By Neil Rose From Legal Futures

The unexplained wealth order (UWO) issued against the ex-wife of the struck-off solicitor behind the Axiom Legal Financing Fund fraud will investigate whether her home was bought with tainted funds, the High Court has said.

The Serious Fraud Office (SFO) announced in January that it had obtained the order, its first UWO, against Claire Schools but Mr Justice Pepperall only gave his reasons for doing so yesterday.

The Cayman Islands-based fund – which lent money to law firms to pay for disbursements, mainly for personal injury cases which were said to have a high chance of success – closed in October 2012 after four years in the wake of allegations of fraud, and went into receivership in February 2013 owing investors around £120m.

The SFO investigation uncovered that investor money was used to fund thousands of high-risk cases, that were not independently vetted and often failed at court. Few investors ever received any return.

Mr Schools was struck off in 2014, although the charges did not relate to the Axiom fund, and was jailed in 2022 for 14 years over the fraud. More than 500 investors sank cash into the fund.

A confiscation hearing at the Crown Court earlier this year found that Mr Schools’ benefit from his general criminal conduct was over £146m but determined that the available amount that could be confiscated was just £1.1m.

Pepperall J recounted: “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.

“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.”

Ms Schools married Tim Schools in 2011 but a decree nisi was issued in June 2016, although the decree absolute was only pronounced in October 2020.

The SFO asserted that there was reason to believe the couple were still “in a romantic relationship, or at the very least that they remain close and in regular contact” – they lived together at Hope Springs House in Penrith until his conviction, while there was evidence she regularly visited and talked daily to him in prison.

Ms Schools is listed on the prison’s records as his next of kin, his common law wife and his partner.

It is not alleged that she was herself involved in his criminal activity but the SFO’s investigations found that – aside from £230,000 in dividends from UK companies declared in 2009/10 and 2010/11 – she has declared “minimal income” since 2009/10.

Nonetheless, she purchased Hope Springs House for £430,000 in September 2018. The SFO said it was primarily funded from the proceeds of sale of a chalet in France which in turn had been bought by payments from companies instrumental in the fraud.

The house has since undergone extensive renovation to the point where it is worth £1.8m. A key aim of the UWO is to understand how Ms Schools afforded the £740,000 she spent on it.

Pepperall J said he was “satisfied that there are reasonable grounds for suspecting that the known sources of Ms Schools’ lawfully obtained income would have been insufficient to enable her to obtain Hope Springs House”.

He also made an interim freezing order to prevent Ms Schools from selling the house – as she wanted to do – without the SFO’s consent.

If she fails to prove that the asset was acquired legitimately, the SFO can apply to seize it at the High Court.

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