The former wife of a crooked lawyer who carried out a ‘breathtaking’ £146m fraud could have cash seized from her recently-sold £1.5million house amid claims it was bought with criminal proceeds and the couple are ‘still in a romantic relationship’.
Cumbria-based solicitor Timothy Schools raked in millions of pounds from his victims, pocketing cash invested into his Cayman Islands-registered Axiom Legal Financing Fund.
But by the time he was caught the proceeds had vanished, with the prosecution ‘unable to identify any bank balance in his name in excess of about £50.’
He was jailed for 14 years in August 2022 after being convicted of three offences of fraudulent trading, one offence of fraud by abuse of position, and one offence of transferring criminal property at Southwark Crown Court.
A confiscation order of just £1,083,67.38 – representing ‘tainted gifts’ to others – with five years’ extra jail time in default was made in January this year, leaving almost all of the swindled millions unaccounted for.
Now the Serious Fraud Office (SFO) – which London‘s High Court heard ‘seeks to investigate this serious shortfall and identify any other assets that might have been obtained through Mr Schools’ unlawful conduct’.
This includes having been given permission to probe his ex-wife Claire, with a view to seizing the proceeds of her recently-sold £1.5m Lake District home, Hope Springs House, in Matterdale, Penrith.
The application had been backed by a witness statement from a SFO financial investigator, Ian Price, who highlighted suspicions Mr and Ms Schools are ‘still in a romantic relationship, or at the very least that they remain close and in regular contact.’
Claire Schools, the former wife of crooked lawyer Timothy Schools, who carried out a ‘breathtaking’ £146m fraud, could have cash seized from her recently-sold £1.5million house
The Serious Fraud Office is seeking to investigate whether their Lake District home was bought with criminal cash – amid claims the couple (pictured at their wedding in 2011) are in ‘regular contact’ with one another
Hope Springs House, in Matterdale, Penrith, is being targeted by the SFO amid suspicions the property was purchased and renovated with criminal cash
The two had lived together until his conviction in 2022 and there was evidence that she ‘regularly visits and talks daily to her former husband in prison’.
She is also listed on prison records as his next of kin, his common law wife and his partner.
Ms Schools married the fraudster at a lavish champagne reception at a luxury ski hotel in the French Alps in March 2011 and the pair separated in 2016, before finally divorcing in 2020.
But Ms Schools’ home, a five-bedroom, four-bathroom converted schoolhouse set in over two acres of grounds, is now being targeted by the SFO over suspicion the purchase and renovation may have been funded with criminal cash.
The house – which boasts spectacular views of Lakeland Fells and includes a separate two-bedroom lodge with its own living space – was put on the market for £1.8m, then reduced to £1.5m.
It is now listed by an estate agent online as being sold subject to contract.
Earlier this year at the High Court, Mr Justice Pepperall granted an unexplained wealth order and an interim freezing order against Ms Schools relating to the house and the proceeds of its sale.
Giving his reasons for doing so this week, he said the crown court had found Mr Schools’ ‘benefit from his general criminal conduct’ was over £146m, but only a mere £1,083,067.38 was available to be confiscated.
Timothy Schools, 65, was jailed for 14 years in August 2022 for pocketing cash invested into Cayman Islands-registered Axiom Legal Financing Fund
Schools, of Sedbergh, Cumbria, told his victims their loans would be given to high quality law firms to fund legal cases with good chances of success. But most of the funds were paid to just three law firms, all of which Schools either owned or held an undisclosed interest in
Schools used the illicit money to fund a luxury lifestyle including the purchase of a motor boat, luxury cars and a £5million fishing and shooting estate in the Lake District (above)
‘Despite the breathtaking scale of Mr Schools’ criminality, the prosecution was unable to identify any bank balance in his name in excess of about £50,’ he said.
‘Further, there were no properties and the vast majority of the available assets comprised tainted gifts to his family and associates.
‘Unless very substantial further assets are subsequently identified as available, confiscation proceedings will therefore be largely ineffective in recovering the proceeds of Mr Schools’ crimes.
‘The SFO seeks to investigate this serious shortfall and identify any other assets that might have been obtained through Mr Schools’ unlawful conduct.
