Appeals Court Upholds Lindberg Fraud Judgment But Orders Damages to Be Determined

Former insurance executive and businessman Greg Lindberg was found liable for fraud in 2022 in connection with his insolvent insurance companies, but the North Carolina county court did not award damages.

Lindberg appealed. But so did four of his former insurance companies.

This week, the North Carolina Court of Appeals upheld the fraud verdict but ordered a new trial to determine compensatory and punitive damages that Lindberg may owe to his companies, damages that could run into the millions of dollars.

It’s the latest legal blow for the man who was once considered a billionaire and international businessman who created life insurance and reinsurance operations. He faces a retrial in November on charges that he attempted to bribe North Carolina Insurance Commissioner. His previous conviction on those charges was overturned last year. Lindberg, now living in Tampa, also faces another, federal criminal trial in 2024 on charges of fraudulent business practices, in connection with allegedly taking funds from his insurance companies. The U.S. Securities and Exchange Commission also has accused him of fraud.

The North Carolina appeals court’s June 20 opinion in Southland National Insurance Corp. et al, vs. Lindberg, written by Judge Julee Flood, explained the sequence of events. In 2014, Lindberg re-domesticated four insurance companies to North Carolina in order to take advantage of favorable regulations. These firms included Southland National, Bankers Life Insurance Co., Colorado Bankers Life Insurance, and Southland National Reinsurance.

Before the move, Lindberg had made a special agreement with the former state insurance commissioner, Wayne Goodwin, which allowed Lindberg to invest up to 40% of the insurance firms’ assets into affiliated businesses, the judge noted.

“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 judge wrote in the opinion.

In 2016, Causey defeated Goodwin for insurance commissioner and quickly moved to reduce the 40% allowance to 10%, worried that the insurers would not have enough in reserve to pay claims. Lindberg struggled to untangle his affiliated investments, the court said. In 2018, the state regulators placed Lindberg’s insurance companies under administrative supervision and created a memorandum of understanding that required repayment of funds and required Lindberg to relinquish control of some of his subsidiaries.

The lower court and the appeals court found that Lindberg and three of his affiliated investment companies had breached the MOU and had engaged in fraud.

“Here, there is no disputing that plaintiffs were deceived by defendants, and they suffered economic injury as a result,” the appeals court opinion reads.

The opinion can be seen here.