Convicted Insurance Mogul Ordered to Give Up Control of Companies

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Businesses owned by Greg Lindberg could be sold to repay insurers

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Under the ruling, released Wednesday, the bulk of Mr. Lindberg’s private empire would be put under the control of a board, which would have the power to sell companies or take other steps to repay the insurers money they are owed by the Lindberg entities. The judge said Mr. Lindberg and his entities owe the insurers about $1.25 billion.

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A lawyer for Mr. Lindberg didn’t immediately respond to requests for comment. A Lindberg executive has said the restructuring plan contemplated by the agreement couldn’t be accomplished for a variety of reasons, including that it could trigger tax issues and required consent by third parties, the judge wrote in the new court ruling.

Mr. Lindberg is serving more than seven years in a federal prison after being convicted in 2020 of attempting to bribe North Carolina’s insurance commissioner in exchange for certain favorable treatment for his insurers. He has consistently denied any wrongdoing, and his appeal is pending.

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Starting in 2014, Mr. Lindberg gained control of insurers in North Carolina, Bermuda and elsewhere. He proceeded to lend more than $2 billion of their assets to companies he controlled, essentially using their money to expand his private empire.

Mr. Lindberg had a special agreement under a previous North Carolina insurance commissioner to invest up to 40% of the insurers’ admitted assets into affiliated entities. The new commissioner, Mike Causey, considered the strategy too risky. Under Mr. Lindberg’s direction, the insurers had invested even more than 40% in such entities, the judge’s ruling stated.

Mr. Lindberg’s insurance companies have since been seized by regulators in various jurisdictions. The Bermuda insurers are being liquidated.

The North Carolina insurance companies have sued 31 of the Lindberg entities, alleging they are in default on their loan agreements. The Lindberg entities have denied the way.

Mr. Lindberg, who has previously described himself as a billionaire, controls hundreds of small companies in the US and abroad, ranging from eye-care chains to software companies to a collectibles business. In the most recent projection, his umbrella holding company, Global Growth, in 2020 said it had 8,500 employees and projected annual revenue of $1.4 billion.

Under the judge’s order, Mr. Lindberg would lose control of most of these companies. Their oversight would transfer to a board dominated by appointees of the North Carolina-controlled insurers and independent directors. Mr. Lindberg would still own the entities but would be barred from serving on the board.

The ruling is the latest setback for Mr. Lindbergh. Earlier this month, a federal judge in North Carolina ordered him to personally pay $524 million to a Puerto Rico insurer that had invested under a trust arrangement with one of Mr. Lindberg’s now-collapsed Bermuda insurers. Mr. Lindberg has argued, among other things, that some of the Puerto Rico insurer’s assets were worthless prior to when he started to manage them.

The ruling on Wednesday by Wake County Superior Court Judge A. Graham Shirley was a harsh rebuke of Mr. Lindbergh. The judge said Mr. Lindberg “acted with deceit and with the intent to defraud” the North Carolina insurers in not carrying out his end of the 2019 agreement. Mr. Lindberg had obtained more than $100 million in loans and other benefits from the insurers after signing the pact, the judge ruled, but then didn’t turn over control of his operating companies as called for in the deal.

Mr. Causey, the North Carolina Insurance Commissioner, said Wednesday that the ruling “is a big win for the policyholders,” and that his department “will continue its work to hold Mr. Lindberg to his promises and get the policyholders of these companies full access to their policies.”

Placed under the commissioner’s control in 2019, the insurers had 252,000 customers as of March. State officials restricted withdrawals to 10% of owners’ annuity value, or a maximum of $15,000 unless they could document hardship. The moratorium on withdrawals remains in place, the department said Wednesday.

Mr. Lindberg is suing Dow Jones & Co., publisher of The Wall Street Journal, most recently alleging that Journal reporters tortiously interfered with confidentiality agreements he had with two former employees. A federal judge has dismissed the suit, and Mr. Lindberg is asking for reconsideration. A Dow Jones has said in said: “We are confident the Journal’s reporting.”

Write to Mark Maremont at [email protected] and Leslie Scism at [email protected]

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Credit: www.wsj.com /

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