Russell Laffitte did not have authority to issue Alex Murdaugh money, witnesses testify
State (Columbia, SC)
Prosecution witnesses continued Tuesday to chip away at a core idea central to Russell Laffitte's defense: That the former Palmetto State Bank CEO had broad authority to make large loans to, and payments on behalf of, attorney Alex Murdaugh without the approval of the bank's board.
In fact, Laffitte violated numerous "safety and soundness" banking practices involving overdrafts, unsecured loans and a questionable $680,000 payoff to Murdaugh's law firm, banking expert Timothy Rich testified.
"Overdrafts and unsecured loans, it's a pretty risky situation for an institution," said Rich, a top Federal Deposit Insurance Corporation bank official who has 35 years experience of regulating banks.
Rich testified to the problems he found in Laffitte's payouts on behalf of Murdaugh, who separately faces numerous state charges of financial crimes, as well as charges of murder in the 2021 double homicide of his wife and son.
The FDIC, which regulates banks, is the group responsible for making sure the public has a financial system in which the public can have confidence, Rich testified.
"We don't want banks to be subject to failure," Rich told the jury on the fifth day of Laffitte's trial.
Rich testified that on multiple occasions Laffitte made large payments that rescued Murdaugh from his habit of frequently overdrawing his account by substantial amounts and also arranged questionable documentation that showed Murdaugh could put up collateral for a $750,000 loan he didn't qualify for in the summer of 2021.
So many successive overdrafts indicate that someone is "living beyond their means," Rich said.
But the two assets pledged for collateral in the $750,000 loan weren't enough to cover the loan and one of them -- a stock share of a hunting club -- had already been pledged as collateral for another loan, Rich testified.
Moreover, Laffitte only had his board of directors approve that $750,000 loan in August, when in fact Laffitte had already wired in July $350,000 from the loan to a law firm operated by Chris Wilson, a friend of Murdaugh's to whom he owed money. And most of the rest had already gone to pay off Murdaugh's overdrafts.
Laffitte also violated bank procedures in 2015 by stating that the purpose of a $500,000 loan that year was to go for "farming," when in fact emails between Murdaugh and Laffitte at the time indicated that much of that money was sent to the account of Hannah Plyler, an underage car crash victim, whose account had been depleted by making other payments to Murdaugh, according to earlier testimony.
"He appeared to have been replenishing funds in another account," Rich said. "That is not a proper use."
Rich also questioned a $680,000 payment that Laffitte made without the board's knowledge in October 2021 for the bank's share of responsibility in a $1.4 million theft that Murdaugh embezzled from one of his clients. The payment was made to Murdaugh's former form, which had discovered the theft after Murdaugh was fired a month earlier. Laffitte had been involved in handling money from the theft, Rich testified.
Laffitte as CEO "did not have the authority to enter into this settlement," Rich testified.
On cross-examination by Laffitte's attorney Bart Daniel, Rich said he relied on his assessment that Laffitte's lack of authority to divert money on Murdaugh's behalf came from his (Rich's) reading of Palmetto State Bank's bylaws.
In his questions, Daniel repeatedly stressed other bylaw sections which, Daniel said, gave Laffitte authority to disburse money on Murdaugh's behalf.
Daniel also introduced charts of loans to Murdaugh that the defense attorney said showed that Murdaugh, despite having various large loans out, was not a serious credit risk.
At one time, four loans made to Murdaugh totaled nearly $3 million, Daniel's charts showed.
Rich testified that payments made by Laffitte on Murdaugh's behalf were made outside of the normal decision-making channels of the bank.
"I reviewed and concluded it did not comply with the executive committee requirements," Rich said. "The bylaws state there are regular meetings, and then it also provides for things between meetings, and how you handle that.
"For the executive committee to appropriately consider, all voting members of the executive committee would have to be consulted," he said. "Not just find a majority and keep the rest unaware of the payment."
SC car crash victims testify about missing money
Natarsha Thomas never knew she was missing $325,000 from an account managed by Laffitte that ultimately went to Murdaugh.
The young car crash victim testified Tuesday she was ecstatic to receive a check in 2011 for $83,000 from her settlement from a car crash two years earlier on Interstate 95 when a faulty tire on the Ford Explorer she was riding in blew out.
"I woke up crying" in a hospital room in Charleston with severe eye and facial injuries, Thomas told the jury in a Charleston courtroom Tuesday.
The then-19-year-old Thomas used her settlement to buy a car, she said. But Thomas said she never knew about a separate amount she was due from the lawsuit totaling $325,000 that was supposed to go into her account.
