Long before the saga began, Alex Murdaugh was in a tsunami of debt and risk of exposure
In the months before and after June 2021 when Alex Murdaugh’s wife and son were shot to death, the then-Hampton attorney and now-accused embezzler was beset by escalating money problems and threats of exposure.
On the surface, the then-52-year-old lawyer looked prosperous.
He lived on a 1,772-acre homestead called Moselle in Colleton County valued at $3.9 million. He vacationed at a four-bedroom house near the waterfront at Edisto Beach valued at $920,000. He bought his kids a 17-foot motorboat, and he had a share in the Green Swamp Hunting Club worth $250,000. His wife, Maggie, drove a 2021 Mercedes valued at $85,000.
Out of sight, financial pressures were squeezing Murdaugh.
He was facing recurring cycles of unceasing debts, high spending, bank overdrafts, taking out loans, paying them off and getting new ones. He was a defendant in a wrongful death lawsuit over a 2019 fatal accident involving his boat with not enough insurance coverage to cover a possible large verdict against him.
Unknown to the public, Murdaugh also was secretly writing hundreds of thousands of dollars in checks to a distant cousin, Curtis “Eddie” Smith, a disabled logger who faces drug and financial fraud charges, prosecutors have said and records show.
And, for years, Murdaugh was stealing money from clients and his law firm’s client trust account and, aided by a longtime friend, banker Russell Laffitte, he was laundering it through the Palmetto State Bank in Hampton, according to indictments and lawsuits.
At the time his wife and son were killed, Murdaugh’s highly unusual financial situation faced the threat of exposure by proceedings in a civil lawsuit involving the boat crash that killed 19-year-old Mallory Beach two years earlier.
Mark Tinsley, the Allendale County lawyer involved in the wrongful death lawsuit brought by Beach’s mother, was seeking to compel Murdaugh to disclose his financial situation as part of pretrial proceedings.
“A lot of things were closing in on Alex,” said Tinsley, whose lawsuit alleged Murdaugh and others were responsible for the boat crash that caused the death of Beach, a family friend.
At Tinsley’s request, a state judge scheduled a hearing for mid-June 2021. Tinsley planned to seek to compel Murdaugh to open his financial records, including bank statements, loans and mortgages.
That hearing never happened.
On June 7, 2021, Murdaugh’s wife, Maggie, and son, Paul, were found shot to death, lying on the grounds of the family’s estate near the family’s dog kennels. Murdaugh, who said he had been away, found their bodies and called the police.
Clues were scarce. Each had been shot with a different weapon — Paul with a shotgun, Maggie with an assault rifle — raising the possibility that two people killed them.
More than a year later, despite a still-ongoing investigation by the State Law Enforcement Division and frequent predictions of an imminent arrest, no one has been charged with murder. Murdaugh has been labeled a person of interest.
He is now in the Richland County jail on a slew of financial charges, unable to post $7 million bond. A trial hasn’t been set.
Three months after his wife and son’s grisly deaths, Murdaugh’s secrets began to unravel.
In early September, his family law firm — known as PMPED — learned he’d been stealing from clients and forced him out. The firm’s brief announcement didn’t say how much he stole or how long he carried out the thefts. The state Supreme Court suspended Murdaugh’s law license.
In mid-September, two lawyers filed a lawsuit against Murdaugh and two of this friends, alleging they were part of a scheme in 2018-19 that eventually would show he diverted $4.3 million in insurance proceeds meant for Murdaugh’s deceased housekeeper’s estate to Murdaugh and his friends.
Murdaugh has since made a formal confession that he is responsible for the theft of the $4.3 million, according to a June 16 Supreme Court finding. The high court is now preparing a formal disbarment order.
That lawsuit, involving the late housekeeper, Gloria Satterfield, would trigger police investigations and lead to multiple criminal indictments against Murdaugh and others allegedly involved in his various theft and money laundering schemes.
It also led Tinsley to obtain in November a court order appointing two prominent attorneys — John Lay and Peter McCoy — to be receivers and take over Murdaugh’s finances to inventory his assets and prevent him from transferring or selling them.
Tinsley’s goal is to identify and preserve any and all of Murdaugh’s assets for his clients in case of a court jury award or settlement in the Beach lawsuit.
The receivers’ final findings may eventually document how Murdaugh, a supposedly well-to-do attorney, tumbled down a rabbit hole of ceaseless debt into a life of crime.
