last month [1] failed to reach a verdict, the Serious Fraud Office (SFO) has decided.
However, the delays in the criminal courts mean that the retrial of David Kennedy, 69, will not take place until March 2024.
He will again be charged with one count of fraudulent trading, contrary to section 993(1) of the Companies Act 2006.
Last month, Tim Schools, a struck-off solicitor, was jailed for 14 years [2] after being found guilty of three counts of fraudulent trading, one count of fraud and one count of transferring criminal property.
Richard Emmett, also a struck-off solicitor, was acquitted of one count of fraudulent trading and one count of being concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by another.
Mr Schools set up the Axiom fund in 2009 to back law firms pursuing mainly personal injury cases under conditional fee agreements. It secured over £100m from approximately 500 investors, who were promised a secure return on their investment.
Whilst investors were told their loans would be used by a panel of high-quality law firms to fund claims with a high likelihood of success, the majority – some £40m – were paid to just three law firms: ATM Solicitors, Ashton Fox and Bracewell’s.
Mr Schools either owned or held undisclosed interest in all of them; the name ATM was supposedly given to that firm because he used it a cash machine.
The loans were siphoned off by Mr Schools. He used the funds received by ATM to pay himself over £1m in salary, consultancy fees and other personal benefits.
The cases Axiom funded were not independently vetted, often failed and after-the-event insurance policies failed to pay out when they did.
Mr Schools covered up these failures by arranging for the repayments of old loans with new Axiom loans. The SFO said this gave “the false impression to directors, administrators and auditors that law firms were successfully repaying their loans and achieving returns on investment”.
Around 35,000 clients were affected.
The SFO investigation found Mr Schools dishonestly acquired nearly £20m from the Axiom loan monies, including more than £5.7m from audit and management fees he added to the law firm loans.
The monies were transferred and hidden in offshore bank accounts held within complex overseas trusts – the SFO investigation [3] took in bank accounts and companies in eight countries, from the UK to the Marshall Islands in the South Pacific.
Mr Schools used the money to bankroll a lifestyle that included the purchase of shares in a luxury ski hotel in France, a motor boat, luxury cars and a £5m fishing and shooting estate in the Lake District.