A solicitor who masterminded the now collapsed £120m Axiom Legal Financing fund has been struck off for "serious and continued" misconduct at one of the main law firms that received money from the fund.
Timothy Schools, who is appealing the decision, was told he can no longer practise law after the Solicitors Disciplinary Tribunal found against him on ten allegations brought by the Solicitors Regulation Authority relating to his time as owner and director at ATM Solicitors.
These include failing to act with integrity, acting where there was a conflict of interest, and acting in a manner which led to his independence and that of ATM Solicitors being compromised.
In the Tribunal documents, seen by Professional Adviser, one witness states that, when Schools was asked why the firm was called ATM, he said it stood for automated teller machine - that it was a "cash generating business".
When Schools was asked why the firm was called ATM, he said it stood for automated teller machine - that it was a cash generating business
ATM Solicitors is linked to the failed Axiom Legal Financing fund by Schools' involvement in the two businesses - and the fact that money was flowing from one to the other.
Schools launched the Cayman-domiciled Axiom fund in September 2009, promising returns of 11% a year. He also headed up the fund's investment manager, Tangerine.
Axiom was suspended in 2012, unable to meet significant redemption requests from investors after a series of allegations emerged about Schools and his management of the fund.
It was promoted as "an uncorrelated, open-ended investment that provides short term finance to UK law firms" who work on a no-win, no-fee basis.
According to a report from the Axoim fund's receiver, Grant Thornton, about 60% of the fund's assets were lent to just two "panel law firms" - Ashton Fox and Tandem, both of which are now in insolvency proceedings and owe the fund tens of millions of pounds.
Ashton Fox was the rebranded product of the purchase of ATM Solicitors by law firm Emmetts in 2011. Schools stayed on at the enlarged firm as director.
Grant Thornton said last year there is evidence money lent to the law firms was misused.
KPMG said in 2012 that the managers of the suspended fund carried out "little or no due diligence" on the cases in which they invested shareholders' money.
The Tribunal which struck off Schools was not dealing with his conduct in relation to Axiom.
However, in passing judgement on Schools for his role at ATM, the Tribunal found he had "been motivated by financial gain and the misconduct arose from the way the [he] operated the firm".
He showed a "disregard for the interests of his clients, preferring his own financial interests", it added.
Schools, who was not present at the hearing, said at an earlier stage that the case against him was "unjust" and the process "unfair".
Law firm Warren's Law and Advocacy, which acts on behalf of Schools, declined to comment on whether he would be appealing the decision. But a spokesperson for the Solicitors Disciplinary Tribunal said the "matter is subject to an appeal to the High Court (Administrative Court) by Mr Schools".
Tobias Haynes of law firm Regulatory Legal, which acts on behalf of some Axiom investors, said: "The news of Timothy Schools being struck off by the Solicitors Disciplinary Tribunal only goes further to show the gravitas of the situation with the Axiom fund."
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