Does a Successful Appeal Loom for Greg Lindberg?

The U.S. Attorney’s Office in Charlotte, North Carolina filed a recommendation that Robert Cannon “Robin” Hayes, former 11-term congressman and former head of the North Carolina GOP receive zero prison time at sentencing on August 19. Hayes, 75. faced up to six months in prison in a bribery case against himself, Durham businessman Greg Lindberg, and two other defendants.

U.S. District Court Judge Max O. Cogburn obliged and gave Hayes zero prison time. Hayes was charged with five counts and Lindberg was charged with two. Yet Lindberg was not so lucky, with Cogburn sentencing Lindberg to 87 months, despite the fact that Hayes advised Lindberg that “there was nothing wrong with” the donations at issue in the case.

Lindberg says he will now appeal, citing the actions of both North Carolina Insurance Commissioner Mike Causey, and the court behavior of Judge Cogburn.

The Causey Method

It could be that Commissioner Causey, elected in 2016 in a very tight race against his predecessor Wayne Goodwin, might have a pattern of trading political favors for help in getting elected. This was recently brought to light in Civil Complaint No. 20-695 in the United States District Court for the Middle District of North Carolina. The 100-page complaint from Dallas McClain, whose Cannon Surety bail bonds company had been put out of business by Causey, offered shocking statements about Causey’s motivations in attacking Cannon.

The first item of McClain’s complaint stated actions taken by Causey were: “because of a conspiracy among elected officials, government employees, and their lawyers all working in concert to favor and support their campaign contributors, influential legislators, and Mr. McClain’s competitors.”

In exhibits attached to the complaint, bail bond professionals Alwanda Williams Beane and Todd Reavis claimed that “up to and including January of 2017, Defendant Causey had zero bail bonding experience.” Yet he went after Cannon Surety, the #1 bail bonds company in the state, with a fervor. Beane, a decades-long friend of Causey who worked on his campaign, said Causey told her certain donors gave him a lot of money, “so he was eventually going to have to do what they asked.”

Further, in a meeting with Beane and Reavis in November 2017, two months after the seizure of Cannon Surety, Causey told Beane and Reavis “he [Causey] was forced to shut down Cannon and that he was told to do so by ‘Senator Phillip Berger and former Senator Tom Apodaca’.”

Item Number 7 of the McClain complaint stated: “Internal DOI documents reveal the Defendants plotted to shut down Mr. McClain’s company astonishingly in order to cut off his funds so he could not protect and/or defend himself and Cannon in a lawsuit he was then pursuing against a third-party surety competitor and others who were friends and supporters of Defendants.”

In a similar lawsuit filed against Causey by Greg Lindberg and his companies Global Growth, LLC and GBIG Capital, LLC, examples are given of past alleged ethical lapses by Causey. He repeatedly violated local food market rules in 2009 while an organic farmer, according to the 234-page lawsuit. He repeatedly violated state election laws in 2012 and provided false information on state ethics filings in 2018 and 2019, according to the suit.

Curiously, Exhibit 1 of a Lindberg suit against Causey is a February 10, 2016 letter to Douglas Slape, Chair of the Financial Analysis Working Group, a working group of the National Association of Insurance Commissioners’ Financial Condition Committee. The letter concerned Southland National Insurance Corporation, whose portfolio was being managed by Greg Lindberg. The seven-page letter stated in part: “The North Carolina Department of Insurance does not consider the company to be financially troubled or to exhibit characteristics of trending toward a financially troubled status.”

The letter was sent from the office of Insurance Commissioner Wayne Goodwin and signed by Jacqueline R. Obusek, CPA, Chief Financial Analyst.

Southland National was domesticated in Alabama when Lindberg and Global Growth approached senior-level DOI staff in early 2014 to discuss the planned acquisition of the company. The department approved the acquisition in December 2014 and asked for Southland National to be moved to North Carolina. So, for at least two years, everything was fine with Southland and the DOI, but when Mike Causey took over as Commissioner and selected Jacqueline Obusek as his deputy, things changed.

