For 10 years, Alex Murdaugh’s law firm missed millions in thefts. What went wrong?

John Monk
The State (Columbia, S.C.)

Columbia, S.C. — Everyone trusted Alex Murdaugh.

But for 10 years, without anyone noticing or reporting publicly, the disgraced South Carolina attorney allegedly stole $4 million from clients and embezzled cash from a client trust account held by his former Hampton law firm.

From 2011 to 2021, in 30 different transactions, Murdaugh looted Peters Murdaugh Parker Eltzroth and Detrick’s Client Trust Account of millions of dollars and funneled clients’ money into personal bank accounts, where he laundered the cash for his own use, according to an analysis of theft charges in indictments against him.

This photo provided by Hampton County Detention Center shows Alex Murdaugh.

In South Carolina’s storied legal profession, strict rules govern how a law firm must keep client money safe.

But for 10 years not one partner in Murdaugh’s firm noticed anything wrong.

How was Murdaugh able to take money out of his firm’s accounts without notice? Several factors might have been in play:

  • His firm had few financial controls to guard against in-house embezzlements by lawyers. The firm recently told reporters with The State and the Island Packet and Beaufort Gazette that since learning of Murdaugh’s action, the firm has “revamped” its procedures and now has strict financial security controls in place.
  • An atmosphere of trust surrounds lawyers in general and Murdaugh in particular. Murdaugh used that trust to keep his clients ignorant of money due to them in various settlements, according to indictments.
  • Murdaugh used banks where he had checking accounts that enabled him to launder money stolen from clients, according to indictments. One bank was the Palmetto State Bank, headquartered in Hampton and a few blocks away from where his former law firm is located. The other bank was the Bank of America, where Murdaugh had sham accounts he used to launder stolen cash, indictments said.

“He was a lawyer, and people trust their lawyer,” said state Rep. Justin Bamberg, a lawyer who is representing several of Murdaugh’s alleged financial victims. “Add to that the power of the Murdaugh name. It’s a powerful family name in the area, and a lot of people talk about how big and powerful the Murdaugh firm was.”

In early September, when Murdaugh’s law firm said it discovered he had been taking money, the firm forced his resignation and reported the alleged theft to the State Law Enforcement Division and the South Carolina Supreme Court. Days later, on Sept. 8, the South Carolina Supreme Court suspended Murdaugh’s law license.

Murdaugh was sued by his firm in October. His former partners alleged Murdaugh “submitted false documentation to the firm and to clients that allowed him to funnel stolen funds into fraudulent bank accounts.”

The firm did not explain in its lawsuit how exactly Murdaugh stole clients’ money.

It did not say how much money was missing or how long the thefts had been going on.

“I am immensely sorry to everyone I’ve hurt,” Murdaugh wrote in a Sept. 6 statement released through his lawyers, saying the grisly June shooting deaths of his wife, Maggie, and son, Paul, caused him to make regrettable decisions.

The gates near Alex Murdaugh's home in Islandton, S.C., are seen in this Monday, Sept. 20, 2021 photo.

Murdaugh now sits in Richland County’s Alvin S. Glenn Detention Center, charged with dozens of financial crimes.

Alex Murdaugh is led to a holding cell while the court is in recess in the Richland Judicial Center in Columbia, S.C., Tuesday, Oct. 19, 2021.

He is unable to post his bond, set at $7 million, one of the highest in state history. Altogether, Murdaugh so far faces 75 charges for schemes to defraud victims of $8.49 million that are included in 15 state grand jury indictments announced in November, December, January and March by the South Carolina Attorney General’s office.

No date has been set for trial.

His lawyer Dick Harpootlian has said Murdaugh is innocent until proven guilty.

Murdaugh was a South Carolina legal lion and the former president of the South Carolina Alliance for Justice, the state’s pre-eminent trial lawyers’ group. He was the fourth-generation lawyer in a powerhouse law firm started by his great-grandfather, who not only was a lawyer but also the elected solicitor, or chief prosecutor, in a five-county Lowcountry region that includes Allendale, Beaufort, Colleton, Hampton and Jasper counties.

