Axiom Legal Financing Fund facing serious allegations

The Axiom Legal Financing Fund is rapidly becoming engulfed in a storm of controversy.

The Cayman Islands fund  was established to provide finance to a select panel of UK regulated law firms, to enable them to conduct "no win, no fee" litigation cases. As the legal actions were all to be backed by insurance policies, the fund was offering what appeared to be an attractive, low risk, uncorrelated investment opportunity.  And by all accounts there were plenty of investors happy to put their money in to the venture - it is understood that  well over £100 million has been invested in the 3 years that the Fund has been up and running.
However OffshoreAlert has been raising red flags about the probity of the Axiom fund since August, initially because of its links to Tim Schools, an English solicitor who is being investigated by the Solicitors Regulation Authority for alleged misconduct at ATM Solicitors, an English law firm which he sold last year. The allegations made against Mr Schools, which he strenuously denies, include failing to maintain proper books and records, acting recklessly and without integrity.  As there has not yet been a final hearing into Mr Schools conduct by the SRA, it is not known at this stage whether there is any substance to the complaints, but it was enough for a red flag to be raised and for OffshoreAlert to take a closer look at the dealings of the Axiom fund and its Cayman Islands based investment manager, Tangerine Investment Management.  

Mr Schools was a director of Tangerine until his resignation last week in light of the escalating allegations by OffshoreAlert.  

The claims being made by OffshoreAlert against the Fund became more serious when they alleged that all of the loans which have been made have gone to firms which are affiliated to Mr Schools (some of which are heavily indebted) and that the insurance company backing the loans is an unregulated firm currently fighting a fraud case.

Tangerine has strenuously denied any wrongdoing and has confirmed to investors that it has retained KPMG to provide an outside audit of the legal fund’s assets by the end of the month in light of the press stories.

In the meantime, OffshoreAlert have claimed that the Fund has suspended redemptions and ceased accepting new investments whilst the situation is reviewed, a move which will no doubt leave the existing investors nervously awaiting the outcome of the report.