The Serious Fraud Office has today secured the conviction today of ex-IFA and investment manager David Kennedy for his role in a £100m investment fraud in which hundreds lost part of their life savings.

The conviction follows a re-trial at Southwark Crown Court.

Mr Kennedy, 71, and his business partner, former solicitor Timothy Schools, 63, managed a Cayman Island registered company called Axiom Legal Finance Fund for over two years.

Mr Kennedy, of Tyne and Wear, will be sentenced on 8 May.

The fund promised investors a secure return, offering loans to UK law firms that were pursuing no-win-no-fee cases and where there was “purportedly a high chance of success,” the SFO said.

The Axiom Legal Financing Fund raised over £100m from about 500 investors - an average of £200,000 per investor. Victims were falsely promised a secure return on their money. 

As Financial Planning Today reported in 2022, in addition a number of IFA firms were hit by the collapse of the business and an insurance broker business failed.

In his sentencing remarks in 2022, Judge Martin Beddoe described Mr Schools as "an utterly dishonest man."

Mr Schools business partner, Mr Kennedy, a former independent financial adviser, was found guilty of one count of fraudulent trading. Mr Schools, a former solicitor, was jailed in August 2022 after being found guilty of three counts of fraudulent trading, one count of fraud, and one count of transferring criminal property. At the trial, the jury acquitted a third defendant, Richard Emmett, on all charges.

Following the trial in 2022 Mr Schools was sentenced to 14 years in prison for fraud. During the case it was uncovered that Mr Kennedy used investor money to fund thousands of high risk cases, that were not independently vetted and often failed at court. Few investors ever received any return. The number of clients whose cases were affected by the fraud is in the range of 35,000, the SFO said.

The SFO also found that Mr Kennedy diverted over £5.8m from Axiom to pay for items for his own benefit including a Swiss ski resort chalet, a Tenerife villa and renovations to his home in Hull. Mr Schools, from Penrith, Cumbria, used the money to fund a luxury lifestyle, Southwark Crown Court heard.

The 61-year-old ex-solicitor, who has since been struck off, was also reported to have had a boat, luxury cars and a £5m fishing and shooting estate in the Lake District.

Fund to provide the luxury lifestyle were hidden in offshore bank accounts and complex trusts.

Nick Ephgrave, director of the Serious Fraud Office, said, referring to Mr Kennedy: “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.”