Britain’s Serious Fraud Office has charged three men with multiple offences in relation to the collapse of a £100m Cayman Islands investment scheme in which 500 investors lost money.

The Axiom Legal Financing Fund, which loaned money to UK law firms to fund cases, was an unregulated collective investment scheme that was marketed to investors and financial advisers in the UK and overseas. It was suspended in October 2012 and put into receivership in February 2013. Later that year, a partner in the firm appointed to liquidate the fund’s UK distributor said there had been a rush to withdraw money after media reports “alleging fraud and mismanagement”. Receivers Grant Thornton said investors were owed £120m.

On Friday, the SFO said it had charged three people with carrying out a fraudulent scheme to divert money from the Axiom fund for their own benefit.

Timothy Schools, a former solicitor, was charged with three counts of fraudulent trading, one count of fraud, and one count of transferring criminal property. David Kennedy, a former independent financial adviser, was charged with one count of fraudulent trading. Richard Emmett, another former solicitor, was charged with one count of fraudulent trading, and one count of “being concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by another”.

Their case is due to be heard at Westminster Magistrates’ Court starting on September 30.

A lawyer representing Mr Emmett said: “He is very disappointed with the decision to prosecute and will vigorously defend these proceedings in order to clear his name.” A lawyer for Mr Kennedy declined to comment, while lawyers for Mr Schools could not immediately be reached for comment.

An investigation into the collapse of the Axiom fund was opened by the SFO in July 2014, but not formally announced until May 2017. Because it remains ongoing and the criminal proceedings are now live, the SFO did not comment any further.

However, one person familiar with the case said that it had been complicated by the fact that the Axiom fund was registered in the Cayman Islands, used bank accounts in the Isle of Man and was sold to more than 500 investors in several different countries.

Investments in the unregulated fund were also made via specialist insurance products, which were sold to British investors living overseas. Many had hoped to earn high returns, by providing what was, in effect, bridging finance to law firms. But its collapse meant that they lost their money and could not make claims against the UK’s Financial Services Compensation Scheme.

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