Lindberg creditor seeks state Supreme Court’s help in $600 million dispute

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  • An insurance company trying to collect nearly $600 million from former top North Carolina political donor Greg Lindberg is turning to the state Supreme Court for help.
  • The Universal Life Insurance Company seeks a temporary stay and an additional order blocking a unanimous Dec. 5 ruling from the state Appeals Court.
  • ULICO argues that the appellate decision would allow Lindberg to "dissipate" assets in an attempt to evade paying a federal court money judgment.
  • Lindberg is scheduled to return to federal court on May 6. He faces retrial on fraud and bribery charges that originally led to a conviction and seven-year prison sentence.

An insurance company seeking almost $600 million from former top North Carolina political donor Greg Lindberg is seeking help from the state’s highest court. The company is asking the state Supreme Court to block a ruling earlier this month from the Court of Appeals.

A unanimous Appeals Court panel decided on Dec. 5 to throw out an injunction and another order related to Lindberg’s legal battle with the Universal Life Insurance Company, or ULICO.

The rejected October 2022 order from Durham County Superior Court Judge Michael O’Foghludha had blocked Lindberg from withdrawing more than $5,000 from any business entity he owned or controlled.  

Appellate judges agreed that ULICO had failed to follow proper procedures to secure O’Foghludha’s orders against Lindberg.

Now ULICO is seeking both an immediate temporary stay and an order called a writ of supersedeas. The writ would block the Appeals Court ruling.

“The panel’s decision effectively overrules a prior published opinion of the Court of Appeals,” ULICO’s lawyers wrote Wednesday, citing a 2022 decision. “Unless reversed, the decision below will disrupt execution of judgments, will create a loophole providing judgment debtors with a 90-day window to freely dissipate, move or hide assets, and will undermine this Court’s admonition that one panel of the Court of Appeals may not overrule a prior panel’s decision.”

“The erroneous decision of the Court of Appeals significantly limits the ability of all judgment creditors to collect what they are owed, as well as the power of the Superior Court to impose sanctions against judgment debtors, like Greg Lindberg here, for the dissipation of assets for the purpose of evading the judgment at issue,” according to ULICO’s court filing.

“A temporary stay and supersedeas are essential to preserve this Court’s jurisdiction to hear and resolve this important issue,” ULICO’s lawyers wrote. A writ of supersedeas would block the Appeals Court decision from taking effect.

“In the absence of a stay, the Court of Appeals’ mandate will issue on December 28, 2023. At that time, Lindberg will no longer be subject to the contempt power of the Durham Superior Court, and he can be expected to immediately resume his past practice of dissipating his assets,” ULICO warned.

“Thus, unless the Superior Court’s injunction is preserved pending this Court’s review, the important questions raised by the panel’s decision may well become moot – and ULICO’s opportunity to collect the $524 million that Lindberg unlawfully siphoned from ULICO’s Trust Account will be substantially diminished, if not entirely lost,” according to the court filing.

The filing warned of potential consequences for other cases involving debtors. “If discretionary review is not granted, Superior Courts will be required to conform their practice to the decision below and will be obligated to provide judgment debtors a period of 90 days within which they may freely dissipate assets without being subject to contempt.”

“This will leave judgment creditors without protection from unscrupulous judgment debtors who wish to frustrate and elude execution of a judgment,” the company argued.

A response Thursday from Lindberg’s lawyer rejected the argument for immediate state Supreme Court action.

“There is no emergency here,” Lindberg’s lawyers wrote. “This Court should take whatever time is appropriate to review ULICO’s petition for writ of supersedeas and Defendant-
Appellee’s forthcoming response thereto, without the need for any temporary stay in the meantime.”

The request for a temporary stay is “procedurally improper,” according to Lindberg’s court filing.

ULICO’s federal court judgment against Lindberg stood at $576 million on Nov. 22, with interest accruing at almost $32,000 per day, according to the court filing.

Lindberg is dealing with multiple cases in state and federal court in North Carolina. He is scheduled to return to federal court on May 6 for retrial on bribery and fraud charges. Federal officials accuse him of attempting to bribe state Insurance Commissioner Mike Causey with more than $2 million after Causey’s 2016 election. The 4th US Circuit Court of Appeals threw out Lindberg’s conviction and seven-year prison sentence in that case in 2022.

A November 2022 order from O’Foghludha, called the charging order, affected 626 limited liability corporations. The order called on all LLC distributions from those hundreds of entities to go to ULICO rather than Lindberg. The judge called on Lindberg to “produce all governing documents and verified accountings” linked to the 626 LLCs, with governance and accounting updates every 60 days. The order compelled the LLCs to freeze all payments to Lindberg other than wages.

