At last: Murdaugh pal Russell Laffitte pleads guilty to 6 bank fraud counts

Russell Laffitte, once a respected, well-to-do Lowcountry banker, pleaded guilty in federal court Friday to six counts of bank-related thefts involving more than $3.5 million he stole with the notorious swindler and convicted killer Alex Murdaugh.

Laffitte’s plea before U.S. Judge Richard Gergel was the capstone of a three-year saga in which Laffitte was fired from his family-owned Palmetto State Bank, indicted by a federal grand jury for victimizing bank customers, asserted his innocence, stood trial and was found guilty, spent 14 months of a seven-year sentence in prison and won a new trial on appeal. The new trial was set to begin May 5.

Until this week, Laffitte, 54, had continued to cast himself as a gullible but innocent victim who allowed himself to be manipulated by the smooth-talking Murdaugh, a lawyer and major customer of the bank and lawyer. Murdaugh has already pleaded guilty in state and federal court to $10 million in financial frauds including those at Laffitte’s bank and elsewhere. Murdaugh was disbarred in 2022.

With Laffitte’s admission at the Charleston federal courthouse that he used his bank to help Murdaugh launder stolen money, his retrial will now not take place. He will be sentenced at a later date.

Prosecutors and defense lawyers have already agreed on a five-year prison sentence for Laffitte. Judge Gergel said Friday he will accept that sentence.

Laffitte, who left the courthouse yard by a remote exit to dodge reporters and photographers, will also have to pay $3.55 million in restitution and a $85,854 money judgment.

During the 45-minute hearing, Laffitte had stood beside his attorney, Mark Moore of Columbia, answering numerous questions from Judge Gergel about the rights to a public trial and presumption of innocence that Laffitte was giving up with short, “I do, your honor” and “Yes, your honor” responses.

More than a dozen friends and Laffitte family members were in the courtroom to support the former banker, whose family has run the Palmetto State Bank in Hampton County for more than 100 years.

Wrapping up the hearing, Judge Gergel said, “the plea therefore is accepted and the defendant is now adjudged guilty of the offenses.”

Gergel’s statement followed his lengthy reading of the charges against Laffitte and a detailed summary of the plea agreement, followed by a recitation of the evidence by lead federal prosecutor Emily Limehouse. She named Laffitte’s victims and described how Laffitte had cheated them.

Following the hearing, speaking to reporters outside the courthouse, Limehouse said she did not know why Laffitte had changed his mind and agreed to plead guilty after insisting for years he was innocent.

But if Laffitte had chosen to have a retrial, Limehouse said, “We did expect to have some additional evidence that was not presented at the prior trial, but I can’t say whether that made a difference.”

Laffitte, who knew how to use his bank to launder money, was crucial to Murdaugh’s swindling schemes, Limehouse said in a news conference after the hearing.

“As we have said many times, these crimes would not have happened without Alex Murdaugh, but they could not have happened without Russell Laffitte and Murdaugh’s other enablers,” said Limehouse, who stood with Katie Stoughton, a prosecutor, and Josh Loomis, an FBI agent on the case.

Meanwhile, in the parallel universe of state criminal court, negotiations are underway between Laffitte and his lawyers and prosecutors from the State Attorney General’s office to resolve numerous fraud charges against Laffitte brought by a state grand jury. An announcement on those charges could come as early as next week.

In the wide-ranging scheme to which Laffitte pled guilty on Friday, Murdaugh — an unindicted co-conspirator in his case — would funnel to Laffitte’s bank large amounts of money won in settlements for Murdaugh’s clients in car crash cases. Once in the bank, Laffitte would send the money to accounts controlled by himself or Murdaugh. Then they would either steal the money or use it to give themselves loans.

In some cases, Laffitte also managed money for Murdaugh’s clients, paying himself about $450,000 in fees over a 10-year span. He did not pay taxes on those fees, prosecutors said.

Laffitte, who could have stopped Murdaugh’s stealing spree, instead allowed him to bankroll them both with money stolen from Murdaugh’s clients, prosecutors have said. All of the victims who were Murdaugh’s former clients were vulnerable in some way — minor children, elderly or destitute. But Laffitte also stole from his bank and helped Murdaugh steal from Murdaugh’s law firm.

Those whose money was stolen or misused included:

• Arthur Badger, whom Laffitte and Murdaugh stole $1.3 million from. Murdaugh had gotten the money for Badger from a settlement in a car crash case in which his wife had died, leaving six children.

