A federal magistrate judge on Tuesday relaxed tight restrictions on former Hampton banker Russell Laffitte’s movements while he awaits trial on fraud charges.
Those charges allege that Laffitte and disbarred lawyer Alex Murdaugh plundered various conservatorships under Laffitte’s control while he led a prominent Lowcountry bank.
Laffitte, 51, who faces numerous fraud charges that he and Murdaugh wrongfully used millions of dollars in conservatorships under Laffitte’s care, will now be given somewhat greater freedom to take care of his family’s farm interests in Allendale and Hampton counties and will be allowed to wear a less invasive monitor that can “ping” his whereabouts.
His lawyers, Bart Daniel and Matt Austin, are seeking an early trial for the former Palmetto State Bank CEO, perhaps this fall.
Most of the nearly three-hour hearing Tuesday before Magistrate Judge Molly Cherry was taken up with airing evidence in the case, with Laffitte taking the witness stand and for 90 minutes being grilled by federal prosecutor Emily Limehouse.
During the hearing, prosecutors and defense gave the public a glimpse of their opposing strategies for the upcoming trial. The hearing also revealed how the substantial amounts of money under Laffitte’s control and how easy it was for him and Murdaugh to make use of that money.
Limehouse portrayed Laffitte as a willing participant to make illegal use of the money entrusted to Laffitte and his bank by people who had gotten large settlements after vehicle crashes. Daniel, Laffitte’s attorney, characterized the former banker as a trusting victim of Murdaugh’s schemes who might have been “negligent” but certainly had no intention of criminally defrauding people.
Under Limehouse’s questioning, Laffitte acknowledged:
▪ Not reporting to the IRS much of the more than $300,000 in fees he made for serving as a personal representative overseeing conservatorships. Laffitte testified that he has since reported the income to the IRS.
▪ Making a $750,000 loan to Murdaugh and representing to bank officials that the loan was secured by a share of stock in a hunting club in which Murdaugh was part owner. Laffitte testified that he knew Murdaugh was using that same share of stock as collateral for other sizable loans that Murdaugh was getting from the bank.
▪ Being paid $7,000 a month to manage the family farm, which has extensive holdings in Allendale and Hampton counties. He also gets dividends from Palmetto State Bank stock that he owns, worth roughly $6 million, he said.
▪ Reaching a quiet agreement with Murdaugh’s former law firm, then called Peters, Murdaugh, Parker, Eltzroth & Detrick, to pay some $680,000 to cover money that Laffitte had allowed Murdaugh to take out of a conservatorship that Laffitte controlled.
▪ Covering numerous overdrafts totaling hundreds of thousands of dollars over the years in Murdaugh’s Palmetto State Bank checking account.
▪ Knowing in summer 2021, after Murdaugh’s wife Maggie and son Paul were murdered, that Murdaugh was writing hundreds of thousands of dollars worth of checks to a man named Eddie Smith. Laffitte said he didn’t know Smith or what the money was going for. Smith has since been charged with various crimes involving drugs and money laundering by state authorities.
Under questioning by his own lawyer, Laffitte made it clear that he had trusted Murdaugh, had known him for many years, that Murdaugh and his law firm had been excellent customers of the bank for many years and that Murdaugh had always paid his debts.
“He (Murdaugh) always made good?” Daniel asks Laffitte.
“Right,” testified Laffitte.
Laffitte acknowledged he personally took loans from the money in conservatorships, but all that money was “paid back in timely fashion with interest.”
Daniel also elicited statements from Laffitte that he has cooperated extensively with the FBI, the State Law Enforcement Division, the Office of Disciplinary Counsel and bank regulators.
Limehouse, however, told the magistrate judge that Laffitte had “lied” at times to the authorities.
Laffitte’s wife of 21 years, Susie, a reading teacher, spoke for some 10 minutes.
She told the magistrate judge that her husband is a family man and a contributor in the community, who like Murdaugh’s numerous other victims had been betrayed by Murdaugh.
“My family and I understand what it feels like to be victimized by someone you trusted,” she said.
In no way is her husband a flight risk or danger to the community — two factors that necessitate a high bond — and he was widely known as “kind” and “good” man who always thinks of others and has contributed mightily to the community as well as helped numerous people in their time of need, she said.
In recent months, the family has had to sell their family home to raise money for legal bills and their two children’s college educations. They are now living in a double-wide trailer, she said.