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After almost a decade of litigation, investigations and deliberations, criminal fraud cases against reported billionaire and North Carolina insurance entrepreneur Greg Lindberg appear to finally be nearing an end. A sentencing hearing is expected in the next few months, followed by a federal judge’s decision on how much in restitution Lindberg owes—and to whom.

A special master, a bankruptcy-specialist attorney appointed by the federal court in North Carolina, last week recommended that Lindberg pay just over $1.6 billion in restitution to seven insurance companies and financial firms in North Carolina and Bermuda. Those are companies that Lindberg once controlled – and from which he was convicted of diverting funds for other enterprises and for personal gain in a scheme that reached across the continent and involved an attempt to bribe an insurance commissioner.

The largest share of restitution, $821 million, should go to Colorado Bankers Life Insurance Co., the largest of insurers that Lindberg founded, then skimmed millions from over several years.

The funds diversion, as detailed in Lindberg’s federal indictment, constituted “a massive insurance fraud conspiracy, the purposes of which ‘were to evade regulatory requirements meant to protect policyholders, conceal the true financial condition of [Defendant’s] insurance companies, and conceal [Defendant’s] improper use of insurance company funds for [Defendant’s] personal benefit,'” Special Master Joseph Grier III wrote in his April 3 report to the court.

The 2023 indictment is key to the restitution calculations. Grier recommended that only those firms identified as being due restitution in the indictment should receive funds. Grier and other lawyers with his Charlotte law firm also engaged in “a thorough colloquy” with the victim insurers and spent 15 months examining financial records to determine the amount of payment to each organization defrauded by Lindberg.

The companies and Lindberg’s lawyers may yet disagree with the special master’s conclusions. The judge will likely allow parties to comment on the recommendations. But as part of his 2024 plea agreement, Lindberg agreed to pay restitution and agreed to the appointment of the special master, reads an order from the federal judge in the case.

A question remains about exactly what level of assets Lindberg and his affiliated enterprises hold that can now be used to make restitution. Grier’s report estimates that primary restitution assets, as designated in court proceedings, may be as little as $1.16 billion.

“The Special Master believes that the value to be extracted from Defendant’s interests in the Primary Restitution Assets to pay restitution will not likely satisfy Defendant’s restitution obligations in full,” the report notes.

The amount of Lindberg’s other remaining assets is yet to be determined. Lindberg, in a North Carolina county jail since November 2024, was required by the court to produce a financial statement by the end of 2024, detailing secondary assets. But that statement was not provided until last month, and the special master’s team has not had time to fully examine it, Grier said in his report.

He does not believe those secondary assets will yield a significant amount.

The total amount of restitution recommended could have been higher. The special master identified liabilities for the victim insurance companies as high as $2.8 billion. But Grier gave credit for the value of some diverted assets and argued that outstanding policyholder liabilities alone don’t give an accurate measurement.

“While the consequential harm to individual policyholders is an important metric to examine if evaluating the comprehensive fallout of Defendant’s activities, using outstanding policyholder liabilities to calculate loss amounts in this Case is too indirect, and subject to too many variables outside of Defendant’s control, to act as the basis for the Special Master’s recommendation on restitution loss amounts,” the report notes.

The restitution, when finalized, will not go to the more than 200,000 policyholders of the raided life insurance companies, some of which are now in rehabilitation or liquidation proceedings. Those claims have already been paid by several states’ guaranty associations. But those guaranty associations are now owed millions, the report explained.

Grier’s team also did not use the higher interest rate suggested by a 2019 loan agreement, which could have resulted in a total restitution of $2.4 billion. Instead, the team used a “time value of money” interest rate to arrive at the $1.6 billion figure.

Colorado Bankers Life, for example, is owed an unpaid principal of $688 million, the report notes. With the time-value calculation, the amount of restitution comes to $821 million. (By comparison, the inflation rate since 2019 would put the payment at about $879 million.)

Grier, who has served as receiver in a number of bankruptcies, also noted that many people and firms that had requested reimbursement will be left out of the restitution plan. These include Lindberg’s ex-wife, “one or more” of his ex-girlfriends, disgruntled investors and former business partners, as well as other creditors.

“These other persons seeking restitution have failed to demonstrate a connection between their alleged damages and the crimes described in the indictment (or any crime at all),” the report said.

It’s now up to U.S. District Judge Max Cogburn to review the special master’s recommendations. In an order posted Monday, Cogburn agreed to bifurcate Lindberg’s sentencing from the restitution order. A prison-term sentencing hearing will come first. The sentence will combine Lindberg’s penal time for the 2023 financial fraud case with that for his conviction for attempting to bribe North Carolina Insurance Commissioner Mike Causey in 2018, the judge said.

That bribery conviction was overturned by an appeals court but Lindberg was convicted at a second trial in 2024. The judge directed both sides of the case to propose dates for the sentencing hearing, after which restitution hearings will be scheduled.

Top photo: Lindberg in an undated photo. (Robert Brown Public Relations/Greg Lindberg via AP, File)

Topics Carriers