Prosecution rests in Laffitte trial, defense makes case loans to Murdaugh were normal
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Alex Murdaugh Coverage
The Murdaugh family saga has dominated the news after another shooting, a resignation and criminal accusations — with Alex Murdaugh at the center of it all. Here are the latest updates on Alex Murdaugh.
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On the sixth day of Russell Laffitte’s bank fraud trial, the defense got its first chance to try and shape the narrative of the former Palmetto State Bank CEO’s conduct with regards to disgraced attorney Alex Murdaugh.
Laffitte’s legal team launched into the former banker’s defense on Wednesday, after federal prosecutors rested their case at the end of the day Tuesday.
The government presented 15 witnesses — their final witness was FBI agent Brian Womble — who testified that Laffitte removed money from client accounts he managed on behalf of Murdaugh’s law firm without the knowledge of the clients, the law firm or Palmetto State Bank’s board of directors, all to cover payments by himself and Murdaugh.
Laffitte is charged with bank and wire fraud.
Murdaugh is an unindicted co-conspirator in the case and faces nearly 90 charges of financial fraud in state court and murder charges in the deaths of his wife and son in June 2021. He remains in the Richland County jail.
Three bank employees testified Wednesday about the normal operations of the small-town bank, with the defense team led by Bart Daniel attempting to paint the loans Laffitte made to Murdaugh were a normal bank procedure.
They praised Laffitte as a conscientious bank official, who they say cared for both employees and customers.
Defense make their case
Defense lawyers Daniel and Matt Austin tried to show the jury Wednesday that sizeable loans Laffitte approved for Murdaugh, then a lawyer, were OK’d through normal procedures.
The loans included a $500,000 line of credit to Murdaugh in 2015 that bank records said was for “farming” purposes but really went to cover Murdaugh’s overdrafts.
Charles Laffitte III, a bank executive and Laffitte’s older brother, testified that the bank did not routinely keep track of how its loans were used.
“Once they have the line of credit, we don’t monitor what they spend the money on,” he said.
He also testified that it was not unusual for board officers serving on the executive committee to approve some actions without a formal board meeting. That’s been a contentious point in the trial as several board members, including other Laffitte family members, testified that they were unaware of loans and payments Laffitte made to Murdaugh until after the fact.
“Depending on how quickly they are trying to get a deal closed, they may not wait for the monthly meeting,” Charles Laffitte III testified.
“Were you aware that $400,000 on the beach house loan was transferred to Alex Murdaugh around Aug. 9 (2021)?” federal prosecutor Winston Holliday asked.
“I was not,” Charles Laffitte III replied.
Bank records show that the $400,000 loan was supposed to have gone to renovate Murdaugh’s Edisto beach house.
It instead went into Murdaugh’s checking account where he spent it on other purposes, according to early testimony.
Chastity Malphrus, a loan processor at Palmetto State’s Hampton office, also testified Wednesday that it is not unusual for her bank to approve an unsecured, single-payment loan, like those Laffitte made to Murdaugh.
“It’s not unusual for banks in general,” said Malphrus, who worked directly under Laffitte until he was fired earlier this year. “Loans are evaluated on a case-by-case basis, and approved on how likely a client is to be able to pay it off. “They’ll say, ‘I get a bonus from work,’ or ‘I’m selling a piece of property,’ and we try to document that and they are able to pay it back at that time.’”
Under cross-examination by prosecutor Emily Limehouse, Malphrus said Murdaugh’s loans would have required a higher level of approval, since he already had a low credit score, overdrawn accounts and had failed to pay back loans before.
“I’d have to send them to someone else,” she said. When asked who would approve such a loan, she answered, “Then, it was Russell.”
Malphrus also testified about Murdaugh, calling him an “charismatic” and “outgoing” person who on his visits to the bank spoke to everyone he saw.
“Everybody knew him,” she testified.
John Peters, Palmetto State’s compliance officer, testified that he was aware of Murdaugh’s loans and his continued overdrafts of his checking accounts. But didn’t flag them as suspicious at the time as he knew Murdaugh was a long-time customer who “at some point” would pay his debts to the bank, he said.
“Alex borrowed a lot of money for years. ... It was a substantial amount. He always paid them back, although very slowly at times,” Peters testified.
If the actions had raised a red flag, Peters said he would have filed what is known as a suspicious activity report, known in the banking world as an SAR. Such reports are filed when bank officials suspect fraud or money laundering.
“Over the years, the bank made a lot of money off Alex Murdaugh?” Daniel asked.
“I’m sure we have,” Peters responded.
Peters acknowledged, since Murdaugh and Laffitte’s conduct began to be investigated late last year, the bank had reviewed some of their transactions and filed suspicious activity reports.
But shortly before last year, when Murdaugh’s wife and son were murdered as allegations of financial fraud came up, Peters recalled telling bank chairman Charlie Laffitte, “You know Alex is getting up into six figures,” meaning he was substantially overdrawing his checking accounts.
Charlie Laffitte, Laffitte’s father, indicated he was aware of the situation, Peters testified.
Charlie Laffitte also testified Wednesday for the defense.
Murdaugh was fired from his family law firm in September 2021 amid allegations he stole money from clients.
The bank fired Laffitte last January after an internal investigation by Columbia lawyer Greg Harris and at least one lawsuit alleging mishandling of funds managed by a bank official and Murdaugh.
Peters also testified he later filed suspicious activity reports with bank regulators on some checks that were issued on the accounts of some of Murdaugh’s clients, noting that they appeared to be “structured” into separate payments kept under $10,000, the amount that would require federal reporting requirements.
Alex Murdaugh’s brother speaks
John Marvin Murdaugh, Murdaugh’s younger brother and a lifelong friend of Laffitte, testified briefly Wednesday.
Under questioning by attorney Daniel, Murdaugh called Laffitte “an honest man.”
When asked prosecutor Holliday if he had any particular knowledge of banking or law, John Marvin Murdaugh, who sells and rents farm equipment and tractors, replied that he did not.
Defense attorneys had wanted John Marvin Murdaugh to testify at length about Laffitte’s character but, after objections from prosecutors, Judge Richard Gergel ruled the defense could only elicit a brief character statement.
This story was originally published November 16, 2022 at 11:25 AM with the headline "Prosecution rests in Laffitte trial, defense makes case loans to Murdaugh were normal."
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