His father and grandfather, also named Randolph Murdaugh, also were elected solicitors.

“For over a century, the Murdaugh name was trusted. It wasn’t just synonymous with the law — the Murdaugh name was the law,” said Michael DeWitt, who for nearly 18 years has been managing editor of the weekly Hampton Guardian. “The Murdaugh firm was who you turned to if you were hurt or wanted to file a lawsuit, or if you had somebody in your family in criminal trouble, you might turn to the Murdaughs and say, ‘Hey, can you help me out?’”

DeWitt is working on a book about the history of the Murdaugh dynasty.

“If you grew up in Hampton County like I did for three generations,” DeWitt said, “there was trust in the name of Murdaugh.”

How did Murdaugh get past his own law firm?

To some extent, Murdaugh’s law firm appears to have operated on an honor system when handling client’s accounts.

“Partners in that firm, especially legacy partners (a partner related to the firm’s late founder) such as Alex Murdaugh, were not second-guessed or questioned when they requested checks to be written for client matters, or client settlements,” said a source familiar with how Murdaugh influenced his former firm’s check writing.

Numerous theft indictments against Murdaugh aren’t specific, but said he “caused a check” to be written and disbursed from the firm’s client trust account in a way that could start the process of laundering them into money he put to his own use.

In one case, in December 2011, Murdaugh “caused a check” from the firm’s Client Trust Account to be written, with the description “Settlement Proceeds: Natasha Thomas,” in the amount of $325,000 and to be made out to Palmetto State Bank, an indictment said.

“Murdaugh then used the $325,000 trust account check — which was supposed to be compensation to Thomas for her injuries — to purchase a money order payable to a (Murdaugh) family member. Instead of compensating Thomas, Murdaugh ... converted the money to his personal use,” the indictment said.

That 2011 alleged embezzlement was Murdaugh’s first theft, indictments said.

Lawyers said Murdaugh’s former firm likely held millions of dollars at times in client trust accounts.

The highly sought-after firm regularly won high-dollar settlements and sizable verdicts in lawsuits where plaintiffs sued corporations and wealthy defendants in personal injury, wrongful death and medical malpractice cases. Although clients’ money is often kept in one account in firms like Murdaugh’s, software keeps track of each individual client’s incoming and outgoing cash, lawyers said.

Same as the firm, the firm’s clients never noticed Murdaugh was taking their money.

Bamberg said Murdaugh appears to have made sure his victims who were due settlement money received at least one initial payment. Then, Murdaugh took additional money that came in later to the Client Trust Account — money that the client didn’t know about, Bamberg said. Money for clients from settlements often comes in various payments over time, he said.

“Alex cherry-picked what he stole,” Bamberg said.

In response to a series of reporters’ questions, the firm said it has since taken steps to avoid a repeat of what happened.

A firm spokesman said after discovering Murdaugh’s “criminal activities” last fall, it consulted with accounting and ethics experts and updated its financial practices.

“We are confident that our current methods and procedures are greatly improved and adequate to safeguard our clients’ funds. We will not allow a reoccurence of the unfortunate recent events,” the spokesman said.

The firm said it also created a new position to oversee its enhanced security measures, and has worked “diligently to make our clients whole.”

Asked what security procedures it had in place when Murdaugh worked there, the firm declined to answer

“Somebody at the firm is supposed to be overseeing the accounting books, things that should have been in place to protect the firm and the trust account money,” said Lee Coggiola, the former head of the Office of Disciplinary Counsel, who said lawyers’ professional rules require law firms to maintain proper accounting procedures to safeguard money.

“It’s the responsibility of the managerial authority in the firm to assure there are practices in place to protect client money. A law firm could not be sanctioned for missing money, but individual lawyers in the firm who are responsible for the trust account could be,” Coggiola said.

