Possible state vs. federal legal war looms over Murdaugh assets of $1 million-plus

Hours after lawyers for Alex Murdaugh filed a request on Monday for an immediate federal seizure and an accounting of his assets under state control, the lawyers with custody of those assets replied with a request of their own.

Shortly after 8 p.m. Monday, the office of John T. Lay, one of the two receivers who has had control over Murdaugh funds since November 2021, sent an email subpoena to Murdaugh lawyer Jim Griffin seeking various kinds of financial information, including:

▪ Any engagement letters or contracts between Griffin and/or Paul Murdaugh and/or Alex Murdaugh.

▪ Any documents showing payments received by Griffin from “any source related to your representation of Paul Murdaugh and/or Alex Murdaugh.”

▪ Any and all contracts and/or agreements, related to or in any way associated with Alex Murdaugh, Maggie Murdaugh, or Paul Murdaugh, including but not limited to media rights deals, entered into by you and/or Alex Murdaugh and/or Buster Murdaugh providing for payments of any kind.

Griffin, along with attorney Dick Harpootlian, was retained by Alex Murdaugh in 2021 after a February 2019 boat crash that killed a passenger in the boat, Mallory Beach. The boat was allegedly piloted by Alex Murdaugh’s younger son, Paul Murdaugh, then 19, who was allegedly drunk.

Since then, Maggie Murdaugh (Alex Murdaugh’s wife) and Paul were shot and killed in June 2021 at the family estate. Last March, Alex Murdaugh was tried and convicted for Maggie and Paul’s murders. He is now serving two consecutive life sentences.

In the last two years, media interest in the saga loosely known as the Murdaugh murders has soared, and companies have invested millions in developing video products for mass audiences about the Murdaughs. Lay’s subpoena is apparently aimed at getting information that would show whether, and for how much, Griffin and Harpootlian have financially earned from their relationship with the Murdaughs, including any deals they may have made with production companies.

Griffin, in an interview, commented on the subpoena, calling it “retaliatory.”

“Our motion filed in federal is an attempt to stop the draining of Alex Murdaugh’s assets by the spending of attorneys’ fees and special master’s charges through the state receivership,” Griffin told The State newspaper.

“In response to that, what we have seen from them is a subpoena trying to get our financial records,” Griffin said. “They are not pertinent to any issues pending before the receiver or in federal court.”

The receivers explain

Later Wednesday, the receivers -- Lay and Peter McCoy -- released a joint statement, making it clear they oppose the defense attorneys’ efforts.

“Alex Murdaugh’s most recent motion makes the remarkable presumption that he is in a position to override two years of State Court Orders and dictate to the U.S. Attorneys’ Office how and when to seize his own assets,” the receivers said.

The receivers asserted that Murdaugh wants to be the one who picks and chooses who gets shares of his assets, when the process of compensating Murdaugh’s victims is already being adequately and fairly handled by the receivers and the U,S. Attorney’s office.

“Without the Receivers’ efforts over the last two years, it is very likely there would be nothing left for any of Alex Murdaugh’s victims,” the receivers said.

Since assuming control of the assets two years ago, the receivers and their lawyers have been paid $641,442.14 in total for their nearly 3,000 hours of work performed, the receivers said. “This is a substantial discount relative to standard hourly fees which would ordinarily total more than $900,000 and to the standard contingency rates of 40%, which Alex Murdaugh himself used to charge, before expenses.”

The receivers said they had “worked tirelessly” for two years to locate and preserve Murdaugh’s assets “so that they could be available for equitable allocation to his many victims at the appropriate time as determined by the Court.”

All disbursements to the receivers have been made after a public hearing and pursuant to a court order, the receivers said in their statement.

Murdaugh’s motion

On Monday, Murdaugh’s lawyers moved in federal court for federal authorities to “immediately” seize all of their client’s remaining assets now under control by state receivers.

“The Murdaugh Funds are at risk of substantial dissipation and waste without the Court’s immediate action,” the filing said.

The filing indicates the amount of Murdaugh assets now under the control of state receivers is more than $1 million but doesn’t give an exact amount.

Murdaugh pleaded guilty last week to numerous financial fraud and theft crimes in a hearing Sept. 21 in a Charleston federal court before U.S. Judge Richard Gergel.

A day after the hearing, Gergel issued an order requiring Murdaugh to forfeit all his funds. The order did not specify immediate forfeiture, nor did it specifically mention Murdaugh’s assets now being held in receivership.

In last week’s Murdaugh hearing, his lawyers told Gergel that legal fees will eat away at the funds under state control and it is better to put the money under federal jurisdiction because it can be distributed by federal authorities without any charge. Assets under receivers’ control in state court are subject to fees by private attorneys, they said.

“This Court convicted Mr. Murdaugh. No other court has convicted Mr. Murdaugh of any financial crime,” the motion says, underscoring their argument as to why federal authorities, and not state authorities, should have the say-so over asset disposition.

Phil Barber, a lawyer on the Murdaugh defense team with Harpootlian and Griffin, also sent a letter to Gergel, telling the judge that the receivers are in the process of hiring a special referee, Walter Tollison III, to help oversee acceptance or rejection of claims against the Murdaugh money.

“Mr. Tollison is a highly respected senior lawyer and so his standard billing rates are considerable,” Barber wrote Gergel in the publicly filed letter.

If federal authorities seize Murdaugh’s assets, that could save “hundreds of thousands of dollars in legal fees” because they will do Tollison’s job free of charge, Barber wrote.

Murdaugh’s assets are now under control by state court-appointed receivers Lay and Peter McCoy, a former U.S. attorney for South Carolina.

Prosecutors from the S.C. Attorney General’s office are seeking to take Murdaugh to trial in state court on some or all of his financial crimes on Nov. 27.

The Attorney General’s office Tuesday said, “Following our policy, we have no comment because it’s pending litigation.”

In their motion, Murdaugh’s attorneys also said they seek an accounting of all of Murdaugh’s assets that have been seized.

Already, the filing said, the receivers “have disbursed $408,153.58 to themselves from the Murdaugh Funds.”

And, the filing said, the receivers are currently seeking an additional $253,294 for themselves.

The backstory

In November 2021, a state judge ordered that Murdaugh’s assets be identified and put under the control of receivers.

At that time, the extent Murdaugh’s thefts over the years was just beginning to be known. The purpose of the receivership, lawyers said at the time, was to prevent Murdaugh from moving his assets into places where people who had legitimate claims on his money could not reach.

Also at that time, a major civil lawsuit, now settled, was seeking millions in damages from him. Murdaugh had been named as a defendant in a lawsuit brought by the mother of Mallory Beach, the young woman killed in the 2019 boat crash.

Murdaugh’s financial frauds total at least $9.5 million over more than 10 years and his victims include his law firm, clients and others, a federal prosecutor said last week in federal court.

Murdaugh’s surviving son, Buster, recently received some $500,000 from his mother’s estate from the sale of Moselle in a deal signed off on by numerous lawyers seeking part of the proceeds from the sale.

This story was originally published September 27, 2023 at 11:48 AM.