July 22, 2022
Fraud Friday – Former Bank CEO Allegedly Executed a Loan Fraud Scheme with a Disbarred Lawyer
After previously being indicted, a federal grand jury released a five-count indictment charging the former CEO of Palmetto State Bank, Russell Laffitte, with conspiracy to commit wire fraud and bank fraud, wire fraud, bank fraud, and misapplication of bank funds.
Russell Laffitte worked with Alex Murdaugh, a disbarred lawyer. The duo allegedly defrauded Murdaugh’s personal injury clients through the conspiracy to obtain money from those clients and the law firm, finances that were held at Palmetto State Bank. During the time Laffitte served as a conservator to Murdaugh’s personal injury clients, it is alleged he provided himself with $355,000 in personal loans using funds from the clients. Murdaugh received nearly a million dollars in personal loans to cover hundreds of thousands of dollars in overdraft on his personal bank account. The indictment further states that Laffitte was cognizant of the fact that Alex used stolen funds from other personal injury clients to pay the loans off.
As the conservator for the personal injury clients, Russell gained almost $400,000 in fees while committing the suspected fraud.
One of the clients collected over $1.3 million after the settlement of a civil lawsuit. Originally issued to the bank in a single check, Murdaugh directed Russell to email the law firm and request that the check be cut into amounts determined by Murdaugh. Some of these checks allegedly included:
- $388,687.50 money order to a third-party individual to repay a private loan
- $75,000 money order to Murdaugh’s father
- $7,500 money order to Murdaugh’s wife
- $250,987.35 in deposits and transfers to Murdaugh’s personal checking accounts and cash back.
Russell fraudulently distributed $680,000 of the bank’s funds to the law firm without the consent of the Palmetto State Bank’s board according to the indictment. It is also alleged that he “caused PSB to fund a $750,000.00 commercial loan to the Bank Customer for beach house renovations and expenses, with preferential lending terms, including insufficient collateral, knowing that the loan was essentially unsecured and that loan proceeds would be and were used for other purposes…”.
On the same day that Russell’s indictment was released, Alex Murdaugh attended a hearing and pleaded not guilty to two murder charges in the unrelated case of the deaths of his wife and son.