John Nichols, who now heads the Office of Disciplinary Counsel, declined to comment recently when asked whether his office is investigating Murdaugh’s firm for not having proper safeguards to prevent lawyer theft, citing pending investigations.

Murdaugh’s partners and others at his law firm likely had no reason to know he might be looting the Client Trust Account, said Eric Bland, a Columbia lawyer who sued Murdaugh on behalf of two of his alleged victims, the sons of the Murdaugh’s deceased housekeeper, Gloria Satterfield.

“As lawyers, we always trust our partners. We think the best of them. And in all fairness to some of Alex’s partners, they are busy practicing law and doing a damn good job for their clients,” Bland said.

However, Bland conceded, “I have a small firm and I know every dollar that’s going in and out. But if you put 18 to 20 lawyers together, especially a firm like that where money is in the millions and millions of dollars, you have to have checks and balances. And maybe they grew faster than their ability to have checks and balances.”

How Murdaugh used the banks

Alex Murdaugh walks into his bond hearing, Sept. 16, 2021, in Varnville, S.C.

Trust was a key way in how Murdaugh operated.

Over and over again, state charges against him mention that he relied on “his prestige and reputation as a lawyer” to steal client’s money.

Murdaugh had bank accounts at Palmetto State Bank that he used to deposit large checks from the firm’s Client Trust Account and to begin the process of laundering the money for his own use, according to state grand jury indictments.

“Our firm has a decades-long relationship with Palmetto State Bank, a locally-owned community bank. We were unaware that Alex Murdaugh used the trust developed through that relationship to steal from our clients,” said attorney Lee Cope in a statement on behalf of Parker Law Group, the new firm recently formed by many lawyers in the old Murdaugh firm.

In another case, on Jan. 21, 2014, Murdaugh “caused a check” for $50,684 to be written from the firm Client Trust Account and made out to Palmetto State Bank. The check was for the estate of Donna Badger, who had been killed in a car accident, according to a December indictment against Murdaugh.

“Relying on his prestige and reputation as a lawyer,” Murdaugh then deposited the $50,684 trust account check into his personal account at Palmetto State Bank and converted the money for his own use, the indictment alleges.

Prosecutors allege that between 2011 and 2013, Murdaugh took $1.87 million from his law firm’s trust account in various checks, madethe check payable to Palmetto State Bank, and then converted the money for his own use to pay back family members, outstanding debts and obtain cash.

Palmetto State Bank declined to comment on allegations Murdaugh used the bank to steal and launder money.

“The bank is unable to discuss matters that involve its customers’ accounts and matters that are the subject of pending claims,” said G. Trenholm Walker, a lawyer for Palmetto State Bank.

Russell Laffitte, a member of a longtime Hampton banking family, was CEO of Palmetto State Bank since 2020.

He was fired earlier this year after it came to light that he served as legal representative for some of the victims who had their money allegedly stolen by Murdaugh.

Laffitte is currently cooperating with law enforcement, his lawyers said.

After about 2015, Murdaugh stopped using Palmetto State Bank and set up checking accounts in the Bank of America, according to indictments.

One Bank of America account was created under the name of “Richard A Murdaugh Sole Prop DBA Forge,” said lawsuits and indictments. Forge is a respected financial consulting company, but Murdaugh appropriated the name for his own purposes, the company has said.

In yet another example, on Oct. 7, 2015, Murdaugh had a check written from the firm’s Client Trust Account for $338,056 to be made out to his personal Forge account at the Bank of America, an indictment said. A note on the check contained the description, “Proceeds for Investment — Deon Martin,” who had been injured in an accident.

Murdaugh “had created this bank account for the purpose of misappropriating funds belonging to others with the illusion that the money was being paid to the legitimate company Forge Consulting,” the indictment said. Once the money was in the Forge account, Murdaugh “converted the money to his own personal use, for expenses including but not limited to credit card bills, cash, and checks written to himself and associates,” the indictment said.

