The North Carolina Supreme Court has decided that it will not, after all, review another legal filing by convicted insurance entrepreneur Greg Lindberg.

The Oct. 17 ruling lets stand a 2023 decision by the state Court of Appeals, which found that Lindberg and some of his affiliated companies were liable for fraud by misleading life insurance companies and a reinsurance firm that he once owned.

“We hold the trial court’s conclusions of law were supported by findings of fact based on competent evidence,” the appeals court judges wrote in the 2023 opinon.

The high court in December 2023 had agreed to review the appeal court’s order, at Lindberg’s behest. But after hearing oral arguments, the Supreme Court justices changed their minds, noting that “discretionary review was improvidently allowed by order on 13 December 2023.”

No further explanation was offered. But with multiple criminal and civil proceedings stemming from the bribery conviction of and the regulatory crackdown on Lindberg, the appeal court’s 24-page opinion offers a valuable recount of some of the main aspects of the voluminous litigation involving Lindberg since 2016.

“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,” the appellate judges wrote in the opinion in Southland National Insurance Corp., et al, vs. Greg Lindberg, et al.

It all began in 2014 under previous North Carolina Insurance Commissioner Wayne Goodwin, the court explained. Lindberg sought to re-domesticate Southland, Bankers Life Insurance Co., Colorado Bankers Life Insurance Co., and Southland National Reinsurance Corp. to North Carolina. Lindberg struck a special agreement with Goodwin, allowing Lindberg to break what has often been considered a cardinal rule for insurance companies – keeping adequate reserves on hand and under the control of the insurance carrier.

Instead, Lindberg was allowed to invest up to 40% of the insurance companies’ assets into affiliated business entities, and Lindberg soon invested hundreds of millions into non-insurance firms he owned or controlled.

In 2016, Mike Causey defeated Goodwin in the election and took over as insurance commissioner. Causey moved swiftly to reduce the cap on affiliated investments – back to 10%, the court explained.

Lindberg in early 2018 attempted to bribe Causey with heavy campaign contributions, hoping for a relaxation of the rules as he struggled to “untangle his affiliated investments,” the appellate judges noted. Causey cooperated with federal authorities and wore a recording device during the meeting with Lindberg. Lindberg was convicted of bribery in 2020, had his conviction overturned due to improper jury instructions, then was convicted again in 2024. He’s still awaiting sentencing.

Meanwhile, in late 2018, while Lindberg’s prosecution was pending, it became obvious that Lindberg’s affiliated companies would not meet their obligations to restore funds to cover the life insurers’ policyholder liabilities. NCDOI placed Southland and the other insurance companies under administrative supervision. An out-of-state consultant was put in charge, and deadlines were set for repayment of the assets.

With it becoming clear that Lindberg’s affiliated firms would not meet the deadlines, Southland and the other insurance companies signed a memorandum of understanding and other agreements, restucturing the financial obligations, providing a $40 million line of credit to a company owned by Lindberg, and making the affiliated firms subsidiaries of a newly created holding company, the court explained.

In 2019, Lindberg’s affiliated firms failed to meet the restructuring agreements’ goals and failed to make the affiliated businesses part of the holding company. Southland filed suit, charging fraud.

The trial court in Wake County largely agreed, and the appeals court upheld the lower court’s ruling.

“Defendants attempt to convince this Court that the MOU’s main purpose was not only to rehabilitate Plaintiffs’ companies, but to ensure Lindberg would continue to benefit from the overall transaction,” the appellate judges wrote. “This argument ignores another of Defendants’ motivations: to make money using capital provided by hardworking, North Carolina policyholders.”

Lindberg’s team claimed that the memorandum of understanding was unenforceable. The appeals court didn’t buy that argument.

“Defendants and Lindberg have enjoyed the benefit of millions of dollars of debt relief provided by Plaintiffs, yet continue to claim the MOU is unenforceable,” the court wrote.

On other arguments the court was equally critical of Lindberg’s assertions.

“Put plainly, Defendants made representations about their ability to perform under the MOU, then just two weeks before performance was due, cited those exact representations as the reason why they could not perform,” Judge April Wood wrote in the opinion.

And because Lindberg understood the intricacies of the affiliated businesses’ structures, he knew that performance under the MOU was impossible, “yet made representations that induced Plaintiffs to enter into the contract. For those reasons, we hold the trial court did not err in finding Defendants’ actions satisfied the elements of fraud.”

The appeals court remanded part of the case to the lower court to determine remedies available to Southland and the other plaintiff insurance companies.

In November 2024, Lindberg pleaded guilty to $2 billion in fraud in a related prosecution. In July of this year, a federal judge approved a plan to distribute $318 million from the sale of a Lindberg-owned software firm to the life insurance policyholders. In early October, the judge allowed the release of policyholder information so that a special master in the case could finally begin distributing funds to the victims of the fraud.

Read more about Lindberg’s bribery conviction here, and other court rulings here.

Topics
Fraud
North Carolina
Liability