Causey’s Losing record

When Mike Causey was elected North Carolina Commissioner of Insurance in November 2016, it was the first elected office he had ever held. He’d sought the office unsuccessfully in 1992, 1996, 2000, and 2012. He came in seventh in the 2014 Republican Party primary election for the United States House of Representatives, North Carolina District 6.

Yes!Weekly reported the following about Causey’s ethical practices: “Causey’s business practices have not been without controversy. His new business launch comes on the heel of a decision by the Greensboro Parks & Recreation Department to suspend him from the city’s farmers market. Causey ran afoul of the city by selling produce that he had not personally grown on his farm, bypassing guidelines meant to give preference for locally produced goods and ensure that customers have accurate information about the source of food products.”

The article, which now appears to be gone from their website but can be found as an attachment in Lindberg’s lawsuit also stated: “You have continued to bring and sell produce at the market that was not approved on your 2008-’09 Variance to Sell nor was it confirmed by the Grower’s Certificate daled 9122109 (for example, garlic, green beans, cabbage, okra, watermelons, corn, blueberries). This is the third time this calendar year that we have documented your bringing items to sell at the market which you have not personally grown, and for which you have neither requested nor received a variance prior to selling.”

If you read more of Lindberg’s lawsuit that details Causey’s alleged ethical lapses, normal social perception would paint Causey as ethically troublesome, but on the coattails of Donald Trump in 2016, Republican Causey managed to get elected by less than 1% of the vote.

Causey’s Revenge

Causey removed more than a dozen senior-level DOI employees on his first day in office. There had never been a mass firing like this in the 100+ year history of the department. Causey had a subordinate pass out the pink slips and did not speak to any of the DOI employees who were fired. He later admitted he removed the officials because they were “Goodwin’s lieutenants” who “did not share his views.”

This was not illegal on Causey’s part, but it illustrated a vindictive nature that would soon be turned on Greg Lindberg. The Durham businessman had been the largest GOP donor in North Carolina, but chose to back Democrat Wayne Goodwin, with whom he had experienced a good working relationship.

In Lindberg’s suit against Causey, he revealed that after the man took office “Turnaround on customary transactional holding company act filings took months instead of days.” This eventually led to complaints against Deputy Commissioner Obusek, but before that, the new Commissioner ordered an unprecedented scrutiny of Lindberg’s companies.

As Lindberg was busy acquiring out-of-state insurance companies, intending to bring them to  North. Carolina, he was also merging two wholly-owned Southland National subsidiaries into one company. Causey, within 30 days of taking office, ordered DOI staffers to begin investigating Lindberg. John Woodard, then with the DOI, said Causey was concerned about “Lindberg’s business activities.”

As always, Lindberg and his associates complied, but they were soon baffled. In May 2017, the department reported that Southland National’s documentation was insufficient to support the earlier finding. Lindberg’s company submitted a written rebuttal on June 8^th, then met with senior-level DOI staff on June 29, 2017 to discuss the findings.

A few months earlier, Lindberg and his former wife each donated a symbolic $5,000 to Causey’s reelection campaign, perhaps to alleviate any latent Causey grudge over Lindberg’s support of former Commissioner Goodwin. Causey returned the donations and later offered two different reasons. One: “[t]here was an ongoing, just a routine financial examination, and out of an abundance of caution, we didn’t want any questions to be raised.” Two: Lindberg “was a man that was not on my team when I was running,” and “[h]e was a major fundraiser for my opponent.”

This began a protracted battle between Causey’s DOI and Lindberg’s companies that culminated in Causey secretly taping Lindberg 107 times under the auspices of the FBI, looking for a bribe offer. During this time, a change in DOI rulings caused the acquisitions of new insurance companies by Lindberg to fall apart, due to an inability to rearrange financing agreements to suit deadlines imposed by Causey’s DOI.

