Lawyer Admits to Insurance Fraud & Theft from Clients

On September 7, 2021, the Office of Disciplinary Counsel (ODC) requested this Court place Respondent Richard Alexander Murdaugh on interim suspension based upon information indicating Respondent had stolen funds from the law firm that employed him. Respondent consented to the relief and on September 8, 2021, the Supreme Court issued an order suspending Respondent from the practice of law. In re Murdaugh, 434 S.C. 233, 863 S.E.2d 335 (2021) and, inIn the Matter of Richard Alexander Murdaugh, Supreme Court of South Carolina, June 16, 2022 the Supreme Court was faced with the obligation to render a final order re Murdaugh’s license to practice law.

FACTS

On September 16, 2021, Respondent Murdaugh was arrested and charged with Attempted Insurance Fraud and Filing a False Police Report. The false report was related to an attempted assisted suicide that Respondent reported as an attempted murder because he believed his life insurance policy contained an enforceable suicide exclusion.

Respondent appeared at bond hearings and, through counsel, admitted in court that he had, in fact, engineered the events that supported the arrest. On November 22, 2021, Respondent filed an Emergency Motion for a Gag Order in Satterfield v. Murdaugh, Case No. 2021-CP-25-00298, in which Respondent admitted to misconduct related to the theft of money from the law firm that employed him.

Over the course of several months, Murdaugh was indicted and charged with over seventy criminal counts involving the theft of funds from various clients, including the Satterfield plaintiffs. On May 27, 2022, he signed a Confession of Judgment and Stipulation in the amount of $4,305,000.00, admitting liability for the theft of settlement funds in the Satterfield matter in which Respondent was the named defendant.

ANALYSIS

The South Carolina Constitution requires the Supreme Court to regulate the practice of law in South Carolina. The jurisdiction of this Court to discipline attorneys for acts of professional misconduct is exclusive. This constitutional duty includes the duty and the authority to remove unfit persons from the legal profession for the protection of the public and the administration of justice, and to do so through disbarment.

Disciplinary matters call into question whether a lawyer is no longer worthy to bear the Court’s imprimatur and continue to practice law.

Disciplinary proceedings ordinarily follow a course of investigation, pleading, limited discovery, and a contested hearing before the Commission on Lawyer Conduct. The Commission then submits a report to this Court with findings of fact, conclusions of law and recommendations for disposition.

Since Murdaugh admitted to conduct that amounts to clear and convincing evidence of dishonesty in violation of the Rules of Professional Conduct presenting testimony about his conduct would be redundant. His conduct involved dishonesty, fraud, deceit, or misrepresentation. The Supreme Court concluded that Respondent is bound by the admissions contained in the documents he filed in the Satterfield case.

Respondent is also bound by the statements his counsel made at the bond hearings in which counsel admitted Respondent staged a suicide attempt to appear as a murder so as to defraud the life insurance company and subsequently filed a false police report to that effect.

Based on these admissions, there is no factual dispute about whether Respondent engaged in dishonest conduct. Respondent’s admissions in the criminal proceedings that he engaged in conduct that violates the Rules of Professional Conduct satisfies the Disciplinary Counsel’s burden of proving that same misconduct in connection with the pending disciplinary proceedings. As a result it was obvious to the Supreme Court that an evidentiary hearing is unnecessary for disposition of the pending discipline, as the only remaining issue to be decided is the legal question of determining the appropriate sanction, a matter left to the discretion of the Supreme Court under the Constitution.

In this unique case, Respondent’s admissions in the public record lead to only one conclusion-that Respondent’s egregious ethical misconduct subjects him to the most significant sanction available- disbarment. Accordingly, there is no need to expend additional resources to proceed through the normal disciplinary process. Instead, the Supreme Court concluded that it may act under the Court’s constitutional authority to regulate the practice of law in South Carolina and may remove an unfit lawyer from the practice of law to ensure the public, and the administration of justice, are protected. Therefore, the Supreme Court dispensed with further proceedings before the Commission and ordered that Murdaugh appear in the Supreme Court Courtroom at 11:00 a.m. on June 22, 2022, to present legal argument on the question of whether this Court should disbar Respondent from the practice of law.

The Supreme Court was technically required to allow Murdaugh to appear and explain why he believes he should not be disbarred. I hope he does not add to his egregious and unethical conduct by appearing and that the Supreme Court immediately disbars him.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

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