SFO seizes £1.1m from sale of Lake District home linked to £146m fraud

The Serious Fraud Office has seized £1.1 million from the sale of a Lake District property after investigators linked the purchase to proceeds of a £146 million investment fraud carried out by a convicted solicitor.

The money was taken from the sale of Hope Springs House in Matterdale, Penrith, a five-bedroom home that includes a two-bedroom lodge and views of the Lakeland Fells. The SFO used an Unexplained Wealth Order to secure the funds after tracing payments it says originated from the investment scheme run by Timothy Schools.

Timothy Schools, 65, of Sedbergh, Cumbria, was jailed for 14 years in August 2022 after a Southwark Crown Court jury convicted him of three counts of fraudulent trading, one count of fraud by abuse of position and one count of transferring criminal property. The SFO said Schools pocketed millions of pounds invested in a Cayman Islands-registered vehicle, Axiom Legal Financing Fund, which purported to finance legal cases.

Prosecutors said investors were told their loans would be advanced to high-quality law firms on a no-win, no-fee basis, but the bulk of funds were paid to three firms in which Schools had undisclosed interests. The SFO said cases financed by Axiom were not independently vetted, frequently failed, and insurance policies did not pay out as claimed. The scheme, the office said, included arranging new loans to cover repayments on previous ones to give the appearance of returns.

A January confiscation order linked to the case required Schools to repay roughly £1.08 million representing what the SFO described as "tainted gifts" to others, with an additional five years' imprisonment in default. The SFO said that otherwise almost all of the millions invested remained unaccounted for, prompting further investigation into assets and associates.

The UWO granted to the SFO allowed investigators to examine the origins of wealth associated with Mr. Schools and, with a view to recovering proceeds, to pursue assets held by associates and family members. The agency said its financial investigator submitted evidence that Schools and his former wife, Claire Schools, remained close and in regular contact, and that she had been recorded in prison paperwork as his next of kin and partner.

The SFO said investigators found Hope Springs House had been purchased and renovated using funds fraudulently obtained from the Axiom scheme. The office also reported that Schools used illicit funds to acquire luxury items and properties, including motorboats, cars and a reported £5 million fishing and shooting estate in the Lake District.

Nick Ephgrave QPM, Director of the Serious Fraud Office, said: "We will use all the tools at our disposal to recover proceeds of crime from those associates and family members who seek to benefit from the criminal activity of others. Unexplained wealth orders offer investigative opportunities to pursue assets on behalf of victims and taxpayers. This is our first successful use of this legislation and it certainly won't be the last."

Solicitor General Ellie Reeves welcomed the recovery, saying: "Fraud is a pernicious crime. It hurts individuals and businesses, and harms business confidence. I welcome the SFO's successful recovery of more than £1 million from a convicted fraudster – one of the first law enforcement bodies to use such powers. This is money that will go straight back to the public purse and deny a prolific fraudster's family benefiting from his criminal activities."

The SFO's use of a UWO in this matter is the first time the agency has successfully employed the measure; the National Crime Agency previously used the order in a high-profile case involving assets linked to the family of a jailed Azerbaijani banker. The SFO said its investigation into Schools' assets is ongoing and that a further hearing is scheduled for 26 September at City of London Magistrates' Court.

Claire Schools married Timothy Schools in 2011 at a French Alps hotel, the SFO noted, and the couple separated in 2016 before divorcing in 2020. The agency's witness statement indicated the former couple lived together until his conviction in 2022 and that she regularly visited and spoke to him in prison. The SFO said its actions aim to identify and recover assets obtained through unlawful conduct and to return funds to victims and the public purse.