Laffitte, former CEO of Palmetto State Bank, charged with federal fraud – InsuranceNewsNet

A federal grand jury has indicted the former CEO of Palmetto State Bank Russell Laffitte on charges alleging veteran banker meddled in client accounts to help his friend, disbarred lawyer Alex Murdaughrob their mutual customers.

The five-count indictment charges Laffitte with conspiracy to commit wire and bank fraud, bank fraud, wire fraud and misuse of bank funds – a range of alleged crimes which have started in July 2011 and continued for a decade. The charges carry up to 30 years in prison.

The July 20 the indictment represents the first charges that federal authorities have filed in their secret investigation into the alleged financial crimes of Alex Murdaugha prominent Hampton County attorney who earlier this month was charged with two counts of murder in the June 2021 fatal shooting of his wife and son.

The new indictment echoes felony charges that state investigators brought against Laffitte on May 4. The state grand jury has charged the 51-year-old banker with helping Murdaugh steal more than $1.8 million from accounts he controlled at the Hampton-based bank, including repaying loans Laffitte had issued to Murdaugh from a client’s account.

But federal charging documents reveal new details about how Laffitte and Murdaugh’s alleged financial conspiracies worked and how crippling money troubles could have motivated a well-respected, prominent prosecutor to start stealing huge sums from its own customers.

The indictment details Laffitte’s personal involvement in Murdaugh’s alleged robbery. The charging documents reveal several instances in which Laffitte allegedly dumped nearly $2 million into Murdaugh’s legal client settlement funds. He then used a slew of wire transfers, money orders and deposits to repay loans and funnel the money to relatives, associates and personal bank accounts of Murdaugh and Laffitte, the indictment says.

Bart-Danielone of Chez Russel Laffitte defense attorneys, says The post office and Courier, “We intend to vigorously fight the charges at trial.”

efforts to achieve State Bank of Palmetto counsel for comment was unsuccessful.

A close relationship

The federal grand jury alleged that Laffitte was Murdaugh’s personal contact at State Bank of Palmetto, taking care of almost all of its banking needs. Laffitte served as personal representative or curator for many of Murdaugh’s clients and collected nearly $392,000 in fees for backing up settlements or high judgments they won in court, the billing documents show.

But Laffitte did everything but protect his clients’ money, the grand jury said. Instead, the billing documents state:

Laffitte almost loaned out Murdaugh $1 million of their accounts and loaned themselves another $355,000. Laffitte knew that Murdaugh was using the money to cover hundreds of thousands of dollars in overdraft fees on his account, making the loans risky investments. Laffitte also knew that Murdaugh was stealing piles of money from his clients in order to repay these loans – and helped him do so.

Laffitte also spent badly State Bank of Palmetto funds, the charging documents allege. On October 28and without the bank’s authorization, Laffitte sent $680,000 to a Hampton law firm to repay money he had fraudulently transferred to Murdaugh, according to the indictment.

In July 2021Laffitte abused $750,000 in bank funds by providing Murdaugh with an unsecured business loan to “pay an attorney and cover hundreds of thousands of dollars” in overdraft fees on Murdaugh’s account, the indictment says.

More charges are expected as state and federal investigators continue to unravel a decade-long web of deals in which Murdaugh allegedly stole more than $8 million legal settlements owed to its customers and associates.

Laffitte has long been suspected of being the target of the federal Murdaugh investigation.

In January, his own relatives on the State Bank of Palmetto the board fired him as CEO as law enforcement officers investigated Laffitte’s dealings with Murdaugh.

Laffitte hired two expensive defense attorneys, former prosecutors Daniel and Matt Austin, to represent him in the investigation. They insisted that Laffitte was not a co-conspirator of Murdaugh, but rather had been deceived by the since-disgraced lawyer.

Laffitte has been under house arrest since his May 6 bail hearing on state charges, when the circuit judge Alison Lee released him from prison on a $1 million surety.

A bond hearing has not been announced on his new charges.

“Personal slush fund”

Laffitte’s schemes date back to July 2011when he granted himself the first of eight loans totaling $350,000 of the guardianship account of a young girl, state of the charging documents. Months later, he would start lending Murdaugh money from the same account – eventually granting the lawyer 14 loans worth nearly $990,000. Murdaugh needed the money to cover five-figure overdrafts in his personal accounts, the billing documents show.

According to the indictment, Laffitte never sought formal authorization for the loans and did not inform his client or the probate court of their existence.

