Russell Laffitte testifies, said he ‘unintentionally’ helped steal client money for Murdaugh

Former banker Russell Laffitte took the stand Friday morning to testify in his federal bank fraud trial.

The unusual move, a defendant testifying at his own trial, opened Laffitte, 51, up to stiff questioning about his involvement in removing money from client accounts and making other unusual transactions with the help of disgraced former attorney Alex Murdaugh.

Laffitte is charged with bank and wire fraud. The government contends that Murdaugh and Laffitte illegally benefited for some 11 years through Laffitte’s management of conservatorships for various clients of Murdaugh’s, who is an alleged co-conspirator in the case.

Laffitte is alleged by the government to then have used his banking knowledge as CEO at Hampton-based Palmetto State Bank to move that money around in various fraudulent ways.

The former banker, who was the last of nine defense witnesses to testify, testified Friday that he enjoyed working in community banking until he was fired over his involvement with the Murdaugh case this past January.

At times on the stand, Laffitte sounded almost wistful, saying he would have preferred to be outdoors and never intended to become a banker until he started working for his family’s bank as a young man.

“I didn’t want to be stuck behind a desk,” he said, striking a low-key everyday manner for his testimony.

He said the circumstances of his firing last January after an internal bank investigation of his and Murdaugh’s activities over the years gave him a chance to reflect on his life.

“Back in January when I was fired, it gave me a chance to think about this, about how much of my children’s lives I threw away,” he said. “I’m a workaholic, I love to work. When something of this magnitude happens, it changes your priorities and gives you a different set of eyes.”

Laffitte said he has known Murdaugh all his life. They grew up across the street from each other, and Laffitte is a close friend of Murdaugh’s younger brother, John Marvin Murdaugh, who testified to Laffitte’s good character Thursday.

“His father is my godfather, and my father is his godfather,” Laffitte said of Murdaugh.

Laffitte became closer to Murdaugh as adults, when he began handling Murdaugh’s accounts for Palmetto State Bank.

“I was his primary banker,” he said. Although they saw each now and then, he was never as close socially as he was to Murdaugh’s younger brother, John Marvin Murdaugh, who is closer to Laffitte’s age. Murdaugh is 54, three years older than Laffitte.

Laffitte says he was ‘shocked’ about financial crimes

Laffitte said he was shocked when Murdaugh’s personal finances blew up in September 2021, leading to initial charges of financial crimes. In all since late 2021, Murdaugh has been charged with stealing nearly $9 million from more than a dozen law firm clients.

He separately faces charges in the June 2021 murders of his wife and son.

“I’m still shocked about what took place. I’m like, how do you miss it?” he said of Murdaugh’s financial problems. “All the signs were right there in front of me, and not just me, as you’ve heard in this court, it was right in front of everyone and we missed it. I wish I hadn’t.”

Laffitte testified that he knew Murdaugh would often overdraft his accounts with the bank, but justified the money he lent him by saying he believed him to be worth the risk.

“He wasn’t A1 credit. You couldn’t even argue that,” he said. “But he was very low risk because of his job and his ability to earn money. He had been banking with us since the late 80s, so we had a lot of history, which gave us a lot of comfort, which in hindsight opened me up to a lot of things.”

The former banker said he first became aware that something was wrong with Murdaugh’s accounts in September, 2021, when his sister-in-law, Jeanne Seckinger, who was the CFO of Murdaugh’s former law firm, came to him with a law firm lawyer.

They told him the firm suspected Murdaugh of stealing client money and was looking into Murdaugh’s accounts.

Laffitte said he helped them, and for several months became the main point of contact for the firm dealing with Murdaugh’s accounts, and the firm made it clear they only wanted to discuss the matter in person — not in emails.

The law firm “would deliver checks and say, ‘Can you see where these went,’” he said.

Under questioning by his defense attorney, Matt Austin, Laffitte told the jury he met repeatedly with the FBI, the State Law Enforcement Division and the state legal watchdog group, the Office of Disciplinary Counsel. He also gave a deposition in a civil lawsuit involving Murdaugh, he testified.

When he met with law enforcement, Laffitte said he didn’t bring an attorney with him.

“I didn’t think I needed them,” he said. “I knew what we had done. There wasn’t anything to hide. I thought give it to them, help them, do whatever we need to do to fix it.”

Some of the documents he voluntarily turned over to investigators are now evidence in the trial against him, he said.

“I made some mistakes which we’ll go through in great detail, but … the best thing you can do when you make mistakes is stand up and fix it,” he said.

Laffitte said he would routinely sign documents Murdaugh presented him with, including one document that misstated the age of an adult crash victim so that a conservatorship could be set up for her as a minor.

Laffitte said when he realized Arthur Badger’s money had been misappropriated, he moved quickly to reach a settlement with the law firm, with both sides contributing half, before he had brought the issue to the bank board.

