A North Carolina insurance magnate must give up control of his private companies to comply with a 2019 agreement to ensure several insurers within his business empire are paid over $1 billion, a state judge has ruled.
Ruling in a civil lawsuit from which he heard testimony almost a year ago, Superior Court Judge Graham Shirley wrote that Greg E. Lindberg had failed to carry out his side of a memorandum of understanding, WRAL-TV reported.
Shirley decided that Lindberg, who is currently serving federal prison time after being convicted in 2020 on corruption-related criminal charges, put up obstacles to cede control, even though he and his companies benefited from the agreement with up to $100 million in debt relief and $40 million line of credit.
“Lindberg acted with deceit and with the intent to defraud the plaintiffs,” Shirley wrote in the order filed Tuesday.
Shirley ordered Lindberg to abide by the agreement and give up control over scores of his private companies that sit within his umbrella Global Growth Holdings company to a board upon which he could not serve. Many of those companies could be sold to generate revenue to pay the insurers the $1.25 billion that Shirley said is owed them.
Lindberg attorney Aaron Tobin told The Wall Street Journal that “Global Growth and Mr. Lindberg respect the court’s ruling, and are evaluating their post-judgment remedies.”
Shirley noted in his ruling that a Lindberg executive has said the restructuring arrangement couldn’t be accomplished for many reasons. And Lindberg’s lawyers had argued the memorandum of understanding wasn’t an enforceable contract.
The insurance companies that sued Lindberg — Southland National Insurance Corp., Bankers Life Insurance Co., Colorado Bankers Life Insurance Co. and Southland National Reinsurance Corp. — already are being overseen by state-appointed rehabilitators due to cash-flow concerns to pay on policies.
State Insurance Commissioner Mike Causey praised Shirley’s ruling.
“If Mr. Lindberg and his companies had honored the promises that they made to these insurance companies and their policyholders back in 2019, we might be well on our way to having this matter resolved,” Causey said in a statement, adding that his agency “will continue its work to hold Mr. Lindberg to his promises and get the policyholders of these companies full access to their policies.”
Lindberg, who lived in Durham and was once North Carolina’s largest political donor, was sentenced in 2020 to more than seven years in prison after being convicted of attempting to bribe Causey to secure preferential regulatory treatment for his insurance business. The convictions are being appealed. His projected release is 2026. Prosecutors accused Lindberg and others of trying to give over $1.5 million to help Causey’s 2020 reelection campaign. Causey, who wasn’t accused of wrongdoing, alerted authorities and recorded conversations for them.
The civil litigation involves in part the limits on insurance companies to invest in other companies owned by the same person or entity that controls the insurance company itself. The industry standard was 10%, but through an arrangement with Causey’s predecessor Lindberg was able to invest up to around 40%.
When Causey took office, his department sought to reduce the percentage and determined the insurance companies that Lindberg had invested in likely couldn’t cover their policies coming due. That ultimately led to the 2019 memorandum.