Appeals Court judges agreed that ULICO failed to follow the proper procedure to secure an injunction against Lindberg. The problem involved a “returned writ of execution.”

“The officer who signed the writ checked a box stating, ‘I did not serve this Writ of Execution,’ and he made a separate handwritten notation: ‘Per plaintiff’s attorney, writ requested to be served unsatisfied,’” Judge Jeff Carpenter wrote for the Appeals Court. “Further, the writ shows the date of receipt and date of return are the same: 21 September 2022.”

“In other words, Plaintiff merely asked the deputy to check a box and return the writ — a far cry from the required attempted execution,” Carpenter added. “Because Plaintiff did not attempt to execute the writ, the trial court lacked jurisdiction to enter the Injunction.”

Appeals Court judges also questioned the charging order. “Defendant argues the Charging Order is erroneous because it includes LLCs in which Defendant has no ‘economic interest.’ We agree,” Carpenter wrote.

“There are discrepancies in the record concerning the number of LLCs in which Defendant has an economic interest,” Carpenter explained. “Defendant does not challenge the validity of the Charging Order concerning 73 LLCs, as Defendant admits to being a member of those companies. Plaintiff, on the other hand, says Defendant is a member or manager of 190 LLCs, and has an economic interest in the remainder. An affidavit filed with the United States District Court for the Middle District of North Carolina, by a third-party licensed attorney, lists 329 LLCs of which Defendant is a member or manager. Yet the Charging Order says Defendant has an ‘economic interest’ in 626 LLCs.”

“There is conflicting evidence in the record concerning how many LLCs Defendant is a member of, but all evidence suggests it is fewer than 626,” Carpenter wrote. “And there is nothing in the record detailing how many ‘economic interests’ have been legally assigned to Defendant.”

O’Foghludha “erred by including 626 LLCs in the Charging Order,” the appellate judges determined. “The record indicates Defendant was an interest owner in far fewer. On remand, the trial court must reduce the number of LLCs in the Charging Order to the number of LLCs of which Defendant is a member or an assignee of an economic interest.”

Without state Supreme Court action, the case will head back to Durham County Superior Court to address appellate judges’ concerns. Judges John Tyson and Toby Hampson joined Carpenter’s decision.

The three judges heard oral arguments in the case on Oct. 4.

“I don’t think it’s unfair that when we have a $600 million judgment, where somebody has siphoned off money from a trust account, we are asking for help from the state Superior Court to proceed with a prompt execution” of the judgment, said attorney Christopher Browning, representing ULICO, during that hearing.

ULICO has said in court filings that it “stands as Lindberg’s largest judgment creditor.” The company says its judgment stems from Lindberg “draining” a trust fund designed to make annuity payments for policyholders in Puerto Rico.

“They have our money,” Browning said of Lindberg and his businesses. “We have a judgment that allows us to enforce the ability to get our money.”

“it doesn’t impact his ability to go out and earn a living, to be in a job, to be pursuing a craft or a trade,” Browning added. “He is saying he can’t earn a living because of instead of paying our judgment, he wants to spend it on other things.”

“He has fought us since May 2, 2022, when we had our judgment in place,” Browning said. “He has held us at bay.”

A federal magistrate judge determined that “Greg Lindberg has dissipated his assets” and that he should post a bond of “hundreds of millions of dollars” to block any legal proceedings involving ULICO, Browning argued. He accused Lindberg of wanting “to drag this out as long as possible.”

Attorney Matthew Leerburg, representing Lindberg during the oral arguments, said O’Foghluda’s orders have blocked Lindberg from paying any bills, including attorney’s fees. “Mr. Lindberg doesn’t want to delay,” Leerburg said. “He’s making zero dollars from his companies. He can’t pay his own attorneys. There’s no incentive to delay. There’s an incentive to appeal right away.”

Leerburg referenced Global Growth, the Lindberg company that “runs and ultimately owns a hundred companies operating around the world — real companies with real employees doing real business around the world. That’s Mr. Lindberg’s job. He just can’t get paid for it.”

Before the legal action against him, Lindberg had attracted attention in the last decade as a top donor to political campaigns in North Carolina. He supported Democratic Insurance Commissioner Wayne Goodwin’s unsuccessful 2016 re-election bid. Goodwin lost to Causey.

Later Lindberg became the largest financial contributor in 2017 to the NC Republican Party and two groups supporting then-Lt. Gov. Dan Forest, a Republican. Forest lost the 2020 governor’s race to the incumbent Democrat, Gov. Roy Cooper.