Appeals court upholds $524 million judgment against Greg Lindberg

Troubled financier Greg Lindberg's bad year got worse Monday when a federal appeals court upheld a $524 million judgment against him.

The Fourth Circuit Court of Appeals affirmed the judgment for Universal Life Insurance Co. with an economy of words.

"After careful review of the record and with the benefit of oral argument, we find no error in the district court’s well-reasoned ruling," the two-page ruling concludes.

Lindberg did not respond to a request for comment made through his publicist.

In 2017, ULICO reached a deal with Lindberg’s then-insurance company, Private Bankers Life and Annuity, to reinsure a block of business. By February 2020, the deal had gone bad.

ULICO "initiated arbitration proceedings against PBLA,” court documents say, and asserted that Lindberg “drained over $524 million cash-equivalent assets . . . from the [ULICO] trust account and replaced them with assets that do not conform.”

Lindberg insurer found at fault

An arbitral panel awarded judgment to ULICO, finding PBLA at fault and ordering it “to pay [ULICO] $524,009,051.26 within ten days of the entry of the award.” The award was confirmed by a final judgment in the U.S. District Court for the Southern District of New York.

When PBLA failed to pay the arbitration award, ULICO filed a breach of contract action against Lindberg in the U.S. District Court for the Middle District of North Carolina, the venue prescribed by the guaranty agreement.

After discovery, ULICO filed a motion for summary judgment, claiming that the arbitral award was conditioned on a breach of the reinsurance agreement, which unlocked Lindberg’s obligations under the guaranty agreement.

The district court granted ULICO’s motion for summary judgment. The court found that the
guaranty agreement contained unambiguous language regarding Lindberg’s obligation to cover PBLA’s obligations under the reinsurance agreement, finding that “there is no ambiguity and no genuine issue of material fact as to . . . [the] issues on [ULICO’s] breach of contract claim.”

The actual bill for Lindberg is likely to be much higher. As reported by The Carolina Journal, ULICO’s federal court judgment against Lindberg stood at $576 million on Nov. 22, with interest accruing at almost $32,000 per day, according to court filings.

State court ruling

The appeals court ruling was not the only court decision to go against Lindberg recently. The North Carolina Supreme Court allowed a motion to withdraw a petition for discretionary review in Causey v. Southland National Insurance Corp., Insurance Commissioner Mike Causey