But when his client turned 18 and Laffitte had to repay the loans, he didn’t have the money, the indictment says. Laffitte had to release a $245,000 ready to render his full account, the statement of expenses. Laffitte is still repaying this loan.

Murdaugh flew over $663,000 at least four of his own customers to repay his loans from the custody account, according to billing records.

In a written statement released shortly after Laffitte’s indictment was unsealed, trial attorneys Eric Bland and Ronnie Richter said guardianship belonged to their clients, Hannah Plyler and Alania Spohn. The money came from a legal settlement Murdaugh won for the pair of sisters after their mother and brother were killed in a car crash in 2005.

“The girls saw Russ Laffitte as a father figure and trusted him to navigate the waters before them and to guide them,” the lawyers wrote. “It is difficult to express the emotions and disappointment of learning years later than those who sworn to protect the Plylers chose to go after them instead. Russ Laffitte and Alex Murdaugh plundered their custodian accounts and treated them as their own personal slush fund. »

In other cases, Laffitte directly facilitated the theft of heaps of money owed to Murdaugh’s clients, the grand jury alleged.

At Murdaugh’s direction, the banker misdirected a $1.3 million legal settlement for a single customer, status of billing documents. Among a series of transfers, Laffitte used $482,000 of the settlement to repay loans from the Plylers conservatorship account, sent $75,000 to Murdaugh’s father, realized $7,500 to Murdaugh’s wife and filed near $251,000 in Murdaugh’s personal accounts, the indictment alleges.

In another case, Laffitte was divided near $635,000 owed in the colonies to two victims seriously injured in a car accident in 2009, according to the charging documents. The banker sent $10,000 to Murdaugh’s wife, paid more than $4,000 towards the loan of Murdaugh’s boat, directed $100,000 to Laffitte’s father to repay a personal loan and spent more than $50,000 to repay loans from the Plylers conservatorship account, the indictment states.

Birds of a feather

Laffitte and Murdaugh share more than their alleged financial schemes. Both grew up in wealthy families who wielded great social and political influence in the rural southern corner of South Carolina. And both have embarked on the family business.

Murdaugh’s father, grandfather, and great-grandfather served as the elected attorney for the 14th Judicial Circuit, a five-county region covering the swampy southern tip of the state. The family also ran the powerful Hampton-based Peters, Murdaugh, Parker, Eltzroth, Detrick law firm in Hampton.

Murdaugh was a volunteer badge-carrying attorney for the Advocate’s Office and worked as general counsel at PMPED.

Laffitte, meanwhile, went to work at the century-old bank his family bought for $250,000 in 1955. He joined the bank as a teller in 1997, won a promotion to chief operating officer in 2015, and became CEO in 2020.

His father had led State Bank of Palmetto for decades helping to expand it into a Lowcountry institution with offices in three counties and more than $700 million in assets. Other relatives ran branches of the bank and sat on its board of directors. They rose to prominence in SC banking circles, winning tours as chairman of trade groups like the SC Bankers Association and independent banks of Caroline from the south.

One of Caroline from the south the oldest state-chartered banks, State Bank of Palmetto had enjoyed a stellar reputation until last fall when he was dragged into the Murdaugh saga.

Another bank executive, vice-president Chad Westendorfwas named a defendant in a lawsuit alleging that Murdaugh stole millions from a pair of settlements owed to the sons of his late governess.

According to that September trial, Murdaugh had advised the governess’s sons Gloria Satterfield to take legal action against him after he died following a fall in 2018 at his family’s hunting lodge. Next, Murdaugh recruited Westendorf to serve as the sons’ personal representative and oversee all the money they received from the claim.

But Westendorf didn’t – not well, at least. Despite accepting a $30,000 fees as a personal representative, he failed to tell the Satterfield family that their attorney subsequently obtained $4.3 million for them in the Murdaugh insurance company regulations.

Under Westendorf’s watch, Murdaugh eventually stole more than $3 million of those settlements, prosecutors have charged.

In a February deposition that has fueled scrutiny by State Bank of Palmetto practices, Westendorf testified that he never met or interacted with Satterfield’s sons during this case. He also swore he did not know the details of their wrongful death claim or his responsibilities as personal representative of the estate.

State Bank of Palmetto denied any wrongdoing in the matter, saying Westendorf represented Satterfield’s estate in a personal capacity. But he then reached an undisclosed settlement with Satterfield’s family in November. Westendorf was dismissed after reimbursing the Satterfield family for their $30,000 costs.

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