Causey became very active in disseminating the Department’s findings among other state regulatory officials. This harmed Lindberg’s insurance-related operations in other jurisdictions. Causey went to the media as well. In February of 2019, The Wall Street Journal wrote a one-sided article on Lindberg and followed with two more.

In November 2017, Causey complained to other North Carolina public officials about Lindberg’s personal financial information and included tens of thousands of pages of financial details on Lindberg’s assets.

Causey falsely told the FBI that Lindberg gave him a $110,000 campaign donation, Lindberg claims. He said this was a reward for Causey calling and endorsing Global Bankers Insurance Group to an inquiry from the State of Michigan. GBIG was a managing company for several of Lindberg’s insurance and reinsurance companies. Causey also allegedly told the FBI that Joyce Kohn, his campaign coordinator, had received the $110,000 and returned it, at Causey’s request. Kohn, however, affirmed that neither the receipt nor the return ever happened.

Lindberg had invested hundreds of millions of dollars in the insurance companies GBIG acquired and did not receive dividend payments. He provided over $30 million of capital to improve the credit ratings of loans to companies where he maintained a significant economic interest. He paid down loans to companies as well. He offered his entire net worth as a backstop guarantee of all insurance company monies invested in or loaned to affiliates.

Despite this, Causey and his DOI put Lindberg and GBIG through hell. By February 2018, however, Causey seemed to change his tune about having Lindberg as a potential political donor. There finally came a day when Causey said, on a phone call about Lindberg, “I have been thinking about it. You said that Greg wanted to meet with me. I’d be willing to do that with you, nobody but you and him and me somewhere away, somewhere away from Raleigh, away from Chapel Hill where we, we’ll have privacy, and nobody is going to see us.”

And then in the meeting, which was being videotaped without Lindberg’s knowledge, Causey got to the point, telling Lindberg, “I’ll guess what I’ll say is, what’s in it for me.”

In response to Causey’s demand, Lindberg suggested a 501(c)(4), which he’d done for other candidates, an entirely legal structure. Known as an Independent Expenditure Committee, this sets up a nonprofit organization designed to promote social welfare causes but is allowed to participate in politics, if politics is not the organization’s primary focus. Accordingly, a 501(c)(4) must spend less than 50 percent of its money on politics.

All of Lindberg’s Advisors Assured Him He Was Doing Nothing Wrong

In a letter to his constituents after the conclusion of all trial proceedings, Lindberg wrote that everyone on Lindberg’s team was looking to Robin Hayes, a former Congressman with decades of political experience, for guidance on what was right and wrong.

“I called my lawyer, I hired experienced political consultants, and I asked experienced politicians like Robin Hayes for advice,” Lindberg stated. “I had no idea anything was potentially improper. I emailed my lawyer when North Carolina Insurance Commissioner Mike Causey asked for a ride on my airplane – and my lawyer said it was complicated, so we decided not to do it.  I even called my lawyer when I met with Mr. Causey and he ordered me to hang up so my lawyer couldn’t see his attempt to entrap me.

“No one – not my lawyers, not Robin Hayes, not the consultants I had hired, not the FBI, not Mike Causey – ever gave me a simple one-word warning that there was anything amiss. In fact, Mike Causey congratulated me on doing ‘an outstanding job’ answering ‘hardball questions’ from regulators.

“Had any one of these people with decades of political experience given me just a simple warning – or if Mike Causey had simply been honest – none of this mess would have occurred. I would have stopped everything immediately with just the slightest warning. I am a careful and conscientious person. We have compliance plans for just about everything in our organization. I thought I had hired the right advisors who knew the law.”

Causey Demands Over $1 Million From Lindberg

The final donation amount mentioned to Causey by Lindberg in their fateful meeting was two million dollars, meaning that the 501(c)(4) Lindberg proposed for Causey could spend a bit less than one million on Causey’s 2020 campaign, and (one would hope) more than a million dollars on social causes in North Carolina.

