Convicted Preston money launderer challenges court to unfreeze $6.5m in New Zealand bank account

The Court of Appeal in Wellington has refused David Charles Rae, from Grimsargh, permission to pursue a case to unblock the account because police believe it contains some of the proceeds of a $150m fraud in the US.

Rae, 45, was one of four people convicted in New Jersey following an FBI sting in 2020. The case followed an investigation into alleged fraudulent schemes relating to the United States' Medicare health system.

He pleaded guilty to a charge of conspiracy to commit international money laundering and was jailed for 10 months. But he was released immediately by a judge and deported back to the UK due to the amount of time he had already spent behind bars on remand. He also agreed to forfeit $1.775m (£1.35m) as part of a plea agreement.

Back in the UK he told the Post: "The only comment I want to make is: The case is a lot more complicated than has been reported and the sentence is indicative of that."

New Jersey Federal Court heard in 2020 that the three other defendants, all American nationals, had set up dozens of companies to provide medical equipment such as knee, wrist, back, shoulder and ankle braces to elderly patients on the US Government’s Medicare programme, even though the equipment was not medically necessary.

Rae, dubbed 'The Laundryman,' was accused of conspiring to launder proceeds from the scheme. It was alleged one of the other defendants had transferred at least $500,000 of the proceeds to Cargill Consulting Ltd, described as a Rae-owned “shell company with a bank account located in Hong Kong.”

Rae was then said to have laundered the proceeds by transferring the funds through shell corporations. In addition to the Cargill Consulting account in HSBC, Hong Kong, funds were also deposited in an account at the ANZ Bank in New Zealand.

The Commissioner of Police in New Zealand successfully applied to the High Court to put restraining orders on two bank accounts, together worth $6.5m, claiming they held proceeds of the fraud in the US. Rae, however, claimed the Commissioner did not tell the whole story to the High Court and the restraining order should have been rescinded when that became apparent.

Justice Francis Cooke​ discharged the restraining order over one of the accounts, but said the grounds for an order over the second account were established as they appeared to be tainted property and Rae appeared to have unlawfully benefited from significant criminal activity

Judge Cooke had said there was no dispute that certain key information was not put before the Court. However, he said the Commissioner had not acted in bad faith. The Court of Appeal agreed and said the missing information would not have changed the outcome if it had been known.

It also said the public interest favoured ongoing restraint. "Money laundering is a serious crime and one, we consider, that can be difficult to detect. Mr Rae allegedly derived significant benefit from that crime in New Zealand and through similar offending abroad.” The judges dismissed Rae’s application to bring further evidence and declined his appeal.