Citing errors, ex-SC banker Laffitte moves to dismiss federal indictments against him

John Monk/jmonk@thestate.com

Since July, former Hampton County banker Russell Laffitte has been indicted three separate times by a federal grand jury on allegations of wire and bank fraud.

On Tuesday morning, Laffitte’s lawyers filed a motion alleging that the last indictment, issued Sept. 20 — while similar to the first two — violated an earlier promise by federal prosecutors to only make one change in the second indictment, called a “superceding” indictment, which was issued Aug. 16.

But prosecutors actually made numerous changes, altering “more than 16 paragraphs with edits, most of them substantive,” the motion said.

The earlier indictments contained inaccuracies that “impact Mr. Laffitte’s ability to present a defense,” the motion said.

The Tuesday motion urges U.S. Judge Richard Gergel to toss out the entire case against Laffitte by dismissing the final superceding indictment.

“At this point, its continued re-presentation of this case and the improper evidence provided by the Government has tainted the Grand Jury,” said the motion by Laffitte lawyers Bart Daniel and Matt Austin.

Those changes “expanded the scope of the charges against Mr. Laffitte by calling into question more transactions in which he was allegedly involved,” the motion said.

Laffitte’s lawyers originally filed their motion to dismiss Monday afternoon.

That Monday motion specifically said that if the judge dismisses the final superceding indictment, the earlier charges against Laffitte will stand.

“This motion does not seek dismissal of all the charges against Mr. Laffitte. It merely seeks dismissal of the Second Superseding Indictment for the reasons set forth above,” the Monday motion said.

But Tuesday morning, Laffitte’s lawyers refiled their motion to dismiss, deleting the language that said they were not seeking all charges to be dismissed and making it clear they wanted all three indictments thrown out.

Laffitte’s lawyers declined comment.

The U.S. Attorney’s office had no immediate comment. Prosecutors will likely file a written response.

A hearing on the matter would have to be set by Gergel.

Laffitte, an alleged accomplice of disbarred attorney Alex Murdaugh in orchestrating the fraudulent misuse of millions of dollars at Laffitte’s former bank, is now scheduled to go on trial in Charleston in the second week of November.

Murdaugh’s involvement in the Laffitte’s alleged fraud is mentioned throughout all three indictments. But Murdaugh is not identified by name, only as an unidentified “bank customer” who worked with Laffitte in mishandling millions of dollars at the bank. Other court records, however, identify Murdaugh by name.

Laffitte, 51, faces multiple federal counts of fraud in alleged schemes involving the misuse of some $3 million in funds from Palmetto State Bank, where he was CEO until being fired in early January. The maximum penalty for being convicted on the fraud charges is 30 years in prison.

The schemes at the Hampton bank involved money in various Palmetto State Bank conservatorships funded by legal settlements, as well as the alleged misuse of a $500,000 line of credit Laffitte gave Murdaugh for personal use that was labeled “farm loan.”

As a bank official who oversaw the money in various conservatorships, Laffitte was supposed to manage the money for the benefit of those for whom the money was intended. Instead, Laffitte and Murdaugh used much of the money for their own benefit, including taking out personal loans, indictments said.

In the Monday motion, Laffitte’s lawyers said various government editing revisions in its most recent indictment demonstrated that the government didn’t understand the state’s complex requirements governing guardians, conservators and personal representatives.

“If the Government is going to hold Mr. Laffitte accountable for knowing the intricacies of the South Carolina Probate Code, then the Court should hold the Government to the same standard,” the motion said.

Laffitte, who like Murdaugh grew up in a privileged and well-to-do Hampton County family, is a childhood friend of Murdaugh’s.

For years, Murdaugh was a regular customer at Laffitte’s bank, keeping bank accounts there and getting numerous loans.

In a Sept. 6 court hearing in Charleston, Laffitte testified that Murdaugh had “borrowed millions of dollars and paid back millions of dollars over the years. And we never had — you know, he might have been slow sometimes — but he always paid us.”

Murdaugh is being held without bond in the Richland County jail as he awaits trial in Colleton County on charges he killed his wife and son in June 2021. He has also been charged by a state grand jury with some 80 counts of stealing from fellow lawyers, associates and clients more than $8.9 million.

Editor’s note: This story has been updated to reflect that Laffitte’s lawyers filed an amended motion Tuesday morning to their Monday motion that said earlier charges against Laffitte should stand. Tuesday’s motion makes clear that Laffitte’s lawyers want all charges dismissed.