"I would have remembered that," said Thomas, now 30, who lives in Yemassee in northern Beaufort County and is a full-time student studying to be certified nurse assistant.
As Thomas, the 13th witness in the prosecution's ongoing federal bank and wire fraud case against Laffitte, spoke the 12-member jury panel and four alternatives listened intently as some took notes.
Instead, Laffitte, a former Palmetto State Bank executive who was acting as her conservator, sent that money to other accounts associated with Murdaugh, as well as other accounts he had previously taken money out of.
Bank records indicate Thomas' money instead was used to pay back Hannah Plyler, another crash victim whose account was managed by Laffitte, in separate payments of $91,000 and $50,000. Prosecutors made the case Monday that those amounts had previously been removed from Plyler's account without her knowledge to cover loans to Murdaugh.
Another $40,000 was sent to the account of Malik Williams, another account Laffitte oversaw and is accused of making unapproved withdrawals from.
Prosecutor Emily Limehouse broke down the payments to the jury, showing:
$100,000 was given to Laffitte's father, Charlie, who was CEO and chairman of the Palmetto State Bank board at the time
$329,000 was given to Randolph Murdaugh III, Murdaugh's father
$10,000 was given to Maggie, Murdaugh's wife
Asked why a 19-year-old adult needed a conservator to oversee her account, Thomas testified that she was unaware that Laffitte was her conservator, even when she later applied for a car loan from Laffitte at Palmetto State Bank.
Neither Laffitte nor Murdaugh, her attorney on the lawsuit over the car wreck, ever told her about the conservatorship, she testified.
Thomas was one of several people who allegedly had money stolen from their accounts by Laffitte, who was fired as the CEO of Palmetto State Bank in January.
After Thomas completed her testimony, her attorney, state Rep. Justin Bamberg, told The State newspaper that her testimony represented the clearest evidence yet introduced at the trial to show that Laffitte and Murdaugh were stealing from a person whose proceeds from a lawsuit were supposed to be placed in a conservatorship.
"Laffitte had absolutely no legal authority to do this," Bamberg said. "He blatantly stole that $325,000."
Murdaugh was fired from his law firm, now known as the Parker Law Group, in September 2021. Laffitte was fired from his CEO bank job in early January of this year after an internal investigation initiated by the bank board, which also hired Columbia attorney Greg Harris to look into Laffitte's actions.
Arthur Badger, another crash accident victim represented by Murdaugh, testified Tuesday he received a $369,000 settlement from a car crash case.
But Badger said he was unaware of another $1.3 million in his case sent to Palmetto State Bank, which bank records say was instead disbursed elsewhere.
Some $234,0000 of that $1.3 million was deposited into Murdaugh's account, after Badger's attorney had already received more than a $1 million payment from Badger's case, according to his testimony.
Another $250,000 was placed into Hannah Plyler's account, and $386,000 was paid to Murdaugh law firm attorney Johnny Parker.
Badger testified he had to sell annuities his underage children would have received over the years from their mother's death in the same accident in order to cover immediate costs. He said he wouldn't have needed to if he had received the $1.3 million he was owed.
By mid-Tuesday afternoon, the prosecution had called 15 witnesses so far across four days of testimony in the Laffitte trial, including FBI agent Brian Womble.
Prosecutors rested their case late Tuesday. Judge Richard Gergel denied defense requests to throw out the prosecution's case and said the defense would start their case Wednesday morning. Daniel told Gergel the defense expects to put on nine witnesses and that could take two days.
Five prosecution witnesses have been members of Palmetto State Bank board and extended members of the Laffitte family who have pushed back, often forcefully, against the idea that Laffitte was operating within the rules of the bank.
Family member says Laffitte did not have sole authority
Another prosecution witness, Becky Laffitte, a Columbia attorney and board member of the Palmetto State Bank, hit back at the defense's assertion that Laffitte was within his authority to make the large payments to Murdaugh, for which he was ultimately fired, because he consulted with the board's chairman -- his father Charlie Laffitte -- and his sister, bank vice president Gray Henderson.
And she cited the bank's own bylaws to do it.
"A majority can comprise the quorum, if there's not a called meeting, but you need to have consent from all the members of the executive committee, and it needs to be in writing in the meeting minutes the next time," she testified late Monday afternoon.
If, as Laffitte's legal team has asserted, the former CEO had the implicit approval of the two board officers, "They would have made that decision without a meeting, and (to do that) you need consent from the executive committee," Becky Laffitte said.
She said bank directors would have wanted to be consulted about the loans, and were ultimately upset to learn about them, because "it was problematic and we have found it to be problematic," she said.
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