• Alania Plyler Spohn and Hannah Plyler were 12 and 8 years old when their mother and older brother died when a faulty tire caused the car they were riding in to crash into a thicket of trees. Murdaugh arranged a settlement worth millions for the sisters, including annuities and nearly $1 million in Palmetto State Bank accounts for the girls. Murdaugh and Laffitte then proceeded to plunder the bank accounts for loans, paying back the original sums from other settlements Murdaugh secured.

• Natarsha Thomas, who Murdaugh won a $408,000 settlement for after a car crash. Murdaugh gave her $83,000 but didn’t tell her she had another $325,000 coming to her. Murdaugh and Laffitte used the $325,000 to replenish accounts from which they had taken money out of.
• Hakeem Pinckney, a quadriplegic injured in a car crash. Laffitte and Murdaugh stole $309,000 from his settlement proceeds and Laffitte paid himself $60,000 in conservatorship fees.

Laffitte, a fourth-generation banker, had started at his family-owned bank in 1997 as a bank teller and worked his way up to CEO.

In 2019, Laffitte was named Banker of the Year by the Independent Banks of South Carolina association. According to court records, Laffitte in 2023 had more than $10 million in assets, including $6 million in Palmetto State Bank stock, another $100,000 in stock at Bank of America, and $1 million in his 401K, according to court records. He also had about $5 million in liabilities.

Laffitte and Murdaugh were childhood friends, and Laffitte’s father was Murdaugh’s godfather, and Murdaugh’s father was Laffitte’s godfather. Murdaugh was a fourth-generation member of his law firm.

For generations, Laffitte’s bank and Murdaugh’s law firm were the twin financial pillars of Hampton County. The law firm and its lawyers did their banking at the Laffitte bank.

Laffitte has been represented by a legal team that included two lawyers regarded as among the state’s top criminal defense lawyers, Mark Moore and Shaun Kent. Both have managed the rare feat of winning jury trials in federal court. Federal prosecutors have immense resources, pick their cases carefully, and most people charged with federal crimes plead guilty rather than risk a trial.

In 2018, Moore, a former federal prosecutor, was co-counsel on a federal criminal case where a federal jury acquitted two Conway chiropractors of conspiring to cheat BlueCross BlueShield of South Carolina out of hundreds of thousands of dollars.

In 2014, Kent won a major acquittal for his client, Eric Robinson, in a high-profile federal corruption trial in Columbia involving high officials at S.C. State University. Robinson was the only one of more than half a dozen defendants not to plead guilty or be found guilty.

The charges to which Laffitte pled guilty Friday are:

• Conspiracy to commit wire fraud and bank fraud. Laffitte knowingly joined with Murdaugh from 2011 to 2021 to execute an illegal scheme to steal money held by Palmetto State Bank.
• Bank fraud. In 2013, Laffitte and Murdaugh unlawfully manipulated money within the bank.
• Wire fraud. In 2013, Laffitte and Murdaugh unlawfully took money from one account in the bank and distributed it to Murdaugh’s personal account.
• Misapplication of bank funds. In October 2021, Laffitte unlawfully took $680,000 of Palmetto State Bank money and gave it to Murdaugh’s law firm, then known as Peters, Murdaugh, Parker, Eltzroth & Detrick. It is now the Parker Law Group.
• Misapplication of bank funds. In July and August 2021, Laffitte gave a $750,000 commercial loan to Murdaugh supposedly for beach house renovations, knowing that the loan was unsecured and would be used to pay a debt to a lawyer friend of Murdaugh and to cover overdrafts at Murdaugh’s Palmetto State Bank account.
• Misapplication of bank funds. In February 2015, Laffitte extended a $500,000 line of credit to Murdaugh, supposedly for “farming.” Laffitte then issued a $284,787 check on the line of credit, knowing the money would be used to pay off loans.

Jan Malinowski, executive vice president of Palmetto State Bank, was at the hearing with the bank’s attorney, Greg Harris. Both declined comment on leaving the courthouse.

Besides Limehouse and Stoughton, the other federal prosecutor on the case is Winston Holiday.

Besides Moore and Kent, Laffitte’s lawyers include Micheal Parente and Cheryl Shoun.

The FBI, the South Carolina Law Enforcement Division and the state Attorney General’s office also investigated Laffitte.

This story is about a breaking news event and will be updated.

This story was originally published April 18, 2025 at 11:19 AM.