“I did the transaction, nobody else did it,” Laffite acknowledged “When I did the research and saw all those transactions, we’ve got liability. All those transactions went through Palmetto State Bank.”

Laffitte’s role over the Plyler, Badger accounts

Laffitte said he agreed to become the conservator for Alania and Hannah Plyler, two young girls who lost their mother in a car wreck, because Murdaugh asked him to.

The Plylers’ money is one of several pools of money handled by Laffitte prosecutors have made central to their case.

When Murdaugh later asked Laffitte if he (Murdaugh) could take out a loan from the Plyler account, Laffitte said he sought a judge’s permission before agreeing to it.

“It was an investment for the girls,” he said “I was always trying to make them money. I borrowed from them, paid them a higher rate that was twice what would earn anywhere else. I wanted to make sure they were making money.”

Judge Richard Gergel ruled that Laffitte could not testify to what the judge told him he could or could not do. Gergel said the defense would have to call the judge as a witness if they wanted to enter that into evidence.

The loans to Murdaugh were unsecured, meaning the attorney offered no collateral to ensure it would be paid back, but Laffitte said that was not unusual for the bank.

“We made those all the time, unsecured, partially secured, whatever it may be,” he said.

The Plylers earned higher interest on the loans because it was unsecured, Laffitte said. He said he did not know what Murdaugh would do with the loans.

The Plylers now get an annuity between $7,000 and $10,000 a month from those accounts, he said.

Laffitte said he was shocked to hear how tough the Plylers’ situation often was growing up when the now-adult women testified against him earlier in the week, particularly when one testified how she had to sleep in her car because various relatives she was supposed to be staying with couldn’t take her it.

“I wish she had called me,” he said of one of the girls.

Laffitte denied categorically that he stole any money from his clients, but walked that back when he was asked if he helped anyone steal money.

“Not intentionally,” he said. “I absolutely did unintentionally.”

Looking to help make Laffitte’s statement clear to the jury, defense attorney Austin asked, “You are saying, you did not intend to help anybody steal money?”

“That is correct,” Laffitte said.

The question of intent — or the lack thereof — is central to both the prosecution and the defense’s case.

Throughout the trial, which has spanned about two weeks, the defense has elicited statements from witnesses to show the jury that Murdaugh was a master manipulator, able to fool anybody about anything. Part of Laffitte’s Friday testimony, under Austin’s questioning, was aimed at showing that Laffitte was under Murdaugh’s spell.

Earlier in the trial, Arthur Badger testified that he never received a $1.3 million settlement that was instead spent on Murdaugh’s need. Laffitte testified that he never saw the check at the time and didn’t question why Murdaugh had suddenly come into more than a million dollars.

“No telling what he’s doing. I didn’t know if borrowing it from somebody else. I had no idea why he had a check for $1.325 million,” Laffitte said.

It was only in late 2021, when looking back over Murdaugh’s accounts, that he realized what the attorney had done.

“I realized what it looked like, and that it implicated me, and I was nauseous, furious, and every other emotion you could think of went through me, “Laffitte said. “…(Alex) set me up right there.”

Later, Murdaugh moved a $101,000 check from the estate of Donna Badger, which Laffitte knew only contained $500 at the time.

“I would have thought it was odd,” Laffitte said of the transaction. “I didn’t know if he was getting an advance on fees. I don’t know what he would have got.”

“We didn’t think it was Donna Badger’s money,” he said. “We thought it was Alex’s.”

‘That’s not right’

Tiffany Provence, a former probate judge, testified Friday that it is not unusual for a conservator overseeing an account for a child, as Laffitte did for multiple people who received legal settlements won by Murdaugh, to borrow money from that account to make loans and investments for the account’s benefit.

“Borrowing money is not unusual, as long as it goes back to the ward,” she said.

But prosecutor Winston Holliday pointed out that not all instances of borrowing are allowed, including if the conservator is taking money from a client’s account for their own benefit.

“A conservator taking out for own self-interest, you don’t have to be an attorney to know that’s not right?” he asked.

In one particular instance, Laffitte was the conservator for Donna Badger, who was killed in a car crash, but not for her still-living husband Arthur, who received a settlement from that same car crash. The prosecution honed in that in at least one instance, Laffitte took money from Arthur’s own account, which he did not oversee.

Provence said she was unaware of why Laffitte would receive money from Arthur rather than Badger’s estate.

Laffitte also operated a conservator account for another crash victim, Natarsha Thomas, after Thomas had reached adulthood and should have managed her own money.

The prosecutor got Provence to admit that an attorney on a settlement case cannot ask a conservator to “steal” money from a client’s account, the allegation at the heart of the case against Laffitte.

“And the conservator does not have to follow the lawyer’s instructions?” Holliday said. “That person has the right to say ‘no’?”

Provence agreed.

Laffitte will face more questions from the government later in the day Friday.

This story may be updated.