- The N.C. Appeals Court has affirmed a trial judge's ruling against former top N.C. political donor Greg Lindberg in a case involving insurance companies he purchased in 2014.
- The unanimous appellate panel overruled the trial judge's decision not to award damages in the case.
- Lindberg faces this latest legal setback as he awaits a November retrial on bribery and fraud charges linked to his interactions with N.C. Insurance Commissioner Mike Causey. Causey worked with federal officials building their case against Lindberg.
As former top N.C. political donor Greg Lindberg awaits a federal retrial on bribery and fraud charges in November, the N.C. Court of Appeals delivered him another legal blow Tuesday.
In a case titled Southland v. Lindberg, a unanimous Appeals Court panel affirmed a May 2022 Wake County Superior Court ruling against Lindberg and multiple associated companies.
The trial judge found Lindberg and the other defendants “liable for breach of contract and fraud” in connection with insolvent insurance companies purchased in 2014. Those companies are plaintiffs in the Southland case.
Appellate judges overruled the trial judge’s decision not to award damages in the case. The lawsuit will head back to a trial court to address the issue of a proper remedy for the plaintiffs.
“In 2014, Lindberg re-domesticated Plaintiffs to North Carolina in order to take advantage of this State’s favorable regulations,” wrote Judge Julee Flood. “Prior to this re-domestication, acting as owner of Plaintiffs, Lindberg made a special agreement with former Commissioner of Insurance, Wayne Goodwin, allowing Lindberg to invest up to forty percent of Plaintiffs’ assets into affiliated business entities. Lindberg then invested up to forty percent of Plaintiffs’ money into the purchase of other, non-insurance companies, also owned by Lindberg. Simply put, Lindberg created a scheme in which he caused $1.2 billon held for Plaintiffs’ policyholders to be invested into other non-insurance companies that he also owned or controlled.”
“In November 2016, Wayne Goodwin lost his seat as Commissioner of Insurance to Mike Causey (the “Commissioner”), who reduced the cap on affiliated investments from forty percent to ten percent,” Flood wrote. “Lindberg struggled to untangle his affiliated investments and, as the deadline for diversification drew near, the North Carolina Department of Insurance (the “NCDOI”) grew concerned that there would be a ‘mismatch between investments and policyholder liabilities.’”
“In other words, because Lindberg had invested so much of Plaintiffs’ money into affiliated companies, the NCDOI worried that Plaintiffs might experience a shortfall on their obligation to pay individual policyholders,” Flood added.
A 2018 consent order placed the plaintiff businesses under administrative supervision. A 2019 memorandum of understanding linked to restructuring of the businesses prompted the legal dispute addresses in the Southland case.
Causey is also a key player in the federal case against Lindberg scheduled to start Nov. 6.
Federal authorities argue that Lindberg attempted to bribe Causey with “more than $2 million” after Causey’s 2016 election. Causey worked with federal law enforcement officials to collect evidence against Lindberg and associates.
Lindberg was convicted in March 2020 and was sentenced to a seven-year federal prison term. But the 4th U.S. Circuit Court of Appeals tossed out that conviction last June. Appellate judges ruled that mistakes in Judge Max Cogburn’s jury instructions had “infected” Lindberg’s convictions.
Cogburn agreed in March to move Lindberg’s retrial back to November. That decision was based largely on issues related to John Gray, Lindberg’s co-defendant in the fraud and bribery case. Gray hired a new lawyer late last year. The judge agreed that the new lawyer would need additional time to review millions of pages of documents related to the case.
Lindberg learned last week that a second federal trial related to a 13-count indictment has been delayed. Originally scheduled this summer, that case will now be pushed back until after the bribery and fraud retrial.
In November Cogburn rejected Lindberg’s attempt to end GPS monitoring while he awaits his new trial.
“The concerns previously expressed by the Government continue to exist,” Cogburn wrote in a Nov. 10 order. “Mr. Lindberg now lives in Tampa, Florida, where, according to the Government, he has ready access to both his ocean-going yacht and airplane.”
“The Government has also indicated that Lindberg continues to have significant overseas business interest and assets available to him outside of the United States,” Cogburn added. “As for Defendant’s contention that he has no incentive to flee because he has a growing family with an additional child on the way, the Court is not persuaded.”
“Here, Lindberg’s knowledge of an ongoing criminal investigation into his business practices and the potential for additional criminal charges, as well as the knowledge that he was previously convicted by a jury which resulted in his going to federal prison to serve an 87-month sentence, and the recent civil action filed against him by the SEC provide an incentive for him to flee,” the judge concluded. “The Court finds that location monitoring is a reasonable restriction in light of Lindberg’s motivation and ability to flee.”
A court filing from Lindberg had disputed the government’s argument that he’s a flight risk.
“Mr. Lindberg lives in a permanent home in Tampa with his significant other and five of his children — all under the age of three, and two under the age of one,” according to the brief. “He regularly sees his other children in Tampa when they visit him on a monthly basis. He is also expecting another child in March of 2023.”
In addition to the fraud and bribery charges, Lindberg learned in August about a new federal complaint from the U.S. Securities and Exchange Commission. The SEC accuses Lindberg of raiding his own insurance companies in a “massive fraudulent scheme.”