Russell Laffitte didn’t have SC bank approval to make Murdaugh payments, official testifies

A top executive at Russell Laffitte’s former bank testified Thursday that Laffitte was fired as CEO after he secretly paid Alex Murdaugh’s former law firm $680,000 to head off a potential lawsuit and also made hundreds of thousands of dollars worth of loans to Murdaugh without bank officers’ knowledge or approval.

Jan Malinowski, an executive vice president with Palmetto State Bank, testified at a Charleston courthouse that he and other executives were “shocked and amazed” when they learned of the loans, which ultimately led to Laffitte’s firing and his indictment by a federal grand jury on bank and wire fraud charges.

That six-count indictment is what Laffitte is being tried on this month.

Under questioning by federal prosecutor Emily Limehouse, Malinowski testified that he was unaware that Laffitte had used $680,000 in bank funds in October 2021 to make a secret payment to Murdaugh’s former law firm, now called Parker Law Group. The first he heard about it, Malinowski said, was when Laffitte notified the bank’s board that month that Murdaugh “stole” the money and that Laffitte had “made the client whole.”

“I was shocked and amazed,” when he found out, Malinowski said. “This was the first I had heard about it.”

“Did Russell have authority to pay the law firm on his own?” Limehouse asked.

“He did not,” Malinowski replied.

Malinowski was the third prosecution witness to testify. It is the trial’s third day.

Prosecutors are using his testimony to show that Laffitte broke the law by being Murdaugh’s willing accomplice to divert bank money and funds in conservatorships under Laffitte’s supervision to Murdaugh and Laffitte for their personal use. Defense attorney Bart Daniel on cross examination tried to show Murdaugh was the lawbreaker and Laffitte’s actions, while maybe unusual, were within the law.

Malinowski is one of a majority of Palmetto State Bank board members to vote to fire Laffitte after the board received a confidential investigation in December 2021 about the banking relationship of Laffitte and Murdaugh.

The revelation led to a flurry of emails, with another board member asking whether it set an “awful precedent” for Laffitte to make that payment without the board’s involvement. Laffitte responded that he had saved the bank from a potential lawsuit.

“We were wrong and I made it right,” Laffitte responded.

In Wednesday’s testimony, board member Norris Laffitte, a cousin of the defendant, said that the $680,000 payment to the law firm led to revelations of other improper payments made to Laffitte and Murdaugh’s family, including one payment to buy a boat for Murdaugh. All that money was diverted from accounts of clients who received legal settlements that were managed by Laffitte.

Malinowski emphasized that Laffitte acted on his own, without prior approval from, or even the knowledge of, bank officers to make the payment.

In a potentially significant move, Limehouse entered into the record checks that Laffitte had approved to a man named Curtis Smith, although Limehouse did not directly question Malinowski about them Thursday morning.

Smith, an alleged accomplice of Murdaugh, faces state charges of drug trafficking and running a longtime money laundering scheme that involved some $2.4 million allegedly stolen by Murdaugh.

Smith was also involved with Murdaugh in a botched suicide alleged insurance fraud scheme so Murdaugh’s surviving son Buster could collect a $10 million life insurance policy.

Bank official details Laffitte’s role

In cross-examining Malinowski, Laffitte’s defense attorney Daniel got him to acknowledge that Murdaugh was a reliable client for the bank for years. The bank had made numerous large loans to Murdaugh over the years, and Murdaugh had a long history of paying many back with interest that made the bank money, Malinowski testified.

Other attorneys at the same firm had received similar loans and had paid them back when they received their year-end bonuses each December, Daniel said.

Murdaugh’s father for years also had an excellent reputation for paying back bank loans, Malinowski testified.

“If Mr. Murdaugh asked for more money, we would give it to him,” Malinowski testified bank Chairman Charlie Laffitte, Laffitte’s father, had said in a board meeting.

That was because of the long history of the bank loaning money to Murdaugh, “and you could have known if you had looked at his loan history,” Daniel said.

Malinowski’s answers to Daniel’s questions appeared to be a defense effort to establish it was logical for bank officials to think Murdaugh could do no wrong, so they could go the extra mile to help such a reliable longstanding customer.

Malinowski admitted on the stand that under the board’s bylaws, the CEO has the broad authority on his own to approve all kinds of financial transactions.

