State Supreme Court to consider $600 million litigation involving Lindberg

Less than a month after a federal jury found former North Carolina political donor Greg Lindberg guilty a second time in a corruption and fraud case, Lindberg learned Thursday that the state’s highest court would take up separate litigation listing it as a defendant.

The civil case involves Universal Life Insurance Company’s attempt to collect $600 million from Lindberg. ULICO filed papers in December asking the state Supreme Court to intervene in its dispute with Lindberg.

The High Court on Thursday made an order allowing a replacement order. It blocks the state Court of Appeals’ Dec. 5 ruling in the case. A separate order explains that the Supreme Court justices will address two procedural issues in the litigation.

“This motion is authorized to determine (1) whether proceedings under Rule 31 require the return of an unexecuted writ before a trial court has jurisdiction to act and address adversarial matters before the Court of “appeal, and (2) whether the Court of Appeals erred in considering this interlocutory order as an appeal as of right under NCGS § 7A-27(b)(3)(b)”, according to the order signed by Judge Allison Riggs.

A unanimous Court of Appeals panel ruled in December to dismiss an injunction and another order related to Lindberg’s legal battle with ULICO.

Durham County Superior Court Judge Michael O’Foghludha’s rejected October 2022 order had blocked Lindberg from withdrawing more than $5,000 from any business entity he owned or controlled.

The appeal judges agreed that ULICO failed to follow proper procedures in obtaining O’Foghludha’s orders against Lindberg.

The Supreme Court granted ULICO a temporary reprieve from the Court of Appeal’s December 22 decision. The superseding writ blocks the Court of Appeals’ decision more permanently.

“The panel’s decision effectively overrules a previously issued opinion by the Court of Appeals,” ULICO lawyers wrote in December, citing a 2022 decision. “Unless overturned, the decision below below will disrupt the enforcement of judgments, create a loophole providing judgment debtors with 90 days to freely dissipate, move or hide their assets, and undermine this Court’s warning that a panel of the Court of Appeal may not not overturn the decision of a previous panel.

“The Court of Appeal’s erroneous decision significantly limits the ability of all judgment creditors to recover what they are owed, as well as the Superior Court’s power to impose sanctions on judgment debtors, such as here Greg Lindberg, for dissipation of assets. with the aim of escaping the judgment in question,” according to the ULICO court file.

“Thus, unless the Superior Court’s injunction is upheld pending review by this Court, the important issues raised by the panel’s decision may well become moot – and ULICO’s ability to recover the $524 million that Lindberg illegally siphoned from ULICO’s trust account will be significantly reduced, if not entirely lost,” according to the court filing.

The filing warned of potential consequences for other cases involving debtors. “If discretionary review is not granted, the superior courts will be required to conform their practice to the decision below and will be required to grant judgment debtors a period of 90 days during which they may freely dissipate their assets without be subject to contempt. »

“This will leave judgment creditors unprotected against unscrupulous judgment debtors who wish to defeat and evade enforcement of a judgment,” the company argued.

ULICO’s federal court judgment against Lindberg was $576 million as of Nov. 22, with interest amounting to nearly $32,000 per day, according to court documents.

A November 2022 order from O’Foghludha, called the charging order, affected 626 limited liability companies. The order called for all LLC distributions from these hundreds of entities to go to ULICO rather than Lindberg. The judge called on Lindberg to “produce all governing documents and audited accountings” related to the 626 LLCs, with governance and accounting updates every 60 days. The order required the LLCs to freeze all payments to Lindberg other than salaries.

The Court of Appeal judges agreed that ULICO had not followed the proper procedure in obtaining an injunction against Lindberg. The problem concerned a “returned enforceable title”.

“The officer who signed the writ of execution checked a box saying, ‘I have not served this writ of execution,’ and made a separate handwritten note: ‘According to the plaintiff’s attorney, the writ requested to be served dissatisfied,’” Judge Jeff Carpenter wrote for the Court of Appeal. “Additionally, the writ indicates that the date of receipt and the date of return are the same: September 21, 2022.”

“In other words, the plaintiff simply asked the deputy to check a box and return the writ – a far cry from the required attempted enforcement,” Carpenter added. “Because plaintiff did not attempt to enforce the writ, the trial court lacked jurisdiction to issue the injunction.”