Some of the receivers’ findings to date have already been made public, showing Murdaugh held “many bank accounts, bank loans, mortgages on certain properties, and significant cash payments to third parties,” according to a May 26 legal filing.
A June 3 court filing says Murdaugh’s life of debt and loans could date back to 2005, the year that some say his secret life of juggling various in-and-out revenue streams began.
In all, indictments allege Murdaugh stole $8.4 million from numerous victims who include friends, associates and former law partners.
Many of them, including Murdaugh’s old law firm, are also suing him.
Lowcountry bank at heart of Murdaugh probe
At the center of Murdaugh’s alleged stealing and borrowing is Palmetto State Bank, a small financial institution in downtown Hampton long-controlled by generations of the Laffitte family, indictments and lawsuits say.
Murdaugh grew up with Russell Laffitte, who held successive important positions at the bank and is accused of helping Murdaugh in various ways, from giving him hefty loans to cash-laden conservatorships that Laffitte controlled.
For years, Laffitte also helped Murdaugh cope with his frequently overdrawn checking accounts, according to lawsuits and April indictments.
Court records give glimpses of Murdaugh’s Palmetto State Bank overdrafts and loans:
▪ In February 2015, Murdaugh got a line of credit secured by real property with Palmetto State Bank. By May of that year, Murdaugh had overdrawn that amount by $51,937. The bank then approved upping his credit line to $1 million.
▪ In February and March 2018, Murdaugh again had a negative checking account that hit a low of negative $33,841.
▪ In the summer of 2020, Murdaugh’s bank checking account had a negative balance, at times reaching negative $53,302.
▪ In July 2021, one month after Maggie and Paul were killed, Palmetto State Bank gave Murdaugh a $750,000 line of credit at a time when Murdaugh had a checking account balance of negative $162,014.
Murdaugh and Laffitte now face charges of embezzling, money laundering and criminal conspiracy in connection with what they allegedly did at Palmetto State Bank.
The charges stem from alleged schemes where Murdaugh as a lawyer would oversee the collection of large amounts of insurance money due to his clients in personal injury or wrongful death lawsuits, and arrive at large settlements that went into the Murdaugh law firm client trust account.
Then, indictments say, Murdaugh would dip into the client account and send money to Laffitte, who would set up a conservatorship for Murdaugh’s clients or funnel the money directly to Murdaugh.
One indictment accuses Murdaugh of sending Palmetto State Bank and Laffitte a total of $1.3 million in 13 separate payments in 2013 and 2014.
The money was compensation for the death of Allendale resident Donna Badger, and was due to her family after her death in a wreck. An indictment said Laffitte steered most of the money to Murdaugh for his use to pay off debts, buy money orders and give money to family members.
In early June of this year, Arthur Badger, Donna’s husband who represents her estate, filed a civil suit against Murdaugh, Laffitte and Palmetto State Bank, alleging they breached their fiduciary duties to the estate. He is seeking damages.
The suit was filed by Tinsley, the same lawyer who sued Murdaugh in the Beach wrongful death case.
Attorneys Eric Bland and Ronnie Richter — who won settlements from Murdaugh and Palmetto State Bank after suing them for alleged wrongdoing in the case of Murdaugh’s deceased housekeeper — have also raised the possibility of legal action against Murdaugh, Laffitte and the bank in yet another matter allegedly involving stewardship of a multimillion-dollar conservatorship.
In a public statement in early June, Bland and Richter said Murdaugh and Laffitte misused money awarded to two young girls, Alaynia Spohn and Hannah Plyler, in the early 2000s by taking “personal sweetheart loans” out of the girls’ multimillion-dollar conservatorship.
“It is our intent to recover each and every dollar of loss suffered by these young ladies,” Bland said. “Funds held in conservatorship accounts are sacrosanct. They are not slush funds. They are not the personal piggy banks of the people appointed to protect the money.”
Bland said Laffitte and Murdaugh’s ability to use conservatorship funds for personal purposes for many years raises serious questions about oversight at Palmetto State Bank, where large or unusual financial matters are supposed to be reviewed by the bank’s board of directors.
“They were either asleep at the wheel or did not do their job,” Bland said.
Laffitte was fired from the bank in early January. A federal grand jury is investigating connections between Murdaugh, Palmetto State Bank officials and the bank. It has issued no indictments.
Palmetto State Bank attorneys Tom Gressette and Trenholm Walker did not respond to requests for comment.
Murdaugh’s attorney Jim Griffin declined to comment.
