Murdaugh brother, Laffitte family testify in day six of Laffitte Federal Trial

CHARLESTON, S.C. (WCBD) – Russell Laffitte’s older brother Charles Laffitte III and their dad Charles Laffitte Jr. took the stand as part of Laffitte’s defense in his federal trial. Alex Murdaugh’s brother, John Marvin Murdaugh, also took the stand as part of Laffitte’s defense. Other witnesses taking the stand Wednesday included employees from Palmetto State Bank.

Laffitte faces several federal indictments tied to bank fraud, wire fraud, misappropriation of money and other financial crimes tied to alleged financial schemes with Alex Murdaugh while serving in leadership roles with his family bank, Palmetto State Bank. Laffitte was terminated from the bank in January 2022 after it’s Board of Directors voted to fire him in a split vote.

Federal prosecutors rested their case against Laffitte on Tuesday afternoon after calling fifteen witnesses to the stand during the first five days of testimony, clearing the way for Laffitte’s attorneys to begin calling witnesses on Wednesday morning. Attorney Bart Daniels, lead counsel for Laffitte, told the court Tuesday he anticipated needing two days to interview and expected nine witnesses as part of Laffitte’s case.

John Peters, a Compliance Officer for over three decades at Palmetto State Bank, was the first witness to be called by Laffitte’s defense. Peters oversees compliance, bank secrecy, and suspicious activity at the bank. During his testimony, Peters says Murdaugh regularly borrowed money, took out loans from Palmetto State bank but almost always repaid the bank and said there was no suspicious activity. Further, Peters says he never filed a Suspicious Activity Report until an investigation of Murdaugh’s finances.

Peters says bank executives like Russell Laffitte and his father Charlie Laffitte Jr., were routinely made aware of Murdaugh’s financial standing, including when he was in significant overdraft on his accounts. Peters says he was aware and signed off on a $350,000 wire transfer from a $750,000 loan extended by Palmetto State Bank that Alex Murdaugh directed to Bamberg Attorney Chris Wilson. Shortly after, investigations into Murdaugh’s financials began by Palmetto State Bank officials, including Peters. Peters says as he and other reviewed records, he began filing Suspicious Activity Reports into several of Murdaugh’s transactions.

Chastity Malphrus, a 9-year employee of Palmetto State Bank, worked on the loan approval process under Russell Laffitte closley. Malphrus says community banks, like Palmetto State Bank, are able to make more exceptions and extend more credit even with debt being a smaller bank. She testified the exceptions were often based on family trust and relationships. As the investigations into Alex Murdaugh and eventually Russell Laffitte progressed, Malphrus says Laffitte seemed more concerned for Murdaugh than himself as investigators questioned him on several occasions at the bank’s Hampton Branch.

Laffitte’s brother, Charles Laffitte III, took the stand as the defense’s third witness. Laffitte III serves as the bank’s Real Estate Appraiser, used when land or property is used as collateral to borrow money. Laffitte III says he was asked to appraise the Murdaugh’s beach house on Edisto Island to secure a second mortgage on the property for a loan. The Murdaugh’s were planning renovations on the beach house. Laffitte III says the process didn’t happen because Alex had trouble getting his wife, Maggie Murdaugh to commit to a time to do the appraisal.

During the trial, federal prosecutors have repeatedly asked witnesses, particularly Laffitte’s family members and those who serve on the bank’s board, about a $680,000 check Russell Laffitte made out to PMPED (now Parker Law Group). The check covered half of the missing $1.35 million settlement owed to Murdaugh client Arthur Badge. The settlement money had been misappropriated by Murdaugh and Laffitte a number of years ago. Laffitte III says his brother notified the bank’s Board of Directors through email and doesn’t recall there being objection to Russell Laffitte negotiating the settlement with PMPED Partner Ronnie Crosby.

The defense’s next witness was the shortest of the trial when Laffitte’s lead Attorney, Bart Daniel, called Alex Murdaugh’s younger brother, John Marvin Murdaugh to the stand. John Marvin talked about his childhood growing up across the street from the Laffittes and says he’s had a personal relationship with Russell Laffitte much of his life, calling him an “honest man.” Federal prosecutors asked John Marvin if he had any knowledge of the cases against Laffitte and those involving his brother, he answered no and was dismissed from the stand.

Russell Laffitte’s father, Charles Laffitte Jr., testified Palmetto State Bank, which started as a much smaller community bank, has since grown to have a value of $671 million in assets and money. Laffitte Jr. says the bank has seven branches, with the Hampton office being the most profitable. He also testified the bank has grown it’s assets by hiring “hard working people” to build a good community reputation.

Laffitte Jr. says the bank’s Board of Directors had “generally happy” board meetings that felt like family reunions and a chance to catch-up while conducting the bank’s business up until 2019. Laffitte Jr. says the dynamic amongst the family and group began to change and has been different over the last three years. Both federal prosecutors and Laffitte’s defense attorneys asked Laffitte Jr. about the $750,000 loan Russell Laffitte extended to Alex Murdaugh in July of 2021. Laffitte Jr. approved of the loan at the time, says Alex Murdaugh came to both him and Russell in need of a loan. Murdaugh said he needed the money to cover renovation costs at the Murdaugh’s Edisto beach house, attorney’s fees, and to “ditch” two pieces of property he owned in Berkeley County. Murdaugh planned to secure the loan by putting a second mortgage on the beach house but was unable to because it was held by his late wife, Maggie Murdaugh’s estate.

Evidence shows the money was transferred to Murdaugh in July before the bank could secure the loan or draft the proper paperwork. Murdaugh wire transferred $350,000 to Bamberg Attorney Chris Wilson and used the remaining $400,000 to cover an overdraft of more than three hundred thousand dollars on his Palmetto State Bank account. Murdaugh also used the money to pay alleged accomplice Curtis Edward Smith, pay funeral expenses, pay an automobile company, and more. Laffitte Jr. approved the sizable loan to Murdaugh under the impression it was needed for renovation costs and attorney’s fees.

When asked about the $680,000 settlement to PMPED, Laffitte Jr. says he, Russell Laffitte and Russell’s sister Gray Laffitte Henderson all had conversations about the settlement and believed it was in the best interest of the bank to deliver the check.

Wednesday’s final witness called to the stand was Russell Laffitte’s sister Gray Henderson who serves as a Vice President with the bank and works in the Hampton branch. Henderson testified that Murdaugh was a “good” employee to the bank, always paid back loans or overdraft but says he was always late to do so. Like her father, it was her understanding the $750,000 loan extended to Alex Murdaugh in July of 2021 was to cover beach house renovation costs, attorney’s fees and ditching the Berkeley County properties.

Henderson says some board members began raising questions when discussing the $680,000 settlement during a board meeting on November 3rd, 2021. Henderson says two board members, Jan Malinowski, President at the time and Board Member Norris Laffitte expressed frustration over the deal. Henderson and her father, Laffitte Jr., approved the settlement, voted not to terminate Russell Laffitte as CEO and were both removed from the bank’s Board of Directors in September of 2022.

U-S District Judge Richard Gergel dismissed court Wednesday until Friday morning at 9am due to having to travel out of town on Thursday. Laffitte’s defense expects to wrap-up testimony on Friday. Closing arguments and deliberation would then begin on Monday.