Supreme Court hears US money launderer’s case against order freezing his millions

David Rae wants access to his millions of dollars that have been frozen. Photo / David White

A man convicted of international money laundering in the United States has millions of dollars in New Zealand bank accounts he cannot touch.

In 2020 the Commissioner of Police successfully sought an order in the High Court to restrain the funds, but the Court of Appeal, despite upholding the High Court’s decision, has since found the commissioner failed to disclose relevant information and misrepresented details in his application.

Now, the convicted man, David Rae, has turned to the Supreme Court in a bid to have his case reassessed, despite being out of time to do so.

He told the court today that he believed the commissioner’s failure to disclose all information to the High Court was a miscarriage of justice.

Rae also argued the Court of Appeal incorrectly applied the law when it upheld the order earlier this year.

On February 11, 2020, the commissioner made a without-notice application for a restraining order over more than $6.5 million held in bank accounts connected to Rae.

The commissioner alleged the money was “tainted property” transferred to accounts through fraudulent schemes against the US health scheme Medicare and that Rae had “benefitted from significant criminal activity”, laundering money from his offending in the US by transferring funds into Kiwi-based bank accounts.

Rae was investigated and subsequently pleaded guilty in the United States District Court of New Jersey in 2019 to conspiracy to commit international money laundering.

He was sentenced in the US in February 2020 to 10 months imprisonment but was released on time served.

Less than a week later, Justice Francis Cooke granted the restraining order in New Zealand’s High Court.

Justice Cooke later discharged the restraining order over one of the accounts but left it in place in relation to the remainder.

Rae has since continued to fight the order.

In the Supreme Court today, lawyer Sean McCusker, on behalf of the commissioner, submitted the order should be upheld.

Rae was caught by the FBI and when sentenced, was ordered to pay US$1.7 million, the court heard.

But he has not paid the money.

Rae said if the restraining order was lifted and he had access to funds, he would be able to repatriate the money.

The Supreme Court reserved its decision.

Hazel Osborne is an Open Justice reporter for NZME and is based in Te Whanganui-a-Tara, Wellington. She joined the Open Justice team at the beginning of 2022, previously working in Whakatāne as a court and crime reporter in the Eastern Bay of Plenty.