State Supreme Court will consider $600 million dispute involving Lindberg

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  • The North Carolina Supreme Court will take up a $600 million dispute between former top political donor Greg Lindberg and the Universal Life Insurance Company.
  • ULICO is asking the state's highest court to block lower court orders that could help Lindberg avoid paying off a multimillion-dollar debt.
  • A federal jury found Lindberg guilty earlier this month of bribery and fraud in connection with his interaction with Insurance Commissioner Mike Causey after the 2016 election. It was the second time he had been found guilty in the case. A federal Appeals Court threw out his original conviction and seven-year prison sentence in 2022.

Less than a month after a federal jury found former top North Carolina political donor Greg Lindberg guilty for a second time in a bribery and fraud case, Lindberg learned Thursday that the state’s highest court will take up a separate dispute listing him as a defendant.

The civil case involves the Universal Life Insurance Company’s attempt to collect $600 million from Lindberg. ULICO filed paperwork in December asking the state Supreme Court to step into its dispute with Lindberg.

The high court issued an order Thursday allowing a writ of supersedeas. It blocks the state Appeals Court’s Dec. 5 decision in the case. A separate order explained that Supreme Court justices will take up two procedural issues in the dispute.

“This petition is allowed to determine (1) whether Article 31 proceedings require the return of an unexecuted writ before a trial court has the jurisdiction to act and to address the conflicting line of cases at the Court of Appeals, and (2) whether the Court of Appeals erred by reviewing this interlocutory order as an appeal of right under N.C.G.S. § 7A-27(b)(3)(b),” according to the order signed by Justice Allison Riggs.

A unanimous Appeals Court panel decided in December to throw out an injunction and another order related to Lindberg’s legal battle with 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.

The Supreme Court granted ULICO a temporary stay against the Appeals Court ruling on Dec. 22. The writ of supersedeas blocks the Appeals Court ruling on a more permanent basis.

“The panel’s decision effectively overrules a prior published opinion of the Court of Appeals,” ULICO’s lawyers wrote in December, 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.

“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.

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 court filings.

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.”

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.”

A federal jury found Lindberg and co-defendant John Gray guilty earlier this month in a retrial of bribery and fraud charges that originally sent Lindberg to federal prison with a seven-year sentence. The 4th US Circuit Court of Appeals later threw out the convictions because of problems with jury instructions.

Before the legal action against him, Lindberg had attracted attention in the 2010s 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 Republican Mike Causey. The federal case against Lindberg and Gray stemmed from charges that Lindberg bribed Causey. Causey worked with federal authorities, including wearing a surveillance wire while dealing with Lindberg.

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.