Thursday, October 24, 2019

No. 338: Greg Lindberg—An Update

In No. 309 (April 17, 2019), I discussed the indictment of Greg E. Lindberg and three others by a federal grand jury in North Carolina. In No. 320 (July 1, 2019), I provided an update, including a discussion of the placement of four Lindberg insurance companies into court-ordered rehabilitation at the request of the North Carolina insurance commissioner. Here I provide a further update. (See U.S.A. v. Lindberg, U.S. District Court, Western District of North Carolina, Case No. 5-19-cr-22.)

The Lindberg Motion to Dismiss
On September 18, 2019, Lindberg filed a motion to dismiss the indictment for failure to state an offense. Here (without citations) are the first two paragraphs of the supporting memorandum (the motion and the full supporting memorandum are in the complimentary package offered at the end of this post):
The government's entire case against Greg E. Lindberg turns on a legally flawed understanding of what constitutes an "official act." According to the government, requesting a personnel move is an official act giving rise to federal criminal liability even when the defendant in no way requested an ultimate outcome on any matter or proceeding that may in the future be pending before the government.
The government's theory is foreclosed by the logic of two recent decisions of the Supreme Court: McDonnell v. U.S. and Skilling v. U.S. And the government's theory raises the full range of constitutional issues that the Court identified in those decisions. Most notably, prosecutions of this nature will inhibit the rights of all Americans to make demands of their elected representatives—and vote and contribute accordingly. Because the charges against Mr. Lindberg are legally infirm, this Court can—and should—dismiss the indictment against him.
The Government Opposition
On September 25 the U.S. Attorney filed an opposition to the Lindberg motion to dismiss the indictment. Here (without citations) is the three-paragraph introduction to the opposition (the full opposition is in the complimentary package offered at the end of this post):
Decisions to hire, fire, assign, and reassign government employees are core official acts under McDonnell v. U.S. The Bill of Indictment charges the defendant, a wealthy insurance executive, with offering a $2 million bribe to the top ranking insurance official in North Carolina to remove a subordinate regulator the defendant did not like, and replace her with one of the defendant's co-conspirators or another individual of his choosing. The defendant's argument that he could do this as long as he did not explicitly request an "ultimate outcome" rests upon a misreading of McDonnell, which nowhere applies an "ultimate outcome" test. Instead, as McDonnell and the courts that have subsequently interpreted that decision have made clear, the removal of the disfavored regulator—and her replacement by a regulator of the defendant's choosing—were themselves "official acts." This Court should reject the defendant's novel and erroneous interpretation of McDonnell.
Similarly, the defendant's argument that Skilling v. U.S. imposed a new requirement that the government must prove a personal financial benefit to a bribe payor is unsupported by any authority, including the Skilling decision itself. A bribe is a bribe, regardless of the payor's motive or realization of profit.
Finally, the defendant's constitutional concerns—regarding the First Amendment's alleged protection of the exchange of campaign contributions for specific action—are unfounded, and have already been addressed by the Supreme Court. When a campaign contribution is conditioned on specific official action it constitutes a bribe and is not protected by the First Amendment. McCormick v. U.S.
The Lindberg Reply
On October 2 Lindberg filed a reply to the government's opposition to the motion to dismiss the indictment. Here is the first paragraph of the argument in the reply (the full reply is in the complimentary package offered at the end of this post):
The government is incorrect that the jury, rather than the Court, must decide the legal definition of "official act." Before trial, a defendant may move to dismiss an indictment for failure to state an offense. And the Court must grant the motion if the "indictment fails to allege facts which constitute a prosecutable offense." Thus, where there is "an infirmity of law in the prosecution" contained in the indictment, a case should not reach a jury. That is the situation here. Because Mr. Lindberg's indictment fails to allege either an official act—a required element of all charges against him—or a bribery scheme that benefitted him, the Court must dismiss the indictment.
The Hayes Guilty Plea
Robert Cannon Hayes is one of Lindberg's four co-defendants named in the indictment. He was charged with five criminal counts: one count of conspiracy to commit honest services wire fraud, one count of bribery concerning programs receiving federal funds and aiding and abetting, and three counts of false statements.

On September 27 Hayes pleaded guilty to one count of false statements. The plea agreement is not publicly available. What is publicly available is a document called "entry and acceptance of guilty plea." It lists 39 questions the magistrate judge asked Hayes, and shows the answers given by Hayes. It also includes the magistrate judge's acceptance of the guilty plea on October 2. The document is in the complimentary package offered at the end of this post.

The Journal Article
On October 4 the print edition of The Wall Street Journal carried a 2,540-word front-page article entitled "Indicted Executive Used Operatives To Spy on Women—Insurance tycoon's surveillance included GPS trackers, secret photos, dossiers." The reporters were Mark Maremont and Leslie Scism. Here are the first few sentences of the article:
Federal investigators were closing in on Greg Lindberg. FBI agents confronted the North Carolina insurance tycoon last year as they probed whether he tried to bribe a state regulator. In March, officials obtained a sealed warrant for his arrest. His attorneys were negotiating his surrender.
Mr. Lindberg also had something else on his mind—the comings and goings of a number of women he was dating, interested in dating, or, in at least one case, cultivating as an egg donor for his future offspring.
Mr. Lindberg paid for dozens of surveillance operatives to tail the women up to 24 hours a day, taking surreptitious photos and sometimes putting GPS trackers on their vehicles, according to former security staffers and copies of internal reports produced by these operatives that were reviewed by The Wall Street Journal.
General Observations
As indicated in No. 320, I think the federal criminal case against Lindberg and his four associates will be lengthy. I plan to report further developments.

I found the Journal article shocking. I have no idea where it might lead, and will not speculate on what if anything will happen as a result of the findings in the article.

Available Material
The complimentary packages offered in Nos. 309 and 320 are still available. Now I am offering a complimentary 62-page PDF consisting of the Lindberg motion to dismiss the indictment (27 pages), the government's opposition to the motion to dismiss (16 pages), Lindberg's reply to the opposition (15 pages), and the material relating to the guilty plea by Hayes (4 pages). Email and ask for the October 2019 Lindberg package.