Laffitte’s criminal lawyer, Matt Austin, said his client has cooperated with the state grand jury investigation and intends to fight the charges. Austin represents Laffitte with Charleston attorney Bart Daniels.
Laffitte’s lawyer for civil cases, Andy Haselden, declined to comment.
Murdaugh owed thousands to law firm partners
Snapshots taken from court records of his financial situation around the time of his wife and son’s killings show Murdaugh’s furious activity on multiple fronts.
In March 2021, three months before his wife and son were killed, Murdaugh borrowed $227,000 from his longtime friend and law partner, John E. Parker.
About the same time, Murdaugh convinced a lawyer friend, Chris Wilson, with whom he’d just collected $2 million in fees in a Richland County lawsuit, to send him personally his share of the fees — $792,000 — instead of sending the fees to the Murdaugh law firm’s client trust account, as was customary.
By getting the fee sent to him personally, Murdaugh got immediate use of the money to pay debts and write checks to family and an unidentified law partner, avoiding giving any money to his firm, according to a November state grand jury indictment that charged Murdaugh with obtaining money by false pretenses and money laundering.
However, by May 2021, one month before the killings, Murdaugh’s law firm discovered that Wilson should have forwarded Murdaugh’s fee to its client trust fund. Murdaugh persuaded Wilson to send the $792,000 to the law firm, but only paid Wilson $600,000 back.
In July 2021, one month after Maggie and Paul were killed, Murdaugh got another loan from law partner Parker for $250,000, according to a lawsuit Parker filed against Murdaugh in October.
A few months later, right before Sept. 2, Murdaugh borrowed $75,000 from his brother and law firm partner Randy Murdaugh IV, to cover “an overdrawn bank account,” according to a lawsuit Randy filed against Murdaugh in October.
Murdaugh money moves to his cousin
Other activity before the killings shows that Murdaugh at that time was writing millions of dollars in checks to his longtime friend and distant cousin, Curtis “Eddie” Smith.
In all, Murdaugh wrote 437 checks to Smith from 2013-2021, worth $2.4 million, and Smith used the money for a “myriad of unlawful activities,” according to a June indictment against Murdaugh and Smith.
In March 2021, Murdaugh wrote 10 checks to Smith totaling $248,953 from a separate Bank of America account, according to records obtained by The State.
That was the same month Murdaugh borrowed $227,000 from Parker and received $792,000 from Wilson for a fee in a lawsuit settlement.
At Smith’s bond hearing last month, the state Attorney General’s office’s top prosecutor told Judge Clifton Newman that from May 2020 to February 2021, Murdaugh wrote approximately $1 million in checks to Smith.
Then from March 2021 to September 2021, Murdaugh wrote some $973,000 in checks to Smith.
September was the same month that Murdaugh and Smith were charged with insurance fraud in a scheme where Murdaugh tried to get Smith to kill him so Murdaugh’s remaining son, Buster, could collect $10 million in life insurance.
The plot failed.
”What we see around March 2021 to June and thereafter is an extreme acceleration of the amounts Mr. Murdaugh is washing through the aid of Eddie Smith,” prosecutor Creighton Waters told the judge at Smith’s bond hearing.
Smith used much of the money Murdaugh gave him to buy drugs for Murdaugh and others, but a “substantial amount of cash is unaccounted for that passed through Mr. Smith’s hands,” Waters said.
Meanwhile, in the three months after the June slayings, Murdaugh continued writing checks to Smith — a total of $305,465 in “multiple checks” from his Palmetto State Bank checking account, according to court records.
Smith, at his June bond hearing, claimed in a statement to the judge that he didn’t have any money.
“All I have is the disability I live off of, and that’s it,” he said.
The charges against Murdaugh and his ever-expanding alleged financial crimes have shocked those who knew him.
Murdaugh is a descendant of a family that dominated Lowcountry legal, social and political life for four generations. His fall from grace has attracted statewide and national attention for more than a year now.
Jay Bender, a prominent Columbia lawyer who has represented The State and other media outlets in court, said the Murdaugh saga is a continuing black eye for South Carolina lawyers.
“Everybody in South Carolina that has been paying attention has been talking about this case, how Murdaugh took advantage of clients,” Bender said.
“Unfortunately, a lot of people are saying, ‘What makes Murdaugh different from any other lawyer?’ Not only has he brought ignominy upon himself, he’s tarnished the reputation of the rest of us.”
