Laffitte defends loans he approved to Murdaugh as prosecutors grill him in bank fraud trial
State (Columbia, SC)
Russell Laffitte began Monday morning on the witness stand under withering cross-examination by prosecutors in his federal bank fraud trial.
The former small-town banker admitted to prosecutor Emily Limehouse that he approved a series of moves initiated by disgraced attorney Alex Murdaugh to take money out of the accounts of Murdaugh’s clients to pay off Murdaugh’s personal debts.
Laffitte told Limehouse he knew a large loan he approved to Murdaugh for “farming” purposes would actually go to pay off loans Murdaugh made from the account of Hannah Plyler, an underage girl who was injured in a car crash and received a settlement through Murdaugh’s Hampton County law firm.
“I was assuming that, yes,” Laffitte said of the loan.
“You knew, because you’re the one who did it,” Limehouse said.
Laffitte said he unknowingly set up a conservator account for client Natarsha Thomas at Murdaugh’s direction even though Thomas was already an adult and didn’t need a conservator to oversee her account. The document Laffitte signed misrepresented Thomas’s age, saying that she was only 15. Laffitte said the document was filled out by Murdaugh and Laffitte depended on Murdaugh’s guidance in setting up the account.
“I had not checked her driver’s license or ID,” he said.
In another case, Laffitte was operating as a conservator for an account for another settlement recipient, Hakeem Pinckney, after Pinckney had died.
Laffitte said repeatedly Monday morning that he relied on Murdaugh’s direction on how to disburse money, including when Murdaugh made out checks to Palmetto State Bank instead of the individual conservator accounts. But Limehouse stressed that it was Laffitte who moved all the checks Murdaugh asked him to as a banker at Palmetto State Bank.
Laffitte acknowledged the loans to Murdaugh were unsecured, as Murdaugh was more than $100,000 overdrawn at the bank at the time. Laffitte testified that unsecured loans were not uncommon for the bank.
At one point, Laffitte said he depended on Murdaugh’s direction “as their attorney” when making money moves from the account, but Limehouse shot back.
“You can’t be relying on him as conservator unless you know those funds belonged to Natarsha Thomas and Hakeem Pinckney,” Limehouse said, to which Laffitte said he misspoke.
Limehouse pressed Laffitte on the stated reason for a $750,000 loan Laffitte made to Murdaugh ostensibly to cover the cost of renovations to an Edisto Beach house that was assessed to be worth less than the cost of the loan. Laffitte said the loan was also intended to cover other expenses. But Limehouse said Laffitte represented the loan to the bank board of directors as only covering beach house renovations. Laffitte said that was not meant to hide the purpose of the loan but was instead normal operating procedure with the board.
“We don’t talk about how the funds are spent with the board,” Laffitte said.
The other spending was not mentioned in emails at the time because “We had been instructed by our attorneys to keep our emails short,” he said.
Limehouse pointed out that Laffitte took loans from Plyler’s account to pay off loans he received from another bank, credit card bills and other personal expenses, as well as giving Murdaugh a million dollars to pay off his loans. Laffitte made $450,000 in fees overseeing Murdaugh’s clients accounts, and “in exchange you let Alex Murdaugh use that money however he wanted,” Limehouse said.
“It was not an exchange, it was a business decision,” Laffitte said. “If he needed money, I made the decision whether or not to pay them.”
Limehouse also pointed out that Laffitte failed to pay taxes on the fees he received from the accounts, but Laffitte testified that was not because he was helping Murdaugh to steal money, but because “I just didn’t want to pay taxes on it.”
“It was stupid,” Laffitte testified.
On Friday, Laffitte testified for more than three hours, answering questions from his own lawyers.
Laffitte told jurors he followed the directions of Murdaugh in withdrawing money from clients from Murdaugh’s law firm, depending on the good intentions of the prominent Hampton County attorney he characterized as a long-time customer and personal friend.
Laffitte said on the stand Friday that he never intentionally stole money from anyone, but said that “I absolutely did unintentionally.”
The former CEO of Palmetto State Bank also testified that as a bank executive and as the conservator empowered to oversee many of the accounts Murdaugh’s law firm set up for underage accident victims injured in car crashes, Laffitte could legally move money for investment purposes.
Two other Palmetto State Bank executives, who happened to be Laffitte’s father and sister, had approved a particularly controversial payment of $680,000 to cover funds Murdaugh had directed Laffitte to remove from the account of client Arthur Badger.
Questions about the move raised by members of Palmetto State Bank’s board of directors eventually led to Laffitte being fired by the board. On Friday, Laffitte’s attorneys played a recording of a closed-door board meeting in which the bank’s attorney discussed the payment with the board, hoping to show bank officials were aware of his actions at the time.
Laffitte was expected to be under cross examination for a couple of hours Monday, with closing arguments expected after.