A North Carolina court has ordered convicted insurance tycoon Greg Lindberg to hand over control of hundreds of his private companies to a special council in a bid to bail out four insurers with financial problems that have been under surveillance since 2019.
The court ruled that Mr Lindberg had committed fraud by failing to comply with a 2019 agreement under which the North Carolina Insurance Division seized control of Mr Lindberg’s insurers.
According to a decree issued Wednesday, much of Mr Lindbergh’s private empire will be placed under the control of a board that will have the right to sell companies or take other steps to repay money to insurers that they owe to Lindbergh’s organizations. The judge said Mr. Lindberg and his organizations owe insurers about $ 1.25 billion.
Mr Lindbergh’s lawyer did not immediately respond to requests for comment. Lindbergh’s chief executive said the restructuring plan provided for in the agreement could not be implemented for a variety of reasons, including because it could cause tax problems and require the consent of third parties, the judge wrote in a new court ruling.
Mr Lindberg is serving more than seven years in federal prison after being convicted in 2020 of attempting to bribe the North Carolina Insurance Commissioner in exchange for some favorable treatment for his insurers. He has consistently denied any wrongdoing, and his appeal is pending.
Since 2014, Mr. Lindberg has gained control of insurers in North Carolina, Bermuda and elsewhere. He lent more than $ 2 billion of their assets to companies he controlled, essentially using their money to expand his private empire.
Mr. Lindbergh had a special agreement under the previous North Carolina Insurance Commissioner to invest up to 40% of the assets of insurers recognized by insurers in affiliated organizations. New Commissioner Mike Kozi found the strategy too risky. Under the leadership of Mr. Lindberg, insurers have invested in such organizations even more than 40%, the judge said.
Since then, Mr Lindbergh’s insurance companies have been seized by regulators in various jurisdictions. Bermuda insurers are being liquidated.
North Carolina insurance companies have sued 31 Lindbergh organizations, claiming they are not fulfilling loan agreements. Lindbergh’s businesses deny the allegations.
Mr. Lindbergh, who previously called himself a billionaire, oversees hundreds of small companies in the U.S. and abroad, from eye care networks to software and collectible companies. According to the latest forecast, its parent holding company Global Growth in 2020 said it had 8,500 employees and projected annual profits of $ 1.4 billion.
By order of the judge, Mr. Lindberg lost control of most of these companies. Their oversight will be transferred to a board dominated by appointees of North Carolina-controlled insurers and independent directors. Mr. Lindberg will still own the organizations, but he will be barred from participating in the board.
The ruling is the latest setback for Mr. Lindberg. Earlier this month, a federal judge in North Carolina ordered him to personally pay $ 524 million to a Puerto Rican insurer whose money had been invested under a trust agreement with one of Mr. Lindbergh’s now-destroyed insurers in Bermuda. Mr Lindberg argued, among other things, that some of Puerto Rico’s insurer’s assets were useless before he began managing them.
Wednesday’s ruling by Wake County Supreme Court Justice A. Graham Shirley was a sharp rebuke to Mr Lindbergh. The judge said Mr Lindberg “acted with deception and with intent to deceive” North Carolina insurers by failing to comply with his 2019 end of the agreement. The judge ruled that Mr. Lindberg received more than $ 100 million in loans and other benefits from insurers after signing the contract, but then did not transfer control of his operating companies, as provided for in the deal.
Mr Kozi, North Carolina’s commissioner for insurance, said Wednesday that the decision “is a great victory for policyholders” and that his department will “continue its work to keep Mr Lindbergh up to his promises and achieve the fullness of policyholders.” campaigns “. access to their policies ”.
In 2019, insurers numbered 252 thousand customers who came under the control of the Commissioner. Government officials limited the withdrawal to 10% of the owners ’rent value, or a maximum of $ 15,000 if they could not record the difficulty. The moratorium on withdrawals remains in force, the department said Wednesday.
Mr Lindberg is suing Dow Jones & Co., publisher of The Wall Street Journal, recently alleging that the magazine’s journalists had maliciously interfered with a privacy agreement he had entered into with two former employees. A federal judge dismissed the lawsuit, and Mr. Lindberg asked to reconsider it. A Dow Jones spokesman said: “We are confident in the magazine’s reports.”
Email Mark Maremont at Mark.Maremont@wsj.com and Leslie Schism at email@example.com
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