Court of Appeal judges also questioned the charging order. “Defendant contends that the charging order is erroneous because it includes LLCs in which defendant has no ‘economic interest.’ We agree,” Carpenter wrote.

“There are discrepancies in the record regarding the number of LLCs in which defendant has an economic interest,” Carpenter explained. “Defendant does not challenge the validity of the charging order regarding 73 LLCs, because defendant admits to being a member of those companies. The plaintiff, for his part, asserts that the defendant is a member or manager of 190 LLC and has an economic interest in the remainder. An affidavit filed in the United States District Court for the Middle District of North Carolina, by a licensed third-party attorney, lists 329 LLCs of which the defendant is a member or manager. Yet the charging order states that the defendant has an “economic interest” in 626 LLC.

“There is conflicting evidence in the record regarding the number of LLCs of which defendant is a member, but all evidence suggests that there are fewer than 626,” Carpenter wrote. “And there is nothing in the record detailing how much ‘economic interest’ was legally assigned to the defendant.”

O’Foghludha “erred in including 626 LLC in the charging order,” the appeals judges determined. “The record indicates that the defendant owned interests in a much smaller number. On remand, the trial court must reduce the number of LLCs in the charging order to the number of LLCs of which the defendant is a member or assignee of an economic interest.

Judges John Tyson and Toby Hampson joined Carpenter’s decision. The three judges heard oral arguments in the case on October 4.

“I don’t think it’s unfair that when we have a $600 million judgment, in which someone siphoned money from a trust account, we seek help from the Superior Court of the State to proceed with a rapid execution” of the judgment, declared lawyer Christopher Browning, representing ULICO, during this hearing.

ULICO said in court filings that it “stands as Lindberg’s largest judgment creditor.” The company says its judgment stems from Lindberg “emptying” a trust fund designed to pay annuities to policyholders in Puerto Rico.

“They have our money,” Browning said of Lindberg and his companies. “We have a judgment that allows us to enforce the ability to get our money back.”

“It doesn’t impact his ability to go out and earn a living, hold a job, pursue a trade,” Browning added. “He says he can’t make a living because instead of paying our judgment, he wants to spend it on something else.”

“He’s been fighting us since May 2, 2022, when we had our judgment in place,” Browning said. “He kept us at a distance.”

A federal magistrate judge determined that “Greg Lindberg had dissipated his assets” and that he must post a bond of “hundreds of millions of dollars” to block any legal proceedings involving ULICO, Browning argued. He accused Lindberg of wanting to “drag this out as long as possible.”

Attorney Matthew Leerburg, representing Lindberg during oral arguments, said O’Foghluda’s orders prevented Lindberg from paying all bills, including attorney’s fees. “Mr. Lindberg doesn’t want to delay,” Leerburg said. “He doesn’t make any dollars from his businesses. He can’t pay his own lawyers. There is no incentive to delay. There is an incentive to do call immediately.

Leerburg referred to Global Growth, the Lindberg company that “ultimately runs and owns about 100 companies operating around the world – real companies with real employees doing real business around the world.” This is Mr. Lindberg’s job. He just can’t get paid for it.

A federal jury found Lindberg and co-defendant John Gray guilty earlier this month in a retrial on bribery and fraud charges that initially sent Lindberg to federal prison with a seven-year sentence. The 4th United States Court of Appeals later threw out the convictions due to problems with jury instructions.

Before the lawsuit against him, Lindberg gained attention in the 2010s as a top donor to political campaigns in North Carolina. He supported Democratic Insurance Commissioner Wayne Goodwin’s unsuccessful reelection bid in 2016. Goodwin lost to Republican Mike Causey. The federal case against Lindberg and Gray stemmed from accusations that Lindberg bribed Causey. Causey worked with federal authorities, including wearing a surveillance wire while dealing with Lindberg.

Lindberg became the largest financial contributor in 2017 to the North Carolina Republican Party and two groups supporting then-Lt. Gov. Dan Forest, a Republican. Forest lost the 2020 gubernatorial race to incumbent Democrat Gov. Roy Cooper.