Thursday, February 13, 2020

No. 355: Greg Lindberg—Another Update on the Federal Criminal Lawsuit in North Carolina

In No. 309 (April 17, 2019), I discussed the indictment of Greg E. Lindberg and three other individuals by a federal grand jury in North Carolina. In No. 320 (July 1, 2019), I reported on the placement of four Lindberg insurance companies into court-ordered rehabilitation at the request of the North Carolina insurance commissioner. In No. 338 (October 24, 2019), I discussed Lindberg's motion to dismiss the criminal lawsuit, and a recent article in The Wall Street Journal. Here I provide another update on the criminal lawsuit. (See U.S.A. v. Lindberg, U.S. District Court, Western District of North Carolina, Case No. 5-19-cr-22.)

Previous Developments
Lindberg is the founder and chairman of Eli Global, LLC, an investment company. He is also the owner of Global Bankers Insurance Group, a managing company for many insurers and reinsurers. The other defendants are John D. Gray, a Lindberg consultant; John W. Palermo, Jr., a vice president of Eli Global; and Robert C. Hayes, chairman of the state Republican party in North Carolina. All four defendants are North Carolina residents.

On March 18, 2019, the grand jury charged the defendants with one count of conspiracy to commit honest services wire fraud; and one count of bribery concerning programs receiving federal funding, and aiding and abetting. Hayes was also charged with three counts of false statements. The defendants pleaded not guilty on all counts, but Hayes later pleaded guilty to one count of false statements.

On September 18, Lindberg filed a motion to dismiss the indictment for failure to state an offense. On September 25, the U.S. Attorney filed an opposition to the motion to dismiss. On October 2, Lindberg filed a reply to the government's opposition to the motion to dismiss. On October 4, The Wall Street Journal carried a lengthy front-page article entitled "Indicted Executive Used Operatives To Spy on Women."

Recent Developments
On October 25, the judge issued an amended scheduling order. It is in the complimentary package offered at the end of this post.

On November 18, Gray filed a motion to dismiss the indictment for failure to state an offense. On December 2, Palermo filed a motion to dismiss the indictment for lack of specificity and for prosecutorial misconduct.

On January 31, 2020, the judge issued an order denying the Lindberg, Gray, and Palermo motions to dismiss the indictment. The order discusses "failure to state an offense," "lack of specificity," and "prosecutorial misconduct." The conclusion of the order reads:
For the foregoing reasons, the Court finds that there is a legally sufficient basis to support defendants' indictment for honest services fraud and federal funds bribery. Moreover, the indictment is sufficiently specific to give the defendants fair notice of the charged offenses. Finally, the defendants have failed to demonstrate prosecutorial misconduct warranting dismissal. Accordingly, the defendants' Motions to Dismiss the Indictment are denied.
The full order is in the complimentary package offered at the end of this post. On February 3, The Wall Street Journal carried another article about the Lindberg case. The article is entitled "Lindberg Trial Set to Proceed." The trial is set to begin on February 18.

General Observations
Lobbying of state insurance regulators by representatives of the insurance business is common. However, detailed allegations of attempted bribery are rare. For that reason, I think this case is important for persons interested in insurance regulation. I plan to report significant developments.

Available Material
The complimentary packages offered in Nos. 309, 320, and 338 are still available. Now I am offering another complimentary 22-page PDF consisting of the judge's amended scheduling order (6 pages) and the judge's order denying the defendants' motions to dismiss the indictment (16 pages). Email and ask for the February 2020 package about Lindberg.