Russell Laffitte’s father says he approved controversial loans to Alex Murdaugh

The former board chairman of Palmetto State Bank said Wednesday he approved a $680,000 payout in 2021 to help compensate an alleged victim of an alleged bank fraud scheme by the bank’s CEO, his son, Russell Laffitte.

Charlie Laffitte, 83, the Laffitte family patriarch, testified on the sixth day of his son’s trial. He testified that Russell Laffitte made the $680,000 payment to attorney Alex Murdaugh’s law firm so it could put up $680,000 of its own money and forward the total — $1,360,000 — to a former Murdaugh client, Arthur Badger, who was due the money.

Laffitte is on trial at the Charleston federal courthouse on charges of bank and wire fraud.

In 2011, Laffitte and Murdaugh together had devised a scheme using the bank’s internal systems to steal the $1,360,000 from Badger and split that money nine different ways, with none of it going to Badger, according to government testimony and bank records introduced at trial. Instead, the money went to pay various loans, including a $388,677 loan to John E. Parker, one of Murdaugh’s law partners,

In the fall of 2021, Ronnie Crosby, a partner at Murdaugh’s law firm, was reviewing law firm records and discovered that the $1,360,000 had not been distributed to Badger in 2011 and had instead been sent to Russell Laffitte’s bank. He contacted Laffitte and discovered that Murdaugh had directed Laffitte to distribute the money to approximately 10 different accounts that had nothing to do with Badger, according to government evidence.

Crosby and Laffitte then informally agreed that both the bank and the law firm were responsible, and that the bank should pay half the stolen money to Badger, and the law firm would pay the other half, according to testimony. They also agreed that the law firm would pay Badger $1,360,000, explain that the law firm was responsible for the mishap and not mention to bank’s role to Badger.

Charlie Laffitte said he, his son, and his daughter, Gray Laffitte Henderson, a bank vice president and member of the bank’s board, had approved the $680,000 payment to the law firm.

“I had lengthy discussions with Russell and Gray, and we approved the settlement amount,” Charlie Laffitte said.

“It was going to be half of what the claim was and Murdaugh was going to handle the second half. I don’t like to pay out any money,” Laffitte testified.

Henderson, testifying after her father, told the jury that she was aware of the payment, although she agreed her father and brother were able to make it due to their roles in the bank.

Her brother told her, “when all this had happened with Alex, we were going through his cases, and found that we had converted this account into other items,” Henderson said.

When asked if she knew her brother was responsible for those payments, Henderson said, “He did, he said I negotiated them. He did it.”

Murdaugh a major bank customer

The law firm fired Murdaugh in September 2021 after discovering he had stolen money from numerous law firm client accounts over the years.

In January of this year, the bank fired Laffitte after hiring an outside investigator to review joint transactions by Murdaugh and Laffitte over the years. For decades, Murdaugh had banked at Palmetto State Bank and, because of sizable loans he got from the bank, he was considered a major customer.

Another major sum of money that was a focus of the government’s prosecution Wednesday involved a $750,000 loan that Laffitte approved for Murdaugh in July 2021.

But that $750,000 loan didn’t go to cover renovations at Murdaugh’s beach house at Edisto.

Instead, according to bank records introduced by the prosecution, Laffitte ordered $350,000 of the money to be wired to Murdaugh’s friend, lawyer Chris Wilson, to pay a debt.

And $400,000 went to pay overdrafts on Murdaugh’s checking accounts, according to bank records.

The testimony was meant to bolster the defense’s argument that Laffitte made payments of hundreds of thousands of dollars for Murdaugh’s benefit. Earlier in the trial, several board members testified that they were unaware of the payments, especially the $680,000 that was paid out before members of the bank’s board of directors were aware of it.

But Wednesday, Charlie Laffitte testified that he spoke directly to Murdaugh earlier that summer and had agreed to the loan to Murdaugh to cover the home renovations.

Charlie Laffitte testified that the loan was properly granted because it had been approved by three members of the bank’s board of directors’ executive committee, who included himself, his son and Henderson.

In Henderson’s testimony later Wednesday, she used the term “we” several times on the stand to refer to her brother’s actions.

“As an employee of the bank, especially a family bank, everything is a ‘we,’” she said. “If a teller shorts someone $20, we have to apologize, not Jane at the window. That was the way I was brought up.”

There were no formal dissents from the board when they were notified about the payment via email, she said. However, the disclosure concerned some board members, including Becky Laffitte and Norris Laffitte, who testified earlier at trial that they were becoming worried about Murdaugh’s ability to pay back various sizable loans he had with the bank.

In his conversation about the $750,000 beach house loan, Charlie Laffitte said, “We made arrangements to get it covered. ... We had been talking over earlier about his beach house, so we put a mortgage on the beach house ... After that I turned it over to Russell to get it done.”

A close family relationship

Charlie Laffitte said his family and the Murdaughs had been close for years, and that Murdaugh and his family lived across the street from him until just a few years ago.

But the elder Laffitte also said he was unaware of many of the details of his son’s handling of Murdaugh-related transactions at the time.

On cross-examination by the government, he said that he was unaware that the money missing from Badger’s account had gone to pay other withdrawals from a minor’s account Laffitte oversaw, or that a part of it was meant to cover fees Laffitte himself had claimed from the account as its conservator.

Asked if he knew his son had negotiated the withdrawal of money from the Badger account in the first place, Charlie Laffitte said, “that’s why we were doing it — the checks were made out to the bank, and he did it the way Alex said to do it.”

Prosecutor Emily Limehouse said the $750,000 exceeded the assessed value of the Murdaughs’ Edisto beach house. When Charlie Laffitte said that the amount also covered some unspecified attorney fees for Murdaugh, Limehouse noted that no use for the loan is specified in the minute meetings from August 2021.

Charlie Laffitte, who said he stepped down from the board in October, also said he was unaware of the uses that loan went to, including payments to an auto dealer, a gastroenterologist, a sports medicine shop and the DeBordieu Club. Henderson also said she went off the board in September of this year.