CHARLESTON, S.C. (WCIV) — Russell Laffitte will learn his prison sentence Tuesday. Federal prosecutors say the former South Carolina banker was the chief enabler in a decade-long, multimillion-dollar fraud scheme involving convicted murderer Alex Murdaugh.
Prosecutors with the U.S. Attorney’s Office are seeking a prison term for Laffitte of nine to 11 years, plus $3.55 million in restitution. Attorneys for Russell Laffitte call that proposal "draconian," and say he doesn’t deserve such a harsh sentence.
Instead, Laffitte's lawyers have asked Judge Richard Gergel to consider a lighter sentence of 3 to 5 years in a minimum-security facility with provisions for Laffitte being able to further his education in pursuit of a new career following his eventual release.
However, Laffitte’s attorneys add that Laffitte maintains his innocence. They say Laffitte was an unwilling and unwitting participant in the fraud conspiracy for which he’s been convicted. Laffitte intends to appeal his conviction regardless of the Court’s sentence, his lawyers say.
“Mr. Laffitte like many others made the mistake of trusting Mr. Murdaugh and failed to question and carefully scrutinize Mr. Murdaugh’s requests, as Mr. Murdaugh was an important customer who Mr. Laffitte wanted to please,” Laffitte’s attorneys wrote in part. “(Laffitte) did not think Mr. Murdaugh would be so brazen to actually steal from his clients. Mr. Murdaugh was the only person who knew the ultimate goal of his scheme and used Mr. Laffitte as a means to that end.”
Laffitte, age 52, was convicted in November 2022 of six felonies stemming from his association with Murdaugh, a personal injury lawyer who — like Laffitte — came from a prominent family in their hometown of Hampton, South Carolina, where the Laffittes have operated Palmetto State Bank since 1907. The Murdaughs opened a law firm there in 1910.
Federal prosecutors say Laffitte while working in various roles at Palmetto State Bank joined Murdaugh in a scheme taking advantage of their two high-profile jobs, public reputations, and decades of goodwill in the community to steal from mutual clients who’d entrusted them with their financial wellbeing.
During the 10-day trial last fall, Laffitte portrayed himself as a simple mark in a scheme orchestrated by the “world-class con man," Murdaugh. A jury disagreed, finding Laffitte guilty of bank and wire fraud conspiracy with Murdaugh, plus three counts of misusing bank funds in subsequent attempts to conceal his wrongdoings.
A multi-agency criminal investigation showed the scheme began in 2011, after Murdaugh asked Laffitte to serve as fiduciary for Alaina and Hannah Plyler, two young girls Murdaugh represented in a lawsuit after losing their mother in a 2005 vehicle crash caused by a tire defect.
The probate judge in Hampton agreed to Laffitte’s appointment as conservator for the two girls, meaning he was to look after the substantial settlements they won from the wreck until they turned 18 and became legally responsible for managing their own money. That threshold was still several years away for Hannah, the younger of the two sisters.
Federal investigators said Laffitte in early 2011 first took advantage of the situation by giving himself a personal loan from Hannah Plyler’s settlement. He’d go on to take four loans from Plyler over several years, totaling more than $245,000.
In each loan, prosecutors said Laffitte indulged in self-dealing and unscrupulous accounting practices. He charged himself interest rates lower than the lending industry standards at the time, fudged how much interest he owed in annual accountings, didn’t charge himself late fees, and didn’t file necessary paperwork such as promissory notes before taking the money.
And the loans themselves were for selfish aims rather than investments meant to bolster the girls’ savings. The first loan Laffitte took was simply to pay off existing personal debts. Another loan he took later was used to install a pool and remodel his kitchen at home.
The Plyler sisters testified at trial Laffitte during this same time made it exceedingly difficult for them to access their money, even as they bounced from couch to couch and slept in their vehicle without a permanent home.
The investigation revealed a paper trail showing Laffitte soon brought Murdaugh into the fold. The attorney had found himself upside down in ill-timed land investments from the time of the Great Recession, and was looking for a way out. Laffitte had the answer.
This genesis story is contrary to Laffitte’s persistent claims Murdaugh recruited him to commit crimes unwittingly. Prosecutors during trial seized on this discrepancy as one of several lies Laffitte told attempting to downplay his role when all available evidence pointed to his intimate involvement.
Regardless of who recruited whom, prosecutors said Laffitte soon began giving Murdaugh the same sort of sweetheart loans from Plyler’s accounts as those he’d given himself.
With Murdaugh in the mix, the ante was raised. Prosecutors said the con quickly turned from simple self-dealing to a nefarious “Rob Peter to pay Paul” scheme at a stupendous scale, targeting some of Murdaugh's most vulnerable and needy clients.
Instead of personally repaying the ever more substantial loans he took, documents show Murdaugh and Laffitte devised a scheme to steal from other unwitting clients and use their money to cover Murdaugh's debts instead.
