The Serious Fraud Office (SFO) has secured the conviction of former investment manager David Kennedy for his part in a £100m ($126m) investment fraud in which hundreds of people lost their savings. The conviction follows a re-trial at Southwark Crown Court.

Kennedy and his business partner Timothy Schools managed the Cayman Island registered company Axiom Legal Finance Fund for over two years. The SFO alleged that they promised investors a secure return by offering loans to UK law firms that were pursuing no-win-no-fee cases and where there was purportedly a high chance of success.

SFO findings

The SFO investigation – that has already resulted in Schools being sentenced to 14 years in prison for fraud – uncovered that Kennedy used investor money to fund thousands of high-risk cases, that were not independently vetted and often failed at court, the SFO said.

Few investors ever received any return.

Furthermore, the SFO also found that Kennedy diverted over £5.8m ($7.3) 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. These funds were hidden in offshore bank accounts and complex trusts, the SFO said.

“[Kennedy’s] criminal actions flooded the legal system with unwinnable cases affecting hundreds of people who suffered financial loss and significant anxiety as a result,” said Nick Ephgrave QPM, director of the SFO.

“This criminality also served to undermine trust and confidence in the legal profession more widely.”

Niall Hearty, partner with Rahman Ravelli chambers, said, “the case could act as a deterrent to others who abuse their position of trust in such a wilful manner.”

Kennedy is due to be sentenced this week.