Feds hit ex-SC banker and Murdaugh friend Russell Laffitte with new fraud charge

A federal grand jury has charged Russell Laffitte, the former Hampton banker and alleged accomplice of Alex Murdaugh’s, with an additional count of fraud involving a $500,000 line of credit that was supposed to be used for farming purposes.

A new and updated indictment, called a superseding indictment, against Laffitte by the federal grand jury was made public Wednesday. Federal prosecutors are known to issue new charges against an already charged defendant as a method of getting someone to plead guilty.

The new charge, added to five previous counts of alleged illegal financial activity, says that Laffitte caused his bank, Palmetto State Bank in Hampton, to fund a $500,000 line of credit in 2015 to an unidentified bank customer to be used for “farming,” and that the bank issued a $284,787 cashier’s check pursuant to the line of credit.

Laffitte’s lawyer, Bart Daniel, declined comment later Wednesday. An arraignment on the new charge will be held next Wednesday in Charleston before Magistrate Judge Mary Gordon Baker.

Laffitte, 51, who was CEO at Palmetto State Bank, was fired by the bank in January after an internal audit. He is a lifelong friend of Murdaugh’s, who is 54, having grown up in the same Hampton-area neighborhood.

A federal grand jury indicted Laffitte in July that alleged a longstanding conspiracy between an unidentified “bank customer,” whom sources identified as Murdaugh, and Laffitte to use the Palmetto State Bank as a tool for laundering money.

The conspiracy alleged the two misappropriated millions of dollars from bank customers and that both profited from the covert arrangement.

The first indictment says the bank was at the center of Laffitte and Murdaugh’s scheme to carry out a series of financial thefts by getting inappropriate “loans” from various conservatorships controlled by Laffitte, a top officer at the bank.

With the misappropriated funds, Laffitte and Murdaugh sent money to relatives and their own checking accounts and paid off loans and bills, the indictment said.

In all, the July federal indictment said, Laffitte and Murdaugh looted six conservatorships over the years, often siphoning money out of one and then, as deadlines approached, repaying one depleted conservatorship with money from another.

The indictment charges Laffitte with conspiracy to commit wire fraud and bank fraud, wire fraud, bank fraud and misapplication of bank funds.

The ease with which Murdaugh and Laffitte took money from the bank has turned into one of South Carolina’s largest financial scandals in years. The legal profession has also come under scrutiny, as numerous allegations by a state grand jury charge Murdaugh stole some $8.4 million from various clients, friends, his law firm and other lawyers for more than 10 years.

Murdaugh was fired last September by his longtime family law firm, which for decades was known as a powerhouse law firm that won millions of dollars suing businesses on behalf of people who claimed they or their relatives had been injured or killed by corporate negligence.

Although some of the money Murdaugh allegedly took has apparently been accounted for, what happened to the rest remains one of the unsolved dynamics of this much-publicized case.

Federal prosecutors on the Murdaugh and Laffitte case are Winston Holliday and Emily Limehouse. Laffitte’s lawyers are Daniel and Matt Austin.

Murdaugh is being held without bond at the Alvin S. Glenn jail in Richland County on murder charges. He is accused of killing his wife Maggie and son Paul in June 2021. He has pleaded not guilty.

The federal case against Laffitte will play out in Charleston. Federal Judge Richard Gergel will preside.

Editor’s note: The spelling of Magistrate Judge Mary Gordon Baker’s name has been updated to reflect the correct spelling.

This story was originally published August 17, 2022 at 9:29 AM.