A north London Holocaust survivor has been freed from prison after an appeal court accepted his plea that being jailed invoked memories of the trauma he endured under the Nazis.

Mendel Rand, 76, of Golders Green, was sentenced to 18 months in prison in February after being convicted for his involvement in a £6.9 million money laundering operation in November 2004.

But last Friday the Court of Appeal decided to free Rand after hearing how time behind bars reminded him of being terrified while in hiding from the Nazis in squalid conditions in his native Poland.

Freeing Rand, Mr Justice Openshaw labelled the 76-year-old the wretched old man', adding that letting him go was an act of mercy'.

Jonathan Goldberg QC, representing Rand, said that a rabbi who visited Rand in prison said his incarceration was bringing back nightmares of his war experience as a young man.

The court heard Rand had been suffering flashbacks of the war since being imprisoned.

Judge Openshaw said that when Rand's parents were arrested in the Polish city of Krakow during the Second World War, Rand was kept hidden from the Nazis by a sympathiser.

The judge said: "Often in cellars in the cold and dark, often under-nourished and in constant fear of capture, this experience has cast a pall over his whole life. Now he daily relives the experience."

The court heard that, prior to his conviction, Rand had been an upstanding member of the Chasidic Jewish community in Golders Green and a respected businessman.

Mr Goldberg said Rand's family had been ostracised by some in the tight-knit community. "I'm told it will mean he's not invited to people's homes as he once was," he said.

The court was also told Rand's elderly wife had been severely injured in a car accident and was house-bound without his care.

Mr Goldberg added that the long delay between conviction and sentence, which occurred partly because of the ongoing trials of Rand's co-accused, had meant his client had been forced to wait four-and-a-half years for justice.

"We submit, for an old man, with the worry of this hanging over him and his family, that is an exceptional factor of punishment," Mr Goldberg said.

Rand's prison sentence was replaced with a two-year suspended sentence. He will face a confiscation hearing, to deal with his ill-gotten gains, in April in Manchester.