But that’s not how it played out. Lindberg, Hayes, and two others were indicted on bribery charges. A highly publicized eight-day trial was held in federal court in Charlotte, and on March 5, 2020 Lindberg, his associate John Gray, and Robin Hayes were found guilty on two public corruption charges. Lindberg associate John Palermo was found not guilty. Lindberg and Gray both faced a maximum of 30 years in prison.

As reported in the News & Observer, “The recordings played for the jury showed that the defendants repeatedly urged Causey to remove Jackie Obusek, the deputy N.C. insurance commissioner responsible for regulating Lindberg’s company. They contended Obusek was unfairly hurting the reputation of Lindberg’s companies and hampering their ability to make investments and acquisitions in other states.”

The FBI spent eight months, hundreds of hours, and made over 107 attempts to try to entrap Lindberg. In many jurisdictions worldwide, this type of aggressive entrapment by law enforcement would not be permitted. Why was such aggressive entrapment of a law-abiding citizen with no prior criminal record even allowed, or deemed necessary?

Given what was claimed in Lindberg’s civil suit against Causey and Obusek, it very well could be that it was Causey who was harming the Lindberg companies’ reputation. During his secretly videotaped meeting with Lindberg, Causey did not reveal that Obusek had been fired months before. Lindberg and his associates might have acted differently had they known that.

Causey’s Motivations Must be Questioned

Speaking to the effects of the Insurance Commissioner, Lindberg said this: “Mr. Causey had enormous power over my companies and still does so today. What was I supposed to do when he aggressively and repeatedly demanded donations? We didn’t have a choice but to concede to his demands. As we later found out, he forced my insurance companies into rehabilitation anyway, based on lies he told the Wall Street Journal.

“Causey lied to the FBI and the government telling them one of my largest assets was ‘worthless’ – despite numerous audits, valuations, and an audited personal financial statement, all of which was provided to support the asset’s $900 million+ value. The FBI, the media and others accepted Causey’s lies at face value. These lies have cost our companies hundreds of millions of dollars in losses,” Lindberg said.

Lindberg alleges Causey lied to the Court when denying being obsessed with researching Lindberg and his companies “at all hours of the day and night.” Why? Because of evidence that Causey had over 1,100 communications with the FBI as part of his efforts to induce the FBI to investigate Lindberg.

Perhaps that many contacts were necessary, given the volume of the paperwork over the insurance companies Lindberg was acquiring and attempting to move to North Carolina. Mike Causey was regulating all these maneuvers. Nevertheless, Causey seemed to suffer from recurrent amnesia at trial. In response to basic questions on the stand, Causey claimed “I do not recall” over 100 times and (by Lindberg’s estimation) perjured himself during trial about being concerned about donations from owners of companies he regulates.

“At the same time Causey was supposedly concerned about alleged donations from me,” said Lindberg, “Causey received large donations from the owners of other insurers like Investors Title, as well as large donations from the political action committees for numerous other North Carolina insurers. Causey also testified in a deposition in October of 2017 that he did not find it inappropriate to receive large donations from companies he regulates – the opposite of what he said under oath in the trial.”

How Important was the Idea of an “Official Act” to the Lindberg Jury?

The first part of News & Observer article title was “A shouting jury, then a verdict.” It was reported that the jury spent “12 hours of deliberations spread over three days” but there was no explanation about why the jury was “shouting.” Could it have been over the “official act” question? Judge Cogburn, oddly enough, did not let the jury decide – he instructed the court that he said it was an official act and therefore, it was so.

18 U.S. Code § 201 concerns “Bribery of public officials and witnesses.” Section 201(a)(2) states: “the term ‘person who has been selected to be a public official’ means any person who has been nominated or appointed to be a public official, or has been officially informed that such person will be so nominated or appointed.”

As Insurance Commissioner of North Carolina, Mike Causey is by legal definition a public official.

18 U.S. Code § 201(a)(3) defines the following: “the term ‘official act’ means any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.”

