Preston businessman facing jail in the US after admitting international money laundering

FBI mugshot of David Rae who has pleaded guilty to money-laundering.
FBI mugshot of David Rae who has pleaded guilty to money-laundering.

A Preston businessman is facing up to six years in prison in the United States after pleading guilty to international money laundering.

David Charles Rae will be sentenced next month in New Jersey for his part in an alleged $150m health care fraud.

The 42-year-old from Grimsargh has also agreed to forfeit up to $1.775m (£1.35m) of criminal proceeds as part of a plea agreement.

Rae, who was arrested by the FBI in April, was accused of using a shell company with a bank account in Hong Kong to launder cash from the fraudulent operation.

Three other people, all US citizens, are accused of running the racket, which is said to have creamed off millions of dollars from Medicare, a US federal healthcare programme.

Two of them, Neil John Aaron Williamsky and Nadia Levit, both of New Jersey, have pleaded guilty to fraud and/or money laundering and are also awaiting sentence. The fourth defendant, Albert Davydov, from New York, has pleaded not guilty and the case against him is ongoing.

Rae, who has been held in custody since his arrest eight months ago, is to be sentenced on February 7 by a judge in the New Jersey Federal Court.

The recommended term of imprisonment agreed between his lawyers and the District Attorney’s Office, is between four years nine months and five years 11 months for a defendant with no prior criminal history.

The UK’s Serious Fraud Office opened a criminal investigation in 2014 into Rae’s involvement in a totally separate £100m fraud in the Cayman Islands. No charges have yet been filed.

In 2017 Rae was fined £200,000 by the Solicitors’ Disciplinary Tribunal for his part in that fraud by Axiom Legal Financing - an investment fund which collapsed in 2012.

Individual investors lost between £15,000 and £250,000 each.

One, from the Preston area, told the Post the fund’s collapse had forced him into bankruptcy.

Although not a lawyer, Rae was banned from working in the legal profession after it was revealed he had personally received payments totalling £600,000 from the fund working for Emmetts Solicitors in Longridge where he was the company’s chief executive.

It was estimated the law firm had received almost £30m in just six months in 2010. Four solicitors from the firm were later struck off.

In the New Jersey fraud it was alleged Williamsky, Levit and Davydov 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 was accused of conspiring to launder proceeds from the scheme. It was alleged Williamsky 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 “calling the proceeds payments for failed sham joint venture agreements” and also investing money in real estate abroad.

One such transaction involved $39,400 “using the cover story of an investment in a movie business.”

In addition to the Cargill Consulting account in HSBC, Hong Kong, funds were also deposited in an account by the name of Sympatic Global Solutions at the ANZ Bank in New Zealand.

Rae has also been indicted in South Carolina on one count of money laundering the proceeds of healthcare fraud, but no details have been specified. That case has been transferred to be dealt with by the New Jersey court.

It is not known if the forfeiture of £1.35m of criminal proceeds agreed by Rae will involve any property in the UK.

JET-SETTER GROUNDED

For a man who enjoyed a jet-set life around the globe, David Rae led a comparatively modest existence back home in Lancashire.

His family home was an extended bungalow in a quiet cul-de-sac in Grimsargh near Preston.

And those who knew him said he was not a man to “flash the cash”.

Yet Rae has agreed to repay up to £1.35m from the proceeds of his crime, just over a year after he was fined £200,000 by the Solicitors’ Disciplinary Tribunal for his involvement in the collapse of an investment fund in the Cayman Islands.

Rae was said to have benefitted to the tune of around £600,000 from the Axiom Fund which raised an estimated £120m from investors to provide short-term fixed interest loans to reputable UK law firms working on “no win no fee” cases.

Many British investors were tempted to put their money into offshore bonds with the promise of a good return. They were told each legal case being financed was rigorously vetted to ensure a high chance of success in the courts.

The fund crashed in October 2012 amid claims it had been poorly managed.

One law firm, Emmetts of Longridge, where Rae was chief executive, was said to have received 71 payments totalling almost £30m in just six months in 2010.

But instead of funding cases in the courts, cash from the fund was improperly used to pay salaries, general running expenses and a property company in Dubai.

Rae, who jetted around the globe on business trips, was a director of seven companies in the UK between 2009 and 2012, six of which have since been dissolved.

They included Wiseton Investments, Oaks Legal Consultancy and Cliffcot Investments.

He was also chief executive and later a director of Whistledawn Care Ltd of Blackpool which trades under the name of Northern Care and runs care homes for young people.