‘The SFO applied for an unexplained wealth order and an interim freezing order pursuant to the Proceeds of Crime Act 2002 against Mr Schools’ former wife, Claire Schools. At the conclusion of the hearing, I made both orders.
‘It is not alleged that Ms Schools was herself involved in her former husband’s criminal activity.
‘Nevertheless, these proceedings are designed to target assets that might be held in her name but which were obtained through her former husband’s crimes.’
He continued: ‘Mr Price gives an account of Mr Schools’ criminal offending and asserts that complex offshore arrangements were used as a mechanism to purchase and hold property, and to hold monies in bank accounts,’ the judge continued.
Schools was convicted on five counts of fraudulent trading, fraud by abuse of position and money laundering
‘Mr Price asserts the SFO’s belief that, with minimal other income, Ms Schools has used money made available to her via the divorce settlement and other means such as realising property purchased from the proceeds of her former husband’s crimes.
‘Ms Schools purchased Hope Springs House for £430,000 on 11 September 2018.
‘The conveyancing file indicates that the purchase was primarily funded from the proceeds of sale of a chalet in France, which had been owned jointly by Mr and Ms Schools through their French company, SCI Chalet Schools, prior to their divorce.
‘Mr Price asserts that analysis of the French company’s bank accounts and the corporate vehicles used by Mr Schools to perpetrate the fraud showed that the chalet was primarily funded by payments from companies instrumental in the fraud.
‘Mr Price says that Hope Springs House has undergone extensive renovations and estimates that some £750,000 has been spent on the property.
‘One of the primary purposes in seeking an unexplained wealth order is to obtain a detailed explanation from Ms Schools in respect of the costs and sources of funding for the renovation works.
‘Ms Schools’ bank statements support expenditure of about £740,000. Against that, there is little evidence of meaningful income.
‘Since 2017 to 2018, Ms Schools has been in receipt of a pension of just over £11,000 per annum.
Southwark Crown Court heard that Schools paid himself over £1m in salary, consultancy fees and other personal benefits, with monies also transferred offshore
‘There is some rent totaling about £60,000 for the period between 2014 and 2020.
‘Ms Schools’ only other apparent source of funds to finance the renovations appears to have been the sale proceeds of another seven properties, sold between March 2017 and August 2019 with total net proceeds of sale of a little under £1.2 million.
‘Mr Schools had an interest in one of those properties, Headley House, until he transferred his interest to Ms Schools in 2004 for no consideration.
‘She did, however, assume liability for a mortgage debt secured against the property.
‘Mr Price adds that the SFO believes that the couple may have continued to live there together until Headley House was sold in March 2017 despite their divorce.
‘During the criminal trial, there was evidence that Axiom Funds, a vehicle used for the fraud, paid off the mortgage on Headley House.
‘Further, there is evidence that Noble Finance, another company involved in the fraud, loaned Ms Schools £500,000 in November 2010.’
He said he was satisfied there are ‘reasonable grounds for suspecting’ that Ms Schools’ known income would have been ‘insufficient to enable her to obtain Hope Springs House.’
‘There is ample evidence of Ms Schools’ connection with Timothy Schools, a convicted fraudster who has been involved in serious crime.
‘The threshold conditions for an unexplained wealth order are therefore established.
‘In my judgment, it is appropriate to make such an order in this case for the purpose of investigating further the proceeds of Mr Schools’ crimes and specifically whether Hope Springs House might be recoverable property.’
The judge said he was granting the interim freezing order in relation to the house and proceeds of its sale because ‘there is a real risk that the proceeds of sale will simply be dissipated in supporting (Ms Schools’) lifestyle’.
During Schools’ trial at Southwark Crown Court, a jury heard investors were told their loans would be given to high quality law firms to fund legal cases with good chances of success.
But most of the funds were paid to just three law firms, all of which Schools either owned or held undisclosed interest in.
He paid himself over £1m in salary, consultancy fees and other personal benefits, with monies also transferred offshore.
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, according to the SFO.
Schools covered up these failures by arranging for the repayments of old loans with new Axiom loans, giving the false impression to directors, administrators and auditors that law firms were successfully repaying their loans and achieving returns on investment.
