Table of Contents

Overview of the Cases

Both Candy Kern and Alex Murdaugh were involved in extensive financial crimes that targeted vulnerable populations and exploited their trust. While Kern’s scheme focused on veterans and elderly investors, Murdaugh’s crimes primarily victimized his personal injury clients.

Case of Candy Kern

Candy Kern, 55, of Anderson, South Carolina, pleaded guilty to conspiracy for her role in a nationwide structured cash flow scheme. This scheme, which operated from 2012 to 2021, exploited military veterans in financial distress and targeted elderly investors looking for safe retirement investments.

Kern’s role involved using her law firm to facilitate illegal assignments of veterans’ benefits. The scheme promised veterans lump-sum payments in exchange for their pension and disability benefits, which is illegal under federal law. The retirees were misled into believing these assignments were valid investments, ultimately resulting in significant financial losses.

Kern’s law firm managed and controlled the financial transactions, filed lawsuits against defaulting veterans, and facilitated the flow of approximately $14 million in illegally assigned benefits. The firm earned about $1.4 million, while retirees lost over $31 million. The scheme collapsed when many veterans could not repay or refused to continue payments upon realizing the illegality of the contracts.

In February 2024, Kern was sentenced to five years of probation, with the first 500 days under home detention with GPS monitoring. Her sentence also included restitution of $1,442,401.56 to be paid to the victims.

Applicable Law

“Federal courts do not have inherent authority to order restitution, but must rely on a statutory source.” United States v. Cohen, 459 U.S. F.3d 490, 498 (4th Cir. 2006). In Kern’s case, the Mandatory Victim’s Restitution Act (“MVRA”) provides such authority. Under the MVRA, a district court “shall order . . . that the defendant make restitution to the victim of the offense” upon conviction of “an offense against property . . . including any offense committed by fraud or deceit” The victims must be identifiable and have “suffered a physical injury or pecuniary loss.”

Discussion

Kern requested that $725,000 wired to the CFPB to be distributed to “affected consumers” per the Consent Order in a related civil case be credited towards her restitution payment. She argued that the allegations in the civil and present cases mirror each other and that the “affected consumers” are the same in both cases.

The Government contended that the victims in the civil case were different from those in the present case, arguing that the civil case victims were the individual pensioners, while the present case victims were the investors purchasing structured cash flows. The court sided with the Government, stating that the criminal charges were based on fraudulent conspiracy directed at investors rather than pension holders. Consequently, the court denied Kern’s motion to credit the restitution payment and held her restitution payments in abeyance pending further updates.

Case of Alex Murdaugh

Alex Murdaugh, a former personal injury attorney from Hampton, South Carolina, was sentenced to 40 years in prison for 22 federal financial crimes, including conspiracy to commit wire and bank fraud, wire fraud, and money laundering. His schemes spanned from 2011 to 2021 and involved exploiting his clients’ trust to embezzle millions of dollars.

Murdaugh conspired with his banker, Russell Laffitte, to defraud personal injury clients by redirecting settlement funds for personal use. He created fraudulent expenses, intercepted insurance proceeds, and set up a fake bank account to funnel stolen settlement funds.

In addition to his financial crimes, Murdaugh was involved in a scheme with attorney Cory Fleming to defraud the estate of his former housekeeper. He directed settlement funds intended for the estate into his own accounts, totaling over $3 million. Both Murdaugh and Fleming have been convicted, with Murdaugh receiving a 40-year sentence and Fleming sentenced to 46 months in prison.

Similarities

Exploitation of Vulnerable Populations: Both Kern and Murdaugh targeted individuals who were vulnerable—veterans, elderly investors, and personal injury clients.
Complex Schemes: Their crimes involved intricate schemes designed to mislead and defraud individuals out of large sums of money.
Use of Professional Status: Kern used her law firm, and Murdaugh his legal practice, to facilitate and legitimize their fraudulent activities.
Significant Financial Impact: Both cases resulted in substantial financial losses for their victims, with millions of dollars being embezzled.

Differences

Nature of Crimes: Kern’s scheme was centered around the illegal assignment of veterans’ benefits, while Murdaugh’s crimes included embezzling settlement funds and setting up fraudulent bank accounts.
Scope of Fraud: Kern’s activities were part of a broader, nationwide scheme involving multiple entities, whereas Murdaugh’s crimes were more localized, involving direct manipulation of his clients’ settlements.
Sentencing: Kern was sentenced to five years of probation with home detention and GPS monitoring for the first 500 days, along with $1.4 million in restitution. Murdaugh received a 40-year sentence, reflecting the severity and extent of his fraudulent activities.

Sentencing and Accountability

Both cases highlight the severe penalties associated with financial crimes, particularly those that exploit trust and target vulnerable populations. Murdaugh’s 40-year sentence underscores the justice system’s commitment to holding high-profile offenders accountable. Similarly, Kern’s guilty plea and probationary sentence demonstrate the legal system’s dedication to addressing and rectifying such fraudulent schemes.

Conclusion

The cases of Candy Kern and Alex Murdaugh illustrate the pervasive nature of financial crimes and the profound impact they have on victims. Despite differences in their schemes, both cases involved significant abuse of trust and professional status to perpetrate extensive fraud. The justice system’s response in both instances emphasizes the importance of protecting vulnerable populations and ensuring that those who exploit them are held accountable.