AdvisoryMatters

Manager Alan Boothby looks at the role of Forensic Accounting in unravelling the murder of a Netflix Southern dynasty.

Forensic accounting may not have the most exciting reputation, and you probably think of endless spreadsheets and incomprehensible data, but the recent Netflix series realises an alternative insight.

Investigations by forensic accountants into missing funds at a law firm in South Carolina led to the unravelling of a corrupt lawyer’s century-old family dynasty and his family’s hold over a community, leading to worldwide media coverage and a hit show ‘Murdaugh Murders – A Southern Scandal’. 

The Murdaugh family ran Colleton County in South Carolina, USA, for four generations, when Alex Murdaugh’s great-grandfather became Chief Attorney of the area. However, a criminal and civil suit against Alex Murdaugh’s son, Paul, following a fatal 2019 boating accident, led to intense scrutiny into the Murdaugh family financial affairs, putting Alex Murdaugh at risk of financial ruin.

Alex Murdaugh’s wife, Maggie, apparently ordered a forensic accounting review of her own finances because bills were unpaid despite her husband’s seven figure income, and Maggie had also allegedly consulted a divorce attorney after the discovery of pharmaceuticals belonging to Alex.

Reports stated that Alex Murdaugh was protecting the family’s assets against the claim resulting from the boat crash, and by summer 2021 there was an upcoming court hearing where the Murdaugh family would need to provide evidence of their assets.  

While the PKF forensic accounting team were of course not involved in the Murdaugh case, it’s interesting to note what they might have advised if they had deployed their own investigation techniques to review and analyse all available data. Alan Boothby, explains:

“In this case if the wife had provided us with access to all of the family records then we would have analysed all income and expenditure, to establish why bills remained unpaid. We have software which enables the conversion of bank statements to spreadsheet format which allows much faster and more accurate analysis.

“We also use Land Registry and other open source Intelligence tools to ascertain target’s asset positions and reconcile them to the information provided, to establish any gaps.”

The law firm investigation

A separate forensic investigation at his law firm uncovered a misappropriation by Murdaugh of $792,000. Murdaugh had won a large settlement for a client and fees of $792,000 went directly to him instead of the law firm.

The law firm confronted Murdaugh on 7 June 2021 and demanded repayment, but Murdaugh did not have available funds to repay the missing money and he informed his law firm that it was a mistake.

However, Murdaugh knew that if his law firm kept looking then they would locate further fraud and the civil boat case lawyers would be scrutinising his finances. Alex Murdaugh could not settle the case because he didn’t have the cash, and the family properties were in his wife Maggie’s name. He needed her to sign off on additional loans, but she had uncovered Alex’s addiction in May 2021, and was perhaps no longer willing to sign off because of boat case risk.

Our view

“Again our Fraud & Forensic team would forensically analyse accounts, invoices, and payment records and in this instance a reconciliation would have  uncovered that the  funds were missing.  It’s clear that Alex Murdaugh needed time and money, and most importantly, the boat case to be dismissed, to deter lawyers from focussing on his financial affairs.”

The murders

On the same evening that he was confronted by his law firm, Alex Murdaugh’s wife Maggie and son Paul, were shot dead at the family’s hunting lodge.

Alex Murdaugh claimed that he had been asleep at the time of the murders just before 9-00pm, and he was not suspected until video evidence from the victim’s phone later showed that he was at the scene of the crime.

Our view

“Technology plays an increasingly important role in such cases and the forensic interrogation of devices and the use of e-discovery forensic techniques to locate information in emails and shared drives is now commonplace,” Alan explains. 

The fraudulent bank account

A cancelled cheque made out to Murdaugh personally, led to a further forensic investigation which uncovered financial settlements Murdaugh paid to ‘Forge’, which appeared legitimate because Forge Consulting LLC is an entity which collects settlements and structures payments on behalf of successful litigants.

However, Murdaugh opened a bank account called ‘Forge’ and redirected funds into that account. The forensic investigation at the law firm uncovered millions of dollars redirected to Murdaugh, totalling approximately $10 million.

Our view

“This highlights the importance of engaging Counter-Fraud specialists such as our Fraud & Forensics team to undertake reviews of fraud, bribery and corruption policies in organisations seeking to limit their exposure to internal and external fraud risks.”  

The mysterious shooting

On 4 September 2021, the day following his exposure at the law firm, Murdaugh claimed that he stopped to change a flat tyre when a truck stopped and someone inside fired a shot at him. An individual with links to the Murdaugh family (Curtis Smith) was later charged for shooting Murdaugh to secure $10 million life insurance pay-out.

Murdaugh was released from hospital and announced his resignation from the law firm, saying that he was entering rehab for prescription drugs addiction. Investigations showed many payments to Curtis Smith, a large number just below the $10,000 threshold for further scrutiny.

Our view

“The payments to Curtis Smith were allegedly converted to cash, and the destination of these funds does not appear to have ever been established.  The payments from Forge were traced using forensic investigation tools which the Fraud & Forensics Team utilise when tracing funds by reviewing bank statements and analysing receipts and payments.”

Financial crime investigations

The ongoing investigations uncovered a series of financial crimes relating to the theft of client monies, including Murdaugh’s housekeeper who died in a fall at the Murdaugh home.  When the housekeeper’s son spoke to Alex Murdaugh in June 2021 he was told that they were still working on a settlement, but court records show that Murdaugh’s insurers had already paid more than $4 million for the fall.

Our view

“In Fraud & Forensics we have experience of both criminal and civil litigation enabling us to work on behalf of insurers or third parties to assist with loss of profit calculations and investigating fraudulent claims.”  

The trial

The South Carolina Attorney General’s Office stated that Murdaugh did not have the funds to cover $792,000 in missing fees at his law firm, settling with the housekeeper’s family and potentially millions of dollars in the 2019 boat crash lawsuit.

Prosecutors theorised that Murdaugh killed his wife and son in order to gain sympathy and buy time because his thefts and debts had been exposed.

Murdaugh has been charged (but not yet tried) with 99 other crimes, including thefts, running a drug and money laundering ring, tax evasion, and attempted insurance fraud for trying to arrange his own death, so that his surviving son could collect $10 million in life insurance. 

Our view

“The Fraud & Forensics team have the knowledge, experience and capability to undertake  money laundering investigations bringing together our analytical and  interviewing expertise, with added benefit of having a global presence utilising the services of our PKF international colleagues.”  

The verdict

On 3 March, Alex Murdaugh was found guilty of the murder of Maggie, his wife and Paul, his son, and was subsequently sentenced to life without parole, still facing 99 counts relating to the financial crimes. The investigations have not explained why Murdaugh embezzled so much money and where it went, since his addiction cannot account for the entirety of the missing $10 million, so this will provide forensic accountants in law enforcement with a tracing exercise to establish the destination of the missing funds.

“Although not all of our cases involve a murder or feature a Hollywood blockbuster,” Alan concludes, “if you do have a financial dispute or are a victim of fraud, please bear in mind the role we play and how it may assist you.”

Is it Fraud & Forensics?