Investigators said the plan hinged on Laffitte assuming fiduciary duties from even more of Murdaugh’s clients, giving him dual access to clients’ funds through his position at Palmetto State Bank and as their court-appointed money manager.
Federal prosecutors say Laffitte and Murdaugh went to this well at least four times — targeting the settlements of Arthur Badger, Natasha Thomas, Hakeem Pinckney and Malik Williams. In Williams case, prosecutors noted Murdaugh hadn't even been his lawyer, meaning the only person in the equation who knew hownmuch money Williams had to target him was Laffitte.
Despite representing these people and their financial interests, Laffitte admitted at trial he never actually met some of them, and had very little interaction with any. Despite this, Laffitte collected about $450,000 in fees for serving as their fiduciary.
Once clients gave Laffitte access to their money, the banker and lawyer would file fraudulent paperwork with the bank and Murdaugh’s law firm enabling them to short clients’ on their settlements without anyone immediately noticing.
From there, prosecutors say Laffitte would move the money out the door at Murdaugh’s behest through a laundering scheme utilizing name recognition of an annuity company and fraudulent bank accounts controlled by Murdaugh.
The scheme started with Murdaugh pulling the strings. But the government alleges Murdaugh quickly fell more deeply into debt while racking up substantial overdrafts and late payments as he blew through money at a breakneck pace.
Prosecutors say Laffitte in response transitioned from a simple facilitator to having an increasingly proactive role in concealing the scam. That included moving money between accounts on his own without asking Murdaugh, doing whatever he deemed necessary to balance the books and allay suspicions.
"Murdaugh was not calling the shots. (Laffitte) was calling the shots. Murdaugh just spent his money and relied on (Laffitte) to cover for him," Asst. U.S. Attorney Emily Limehouse said in her closing statement during Laffitte’s trial.
The bill came due in June 2021, when Murdaugh faced imminent discovery of his financial crimes. Murdaugh’s law firm was about to launch an internal investigation into his actions over missing money.
Meantime, a judge was days away from ordering Murdaugh to open up his personal finances for review by attorneys for the family of 19-year-old Mallory Beach. The Beaches sued Murdaugh for wrongful death after their daughter died in a 2019 boat crash involving Alex Murdaugh’s son, Paul.
When the lawsuit was announced, and Beach’s attorneys revealed their intent to seek a judgment of $10 million, Murdaugh claimed he didn’t have nearly that much money despite his wealthy lifestyle. Beach's lawyers were incredulous, and sought access to his bank records.
State prosecutors who secured double murder convictions against Murdaugh in March 2023 convinced a jury Murdaugh — with accountability closing in — brutally killed his wife, Maggie, and son, Paul, as part of a sadistic ruse meant to delay discovery of his financial crimes and impending downfall.
If that was the plan, it worked only briefly. Murdaugh amid the shock of the killings went back to Laffitte during the summer of 2021 asking for more help concealing his earlier thefts. Laffitte obliged, extending Murdaugh an unsecured loan he kept off the books at his bank.
But the move came too late. Murdaugh’s law firm continued its internal investigation and soon discovered Murdaugh’s fraud nearly in its entirety. Murdaugh was fired and soon after arrested in September 2021.
Murdaugh's law firm informed Laffitte they had discovered fraud by Murdaugh, and cautioned Laffitte to look into the possibility Murdaugh had defrauded the bank, too, given the two firms’ mutual clients connected by Murdaugh.
Prosecutors say Laffitte quickly wrote Murdaugh’s former law firm a $680,000 check from the bank’s reserves, which Laffitte framed as a settlement to cover its half of stolen funds revealed through its own internal probe. Murdaugh’s law firm would simply need to pay the other half and hopefully the victim wouldn’t sue either business, Laffitte reasoned.
Although Laffitte attempted to portray the bank as a another duped victim attempting to do the right thing by offering the law firm a check, prosecutors say Laffitte was really jonly trying to cover his tracks.
The U.S. Attorney’s Office said Laffitte knew the truth about his involvement with Murdaugh and was acting without approval from Palmetto State Bank’s board or executive when he delivered Murdaugh’s law partners that check. It accounts for one of his three misuse of bank funds convictions.
Laffitte’s sentencing hearing is scheduled to begin at 10 a.m. Tuesday at the U.S. District Court in Charleston.
Alex Murdaugh has also been indicted on 22 similar federal charges tied to the conspiracy. Murdaugh at his arraignment on those charges in June pleaded not guilty. His attorneys said at the time, however, they do expect to change that plea and avoid trial.
A third co-conspirator in the case, ex-lawyer Cory Fleming, pleaded guilty already to a single charge of wire fraud conspiracy. He awaits sentencing.
Laffitte, Murdaugh and Fleming each face similar charges for the same crimes in state court after State Grand Jury indictments in 2021 and 2022. Fleming’s state trial is set for September.
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