An investment manager who funded his ‘extremely lavish lifestyle’ by fleecing victims out of £107million has been ordered to pay back just £928,000.

David Kennedy, 72, operated a fraudulent no-win no-fee legal scheme to generate £5.8million from the Cayman Islands-registered Axiom Legal Financing Fund.

He spent his illicit fortune on a Swiss ski resort chalet, a villa in Tenerife and lavishly renovated his home in Hull.

More than 500 people invested in the scheme, which claimed to insure lenders against unfinished cases or solicitors going bankrupt. But savers lost all their money when the fund collapsed in 2012.

Kennedy was convicted of fraudulent trading after a retrial. He was jailed for eight years in June 2024 and banned from being a company director for 15 years.

His benefit from the fraud amounted to £91,159,849 but Judge Gregory Perrins ordered his realisable assets amounted to far less.

He was ordered to pay back £928,479 in three months or face another six and a half years in jail in default.

In August 2022 lawyer Timothy Schools, 63, was jailed for 14 years for pocketing more than £20 million of investors’ cash.

Schools, of Sedbergh, Cumbria, had called his firm ‘ATM’ because he could simply withdraw wads of cash whenever he fancied.

He ran a scheme financing loans to law firms for ‘no win no fee’ cases.

Schools has used some of the money from the scam to pay for an estate in Cumbria.

He also had a £45,000 corporate box at Blackpool FC’s home ground, claiming it was a business expense for the purpose of corporate hospitality.

Schools who owned Preston firm ATM Solicitors denied but was convicted of three counts of fraudulent trading, one count of fraud and one count of transferring criminal property.

Today’s result follows £1.1million being secured from Schools’ ex-wife, following the sale of a Lake District property in September. 

Earlier Paul Raudnitz KC, prosecuting, said: ‘A large number of investors in the Axion fund lost all that they had invested.

‘The offence fundamentally undermines public confidence in elements of the investment industry.’

‘The losses were substantial.’

‘These were extremely serious offences conducted over a protracted period of time.’

‘The Crown says that this matter was fraudulent from the outset.’

Judge Perrins had told Kennedy: ‘The cases were said to have a good prospect of success and that they would conclude within a short period of time.

‘Investors were promised that they would get money back with interest whether or not the cases were successful.

‘It seemed as though investors would not lose,’ the judge added.

‘You personally benefited from the fraud in the region of £5.8 million.’

‘I am satisfied that the Axion Fund was a fraud from the outset. That is clear from the way that the fund was promoted.

‘Investors were also told that each case was individually vetted to ensure that they had a real prospect of success. This too was a lie.

‘Investors were told that there was effective insurance in place if a case failed in court. This proved to be yet another lie.

‘You knew investors were being lied to. You knew that the fund was not performing as it should, which was abundantly clear because money was not being repaid into the fund.

‘The whole fund was rotten to the core. You knew this and you played a significant role in keeping it going as long as possible so that the money would keep rolling in.

The judge added: ‘You used the money you made to fund an extremely lavish lifestyle.

‘You were, as far as I can tell, motivated by pure greed.

‘You have shown no remorse, you have taken no responsibility for what you have done, You thought only of yourself and your desire to get rich.’

Kennedy was jailed for eight years. He will spend half his sentence in custody.

He was banned from being a company director for 15 years.

Mr Raudnitz had earlier said 35,000 clients were affected.

He said: ‘The overall figure of investor money amounts to £107million… Only £6.8 million was returned to the fund so a net loss was something in the region of £100,536,000.

‘Litigating the matter has resulted in no meaningful return to the investors.’

He added: ‘The very first investment had money siphoned off for School’s benefit.

‘If that’s not a fraud from the outset then I don’t know what is.’

Axiom’s marketing material claimed investors’ cash would be held in the Cayman Islands and forwarded to an ‘independent panel’ of law firms who would pay it back with 15 per cent interest.

Paul Napper, Head of the Proceeds of Crime, said: “David Kennedy funded a lavish lifestyle with other people’s life savings and many lost everything when his scheme collapsed.

“Today’s order is a significant step forward in addressing the impact of Kennedy’s crime on victims”.