In December, one of Murdaugh’s alleged theft victims sued the Bank of America, alleging it had failed to properly vet Murdaugh’s sham accounts and “aided and abetted Murdaugh’s financial crimes and money laundering.”

Murdaugh had two Bank of America accounts labeled “Forge,” the lawsuit said.

“Bank of America is the bank of the money launderer. ... Bank of America is America’s bank of fraud,” said the lawsuit filed by lawyers Bland and Ronnie Richter on behalf of Satterfield’s heirs.

Bank of America has denied the allegations.

In early March, Bland and Richter reached a confidential settlement with the bank and the lawsuit was dismissed.

’It’s being unraveled’

Murdaugh’s best-known alleged fraud didn’t involve his firm’s Client Trust Account.

In 2018, after his longtime family housekeeper died of injuries in a fall at his house, Murdaugh concocted a plan to have her sons sue him and collect money from his homeowner’s and personal liability insurance, indictments said.

Pretending to befriend the sons, Murdaugh and a longtime friend, Beaufort attorney Cory Fleming, told the sons Fleming was filing a legal action on their behalf to collect insurance money for them, according to indictments.

Murdaugh got another longtime friend, Palmetto State Bank banker Chad Westendorf, to serve as the Satterfield’s estate’s personal representative, according to indictments and evidence in the case.

Although a lawsuit was never filed, Fleming managed to get insurance companies to pay $4.3 million into the Satterfield estate, where the money was released to Fleming, who funneled it to Murdaugh, according to indictments and case evidence.

Fleming has been indicted on multiple financial charges connected to the Satterfield case.

He is accused of defrauding victims of $3.6 million. His attorney, Debbie Barbier of Columbia, told a judge last week Fleming is an “innocent man” and is not guilty of his charges.

Murdaugh had an “ability to develop complex, creative schemes to steal and hide assets,” said a legal filing by attorney Mark Tinsley, who represents Renee Beach, the mother of Mallory Beach, a 19-year-old woman killed in a 2019 boat crash near Beaufort.

Renee Beach has named Murdaugh as a defendant in a wrongful death lawsuit, alleging that Murdaugh helped his late underage son, Paul, illegally get alcohol in the hours before Paul was reportedly piloting a boat at a high rate of speed when it crashed into rocks, causing Mallory’s death.

‘Do you plan to steal?’

Every year, Robert Wilcox asks his law class one question.

”How many of you plan to steal money from your clients and lie about it?” said Wilcox, a former University of South Carolina Law School dean who has taught legal ethics for 35 years, classes that are mandatory to graduate law school.

For 35 years, not a single student has raised their hand, Wilcox said.

“For the last 20 years, I also told them, ‘Unfortunately, some students who didn’t raise their hand have ultimately done that as lawyers,’” he added.

Safeguarding client money is one of a lawyer’s highest duties, and “rules require that the partners of a law firm have in place reasonable measures to protect against any violation of ethical duties by other lawyers, including the misuse of funds,” he said.

Wilcox said “reasonable measures” include having two signatures on checks written out of the Client Trust Account.

The bottom line, Wilcox said, is that “the system is built on integrity. It works best when the lawyer can be trusted.”

No matter how the Murdaugh case turns out, the once-respected Murdaugh name is now shunned.

His law firm has rebranded itself and formed a new legal entity, the Parker Law Group. Johnny Parker is a longtime Murdaugh partner and a respected lawyer in state legal circles.

All of South Carolina’s 10,000-plus lawyers have been tarnished as news has spread about the ease with which so many clients were victimized for such a long time, some say.

Richter, an attorney who represents two of Murdaugh’s alleged victims, said during Murdaugh’s bond hearing last fall that attorneys across the state have felt “outrage that our profession is stained.”

The Murdaugh story might have one bright side, Wilcox said.

“Maybe we can be somewhat comforted that it’s being unraveled, that it’s getting unwound,” he said. “And at least the process was in place that once it was discovered, it’s being dealt with.”

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Island Packet and Beaufort Gazette reporters Jake Shore and Kacen Bayless contributed to this report.