Recording showed Laffitte bank wanted to keep secret its $680K payoff to theft victim

Jurors at the Russell Laffitte’s federal fraud trial got an inside look Friday afternoon at his bank’s board of directors efforts to approve a secret $680,000 payout it made in 2021 to hide the bank’s role in a $1.3 million theft.

The tape of a Nov. 3, 2021, Palmetto State Bank nonpublic board meeting featured a presentation to board members by bank attorney Trenholm Walker, who told directors that the bank had agreed with Alex Murdaugh’s former law firm to each put up $680,000 to compensate the theft victim.

The combined sum of approximately $1.3 million would go to pay Arthur Badger, a former Murdaugh client, Walker said.

According to evidence presented by the government at the trial, Murdaugh and Laffitte worked together to divert $1.3 million gained in a settlement for Badger to purposes that had nothing to do with Badger.

Both the law firm, which had discovered the theft in September 2021, and the bank assumed responsibility for the $1.3 million theft from Badger.

The theft had been engineered in 2011 by Murdaugh and executed by Laffitte, according to prosecution evidence at the trial.

Laffitte, as bank CEO, was able to divide up the money and direct it to approximately 10 other accounts, none of which had anything to do with Badger, according to prosecutors.

Earlier Friday, Laffitte contested the prosecution’s version of events, testifying that he was duped by Murdaugh and had no intention of carrying out stealing Badger’s money, but he assumed Murdaugh — an attorney and a long and excellent bank customer — was acting properly when he told him what to do with the $1.3 million check due to Badger.

Walker assured board members that in his discussion with Murdaugh law firm attorney Ronnie Crosby, Crosby had assured him he would keep the bank’s role from Badger and only tell him that “there had been discovered a shortfall” in a years-old legal transaction and was now making good by paying him the $1.3 million.

At the time of the discussion, Laffitte had already discussed with Crosby the matter of paying off Badger, keeping things secret and delivering the bank’s $680,000 check to Crosby.

When board members questioned Walker whether Crosby would reveal to Badger the bank’s role in keeping the money from him, Walker said, “I don’t think he is going to try to throw the bank under the bus at all.”

In another section of the tape played to the jury, board members discussed whether Eric Bland and Ronnie Richter, two lawyers who had sued the bank in another case in September, a month or so earlier, had learned about Badger and were getting ready to sue Palmetto State Bank a second time.

But Walker assured board members that Bland and Richter had no way of learning about Badger and added that since the bank and the lawyer were paying off Badger, any payout to those two lawyers “will be much less” than if the lawyers were to later learn about it and sue the bank.

Walker also told the board he would have to report the Badger loss to authorities because the bank had already been subpoenaed for communications about Murdaugh in a lawsuit brought by the family of Murdaugh’s deceased housekeeper.

“This is something the criminal authorities will be very interested in,” Walker said.

Laffitte only speaks on the short tape near the end, when he acknowledges, “I was personal representative for Donna Badger, not Arthur Badger,” referring to Badger’s late wife who died in the same car accident for which Badger received a settlement.

That distinction between the Badgers has been a key point in the prosecution of Laffitte on federal bank fraud charges, since he carried out the transaction to give Murdaugh the money out of Badger’s account, not Donna’s.

Laffitte admitted as much under lengthy questioning from defense attorney Austin on the stand Friday, although he claimed to have unwittingly approved the transaction, only realizing what Murdaugh had done later.

The recording, which Laffitte said he recorded for the purpose of compiling the meeting minutes, was played for the jury after some concern from the federal prosecutors pressing the case against Laffitte. Although an edited transcript of the meeting had been entered into the evidence for the jury, prosecutor Emily Limehouse said Friday the government had not previously heard the tape itself.

After a brief break Friday afternoon for prosecutors to listen to the tape, it was played without objection from Limehouse.

Russell Laffitte takes stand in his defense

Laffitte was on the stand for more than three hours Friday, giving jurors their first chance to hear directly from the accused in the two week long trial

Under questioning by his attorney Matt Austin, Laffitte claimed ignorance of Murdaugh’s alleged schemes to take money out of client accounts for his own purposes.

Over and over he told the jury he acted at Murdaugh’s direction, obeying the lawyer because of a decades-long trusting relationship between them.

The defense finished questioning Laffitte around 4 p.m. Friday.

Judge Richard Gergel then dismissed the jury for the weekend, telling jurors he did not want to have the government start what is expected to be a lengthy cross examination late on a Friday afternoon.

Trial begins again at 9 a.m. Monday.