In July 1993, Laušević entered into a quarrel with a group of local youths, together with his brother. This escalated into a fist fight, culminating in Laušević firing multiple rounds from his handgun, killing two of the youths and seriously wounding one. Sentenced by a Montenegrin (republic) court to prison initially, his conviction was overturned by the Yugoslav (appellate) court on the grounds that the first-instance court had improperly dismissed Laušević's self-defense argument, and the punishment was drastically reduced. Laušević served 4 years and 7 months in prison before his release. But he faced further legal battles. There were appeals by the Montenegrin prosecution, numerous retrials and inconsistent, ad hoc rulings by the Montenegrin court system. In 2001, the prison sentence was reinstated to 13 years by the Montenegrin courts.

In the late 1990s, Laušević left Yugoslavia for the United States. It is speculated that the move was made due to possible revenge by families of the deceased. He has been living in the United States since and is currently fighting deportation proceedings.
Žarko Laušević was born on January 19, 1960, in Cetinje, Montenegro (one of the republics, a federal unit, that comprised the Socialist Federal Republic of Yugoslavia at that time). He fell in love with theater and acting in his early teens, and got his first TV role at the age of eighteen. In 1982, immediately upon graduating from the University of Belgrade’s Academy of Theatrical Arts, he was cast in his first lead film role. Throughout the 1980s and 1990s, he received mostly lead roles in 25 movies, 17 TV shows and numerous theatrical productions all across Yugoslavia. During this period, he became one of Yugoslavia's most popular movie and theatrical actors. Although young, handsome and very charismatic, it was his dramatic skills and range as an actor that propelled him to fame across the former Yugoslavia.
In May 1990, Laušević accepted the lead role in a politically controversial theater production. The opening night performance at the Yugoslav Drama Theatre in Belgrade was violently disrupted by nationalist extremists. Subsequently, Laušević started to receive numerous and repeated threats of bodily harm and even death. His car was vandalized around this time. In these violent and turbulent political times of Milošević's Yugoslavia where lawlessness against, and murders of, the regime's opponents often went unchecked by the authorities, these threats were not to be taken lightly. Laušević became increasingly concerned for his own personal safety and that of his family. Upon recommendation of the police, he applied for and was granted a license to carry a gun.

In the early 1990s, Laušević's visible opposition to the civil wars in Yugoslavia (and hence to the Milošević regime) made him a target of ongoing media attacks in the republics of Serbia and Montenegro. He was often harassed when he went to public places.

It was in this charged atmosphere that a tragic event occurred on a hot summer's night in Podgorica (Montenegro). On the evening of July 30, 1993, 33-year-old Laušević appeared at the premiere performance of a theatre production in the coastal town of Budva. Returning to Podgorica, Laušević and his brother, Branimir, stopped at a walk-in fast food kiosk called 'Apple' around midnight. The argument broke out between them and the group of locals hooligans, which escalated into a fist fight. Laušević fired 13 rounds from the CZ-99 gun, which he was licensed for, killing 20-year-old Dragor Pejović and 21-year-old Radovan Vučinić and also wounding Andrija Kazić. Quoting from the closing statement by the judge in his last trial: “Žarko Laušević was beaten on the ground and had the right to defend himself. In this difficult situation, he managed to pull the gun out of his bag and shoot several bullets at the attackers.” Two of the assailants were gravely wounded and eventually died; a third was wounded and fled the scene together with three others.