It goes on to describe how it is a crime to influence a public official to commit an official act. Would an ordinary citizen know the legal definition of an official act without reading the statute? Most likely not. How about the Lindberg jurors? Since he and his co-defendants were being accused of asking Causey to commit an official act, might understanding the definition be crucial in deriving a just verdict?

Of course, but what might the official act have been? Getting another DOI official overseeing GBIG instead of Jackie Obusek? Surely not, because she was gone from the department by the time of the fateful meeting. Greg Lindberg did not know that, but is a shift of DOI personnel the same as asking that someone be fired in return for a campaign contribution? Lindberg apparently did not have that in mind. He and his associates simply wanted more equitable and timely treatment, which was not unreasonable.

On Questions of Character

Prior to recommendations that Robin Hayes receive zero prison time at sentencing, the Cogburn court received a flood of letters commending the character of Hayes, who had no prior convictions. This might be expected for someone who had been elected to Congress 11 times, but what about self-made billionaire Greg Lindberg?

Lindberg’s good works rarely fell under public scrutiny in the way the activities of a Congressman and state political party chairman do. Why? Because Lindberg has stated (believe it or not) that he considers himself socially shy.

A great many wealthy people do good works that benefit a lot of people but never publicize it. For example, the Hearst Foundation donated $50 million to help fighting coronavirus. The Foundation, originally founded in 1946 by newspaper and magazine publisher William Randolph Hearst, gave emergency funding in early 2020 to over 100 U.S. medical, humanitarian and cultural organizations impacted by the pandemic.

After what he went through before and during his trial, Greg Lindberg thought of what it might be like for people without his financial means to fight a devastating indictment brought against them by the federal government. So, in June of 2020, he made a $1 million pledge to the ACLU’s Criminal Law Reform Project (CLRP). This program focuses its work on the “front end” of the criminal legal system – from policing to sentencing – seeking to end excessively harsh criminal justice policies that result in mass incarceration, over-criminalization, racial injustice, and stand in the way of a fair and equal society.

Ah, but you might say, he only did that to make himself look good before sentencing. So what that in the previous January, he pledged a $50,000 donation to Special Olympics North Carolina (SONC) as a year-round Healthy Communities partner focused on nutrition. Just PR, right? A piffle from a very rich man.

How about the 2018 $1 million donation to a scholarship program for business students at historically black colleges and universities in North Carolina, $200,000 a year for five years? Probably just a tax write-off? Except socially shy Lindberg did not attend the press conference announcing the gift and naming the scholarships in his honor.

As with Robin Hayes, pre-sentencing support letters were sent to Judge Cogburn about Greg Lindberg, from his parents, from employees, and others you would expect to back his character. Like Hayes, Lindberg had no prior convictions. What can be found reading the letters, though, show a charitable side to Greg Lindberg rarely publicly exposed.

Bridgett Hurley, currently doing leadership development and projects for social good for Lindberg’s Global Growth company, wrote about launching eye care camps in Faridabad, India with the goal of eradicating blindness in the town where the company has its main Indian office. “We have served more than 6,000 patients and provided 3,000 pair of eyeglasses as well as hundreds of cataract surgeries,” she related. “In the 18 months before the indictment and trial, he donated $150,000 to food banks and more than $200,000 to other homelessness and healthcare-related charities.”

Chris Bogan, CEO of Best Practices, LLC, wrote about Lindberg always being exceptionally generous – of spirit, of mind and of pocket – and never asking for anything in return. “For more than 10 years, Greg and I participated together in a monthly CEO-peer-group facilitated through Vistage, which provides the heads of small to mid-sized companies with peer-group feedback, executive learning, and leadership counsel…. During Vistage meetings, when he would counsel others, he was always clear about avoiding business transactions or situations that leaned towards being illegal, amoral, or out of bounds. He’d simply say: ‘That would be illegal or that would irk the IRS or that would bring in the Feds… It’s not worth the risk… You’ll spend a fortune on legal fees and it’s not worth doing’.”