What Laffitte did might be unusual but it was not illegal, Malinowski testified.

Limehouse’s examination of Malinowski Thursday was aimed at establishing, by showing him emails, bank reports and numerous copies of financial documents, how Laffitte for years helped Murdaugh get numerous loans that included a $750,000 loan in the summer of 2021.

Much of that $750,000 loan was supposed to go to repairs at Murdaugh’s Edisto beach house, but documents Limehouse showed that $350,000 of the money went to a friend of Murdaugh’s, lawyer Chris Wilson, to whom Murdaugh owed money. And although the loan was supposed to be secured in part by the beach house, that structure already had a first mortgage on it.

Another usual money transfer Limehouse brought out was that in August 2021, when Murdaugh had a $367,784 overdraft on his Palmetto State Bank checking account, Laffitte authorized a payment of $400,000 to cover the overdraft.

That payment alarmed some bank board members because by then, they had begun to get worried about whether Murdaugh had a job. Without a job, he would have difficulty paying off the numerous loans he owed, some board members worried according to Malinowski.

Will Murdaugh get immunity?

Questions still remain whether Murdaugh will take the stand in Laffitte’s trial.

On Thursday, Judge Richard Gergel mentioned the existence of a letter from Jim Griffin, one of Murdaugh’s attorneys, to Laffitte’s defense team and to prosecutors but did not describe its contents.

In an interview later Thursday, Griffin said he told the opposing lawyers that Murdaugh would agree to testify on Laffitte’s behalf if he would be granted immunity for any incriminating statements he made during his testimony.

Since Murdaugh also faces state charges of both murder of his wife and youngest son and numerous financial fraud crimes, the state Attorney General’s office would also have to agree to grant Murdaugh immunity, Griffin said.

By Thursday afternoon, no public discussion in court about that letter had taken place.

Laffitte and Murdaugh, besides engaging in financial transactions for years, have known each other since childhood.

Their families are two of the most prominent in Hampton County — the Murdaughs in law and the Laffittes in banking.

CFO of Murdaugh’s former law firm takes the stand

The day before, prosecutors brought Parker Law Group CFO Jeanne Seckinger to the stand. Seckinger not only had a long-standing professional relationship with the bank, but Laffitte was also married to Seckinger’s husband’s sister.

She testified that Murdaugh had a “chaotic” style that made it difficult to pin him down on details, especially when she tried to question him about money matters.

“Nine times out of 10 (times) his phone would ring, and then you would see him a week later,” she said.

She testified that when she confronted Murdaugh on June 7, 2021, about missing fees from a case, that meeting came to an abrupt end when Murdaugh received a call about his father being moved into hospice.

Later that night, Murdaugh’s wife and son were found murdered at the family’s Colleton County rural estate, and Seckinger let the matter of the missing money drop. But she said she had cause to be concerned about Murdaugh and money.

“At this point, we’re concerned because we know about the boat accident,” Seckinger said, referring to the 2019 boat accident in which Mallory Beach was killed, and for which Murdaugh’s now-deceased son, Paul, faced charges of boating under the influence.

In guiding Seckinger’s testimony Wednesday at the trial’s second day, the federal prosecution painted a picture that Murdaugh’s chaos, financially, was often funneled through Laffitte, who often handled financial requests from Murdaugh to take money out of the accounts of clients with settlements managed by Laffitte himself, acting as a conservator, or trusted manager of a pool of funds.

Records introduced to the jury Wednesday showed much of the money in conservatorships was diverted to personal uses by Murdaugh and Laffitte. Much of the money was also paid back, sometimes using money from other conservatorships under Laffitte’s control, according to the prosecution.

In one email presented at trial Wednesday, Murdaugh makes a suggestion to Laffitte about covering a needed deposit.

“Make a loan from Hannah and I will pay it as we discussed,” Murdaugh said, an apparent reference to Hannah Plyler, an underage crash victim with money in a sizable conservatorship managed by Laffitte.

Laffitte later emailed back, “I transferred 75K this morning.”

In response to another email from Laffitte, Murdaugh responded, “I will be in to see you. How long until Hannah turns 18?” Once she turned 18, the money in the conservatorship would no longer be managed by Laffitte and subject to being tapped by Murdaugh.