State Appeals Court offers partial victory to Lindberg in dispute over $600 million debt

Judges Toby Hampson, left, John Tyson, and Jeff Carpenter hear oral arguments at the NC Court of Appeals. (Image from Court of Appeals YouTube channel)

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  • A unanimous ruling from the state Court of Appeals Tuesday offered a partial victory to Greg Lindberg, the former top North Carolina political donor fighting money judgments and a federal bribery case.
  • Appellate judges threw out an injunction and charging order that limited the amount of money Lindberg could withdraw from limited liability corporations he owns or controls. A Durham County judge will have to address the Appeals Court's concerns.
  • Lindberg learned recently that he will return to federal court on May 6 for a retrial on bribery and fraud charges. He's accused of bribing state Insurance Commissioner Mike Causey with more than $2 million after Causey's 2016 election. A federal Appeals Court tossed out Lindberg's initial conviction and seven-year prison sentence connected with those charges.

Former top North Carolina political donor Greg Lindberg secured a partial victory Tuesday from the state Court of Appeals. The court threw out an injunction and another order related to a $600 million judgment against Lindberg.

He learned recently that he will head back to federal court May 6 on charges that he attempted to bribe state Insurance Commissioner Mike Causey with more than $2 million. Originally convicted in that case and sentenced to seven years behind bars, Lindberg has been free from prison since a federal Appeals Court threw out his conviction in 2022.

In the case at issue before North Carolina’s second-highest court Tuesday, a unanimous three-judge panel overturned rulings from 2022 issued by Durham County Superior Court Judge Michael O’Foghludha. The rulings were related to a $600 million judgment against Lindberg involving the Universal Life Insurance Company, or ULICO.

The Durham judge had issued an injunction in October 2022 blocking Lindberg from withdrawing more than $5,000 from any business entity he owned or controlled. For a larger withdrawal, he would need a court order or permission from ULICO and North Carolina Insurance Companies, represented in the legal dispute by Causey.

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.”

The case heads back to Durham County Superior Court to address the Appeals Court’s 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.”

In a separate state court proceeding involving Lindberg, ULICO claimed that Lindberg owes at least $1.9 billion to creditors.

A federal court order issued Nov. 30 set deadlines in connection with the May 6 retrial of Lindberg and co-defendant John Gray on bribery and fraud charges related to Causey. Pretrial motions are due March 25. Briefs are due April 15. Exhibits, witness lists, proposed jury instructions, and a proposed verdict are due April 29.

US District Judge Max Cogburn agreed in October to delay the retrial. It had been scheduled for November.

It’s the second delay for the retrial. In both cases, the delay related to legal representation for Gray.

Gray’s legal team asked for the delay. Federal prosecutors agreed to extend the case for at least five months.

“[F]ailure to grant such a continuance would deny counsel for Defendant the reasonable time necessary for effective preparation, taking into account the exercise of due diligence,” Cogburn wrote in October, referring to Gray. “Moreover, the ends of justice served by granting such continuance outweigh the best interests of the public and Defendant in a speedy trial.”

The order referenced Lindberg without naming him. “[T]his matter is continued as to the remaining co-defendants and the time is excluded as a reasonable period of delay as such defendants are joined with a co-defendant whose case has been continued from the term and as to whom the time for trial has not run and no motion for severance has been granted.”

The retrial is tied to federal charges that Lindberg attempted to bribe Causey with “more than $2 million” after Causey’s 2016 election. Causey worked with federal law enforcement officials, including wearing a surveillance wire, 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 US Circuit Court of Appeals tossed out that conviction in June 2022. Appellate judges ruled that mistakes in Cogburn’s jury instructions had “infected” Lindberg’s convictions.

A second federal trial related to a separate 13-count indictment against Lindberg already has been delayed. Originally scheduled for this summer, that case will now be pushed back until after the bribery and fraud retrial.

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.