Bogan had known Lindberg for 15 years. Did the billionaire suddenly lose his moral compass over working with a troublesome new Insurance Commissioner in North Carolina?

Erin Masercola’s letter revealed that Greg Lindberg is color blind and she witnessed that lead to an awkward social situation. She said he visited a conference involving a company he’d just acquired—an education and certification company for medical coders that would likely have gone under without him. “All the coding ladies wore eager to get a glimpse of the person who’d saved their association. ‘Is that him?’ they asked me as they pointed to a tall, gawky redhead ambling through the crowds. ‘But what’s that weird thing on his face?’ The weird thing was a bubblegum-pink Bluetooth. ‘I didn’t know Bluetooth had a Hello Kitty collection,’ I commented when I saw him. I remember feeling irritated with the person who’d sold him that incongruous Bluetooth.”

Keith Hollis, a fifteen-year Lindberg employee, told the judge about receiving a diagnosis of cancer, after which Lindberg provided full support and compensation for Hollis and his family throughout the period of his hospitalization and treatment.

Ronny Vogel, CFO of commercial funding group Assets America®, described Greg Lindberg as always doing what he says he’s going to do. “He is a breath of fresh air in the financial industry, in a financial world that is overly-abundant with users and abusers. Mr. Lindberg’s words, statements and handshake are as solid as steel or in his case, gold — he has the Midas touch for sure.” Then Vogel describes a new business Lindberg is creating.

“Right now, Mr. Lindberg is putting together a mask-making manufacturing firm, The USA Mask Company™, that will most assuredly become the USA’s, and within a few years the world’s, largest mask manufacturer with over 1 billion N95 masks made per year (by EOY 2021). The facility will be based out of Macon, GA with over 2.1 million square feet and Mr. Lindberg will employ minority ex-cons from the local community. This amazing manufacturing plant will most probably become one of the USA’s Strategic PPE (personal protection equipment) Reserves. This new Lindberg business will produce made in the USA PPE, it will provide countless jobs to the local Macon, GA community and to persons in great need of such jobs.”

Currently, Lindberg employs 8,500 people worldwide. As of this writing, no one other than the court knows how sentencing will go, but since a retrial was denied by Judge Cogburn, there will doubtless be an appeal.

An appeal is a legal argument presented to a panel of appellate judges who will affirm the decision of the trial court or reverse the decision to the trial court, in which case a new trial may be ordered. The appellate court may also “remand” the case to the trial court, such as when a new standard under the law has been determined and the trial court needs to either retry the case or to re-hold a sentencing hearing.

Will any of the considerations listed here move the appellate court to change the current outcome?

Peter Tomasek, an attorney licensed to practice in several state and federal courts across the U.S., expressed optimism at Lindberg’s chances on appeal. “The question of whether the allegedly requested action at issue–the reassignment or replacement of a staff member–constituted an ‘official act’ is at the least an open question,” he told me.

“And the fact that the judge didn’t have the jury answer that question might be a potential issue on appeal as well.” The potential constitutional questions troubled him, too–for reasons both in and out of the courtroom. “The idea that an elected politician is serving as an informant against one of his opponent’s biggest campaign supporters should at least make us ask questions,” Tomasek said.

Some of the judge’s decisions in the Lindberg case seem, at a minimum, inconsistent with Fourth Circuit case law. One curious note is that no predisposition toward bribery was ever discussed in court. Lindberg weighed in: “On the last day of jury deliberations, the jury asked a question to the judge about predisposition that went unanswered. Had that question been answered, the jury would have been told that evidence beyond a reasonable doubt of predisposition to commit a criminal act must be present before the involvement of government agents who are seeking to entrap someone.”

There are numerous reasons the Fourth Circuit should thoroughly dissect the events of the Lindberg trial. Ultimately, despite what’s been seen in the media, the case against Mr. Lindberg may have been fundamentally flawed from start to finish.