A North Carolina court has ordered convicted insurance magnate Greg Lindberg to hand over control of hundreds of his private companies to a special board of directors in an effort to save four insurance companies that have met Financial hardship has been subject to regulatory scrutiny since 2019.
The court order concluded that Mr. Lindberg engaged in fraud by not complying with a 2019 agreement under which North Carolina’s insurance division acquired control of insurance companies from Mr. Lindberg.
According to the ruling, announced Wednesday, much of Mr. Lindberg’s private empire will be placed under the control of a board of directors, which has the power to sell companies or take other steps to complete it. pay the insurance companies the amount owed by the Lindberg entities. The judge said Mr. Lindberg and his institutions owe insurers about $1.25 billion.
“Global Growth and Mr. Lindberg respect the court’s decision and are evaluating their post-judgment remedies,” said Aaron Tobin, Mr. Lindberg’s attorney. A Lindberg executive said the restructuring plan envisaged in the deal could not be implemented for a variety of reasons, including that it could cause tax problems and require the consent of the company. third parties, the judge wrote in the new court ruling.
Mr. Lindberg is serving more than seven years in federal prison after being sentenced in 2020 tried to bribe the insurance commissioner of North Carolina in exchange for certain favorable treatment for its insurance companies. He has consistently denied any wrongdoing and his appeal is pending.
Beginning in 2014, Mr. Lindberg gained control of insurance companies in North Carolina, Bermuda and elsewhere. He continued lending more than $2 billion of their assets to companies he controls, essentially using their money to expand his own empire.
Mr. Lindberg there’s a special deal under a former North Carolina insurance commissioner to invest up to 40% of the insurer’s admitted assets in affiliates. The new commissioner, Mike Causey, considers this strategy too risky. Under Mr. Lindberg’s direction, insurance companies invested more than 40% in such units, according to the judge’s decision.
Mr. Lindberg’s insurance companies since then seized by regulatory authorities in different jurisdictions. Bermuda insurance companies are being liquidated.
Insurance companies in North Carolina sued 31 of the Lindberg companies, alleging that they defaulted on their loan contracts. The Lindberg entity has denied the allegations.
Mr. Lindberg, who previously self-identified 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 his most recent forecast, his umbrella holding company, Global Growth, said in 2020 it had 8,500 employees and expected $1.4 billion in annual revenue.
By order of the judge, Mr. Lindberg will lose control of most of these companies. Their oversight would transfer to a board made up of appointees of North Carolina-controlled insurers and independent directors. Mr. Lindberg will still own the companies but will be barred from serving on the board.
The ruling is Mr. Lindberg’s latest setback. Earlier this month, a federal judge in North Carolina ordered him to pay $524 million to a Puerto Rican insurance company that invested the money under a fiduciary agreement with one of the Bermuda insurers. Mr. Lindberg’s now collapsed. Mr. Lindberg has argued, among other things, that some of the Puerto Rican insurance company’s assets were worthless before he began managing them.
Wednesday’s ruling by Wake County Superior Court Judge Graham Shirley was a harsh rebuke to Mr. Lindberg. The judge said Mr. Lindberg “acted fraudulently and with the intent to defraud” North Carolina insurers from performing his 2019-end agreement. Mr. Lindberg received more than $100 million in loans and other benefits from insurance companies after signing the agreement, the judge ruled, but then did not transfer control of the operating companies. yours as required in the agreement.
Causey, the North Carolina Insurance Commissioner, said Wednesday that the ruling “is a huge win for policyholders,” and that his department “will continue its work to keep Mr. Lindberg on his word.” their promises and fulfill the contract holders of these companies. access their policies. ”
Booked under commissioner control in 2019, The insurer had 252,000 customers as of March. State officials limit withdrawals to 10% of the owner’s annuity value, or up to $15,000 unless they can document the hardship. The withdrawal ban still applies, the department said on Wednesday.
Mr. Lindberg is suing Dow Jones & Co., publisher of the Wall Street Journal, most recently alleging that Journal reporters grossly interfered with confidentiality agreements he had with two employees old pill. A federal judge dismissed the lawsuit and Mr. Lindberg is asking for a review. A Dow Jones spokesman said: “We trust the Journal’s report.”
Write to Mark Maremont at [email protected] and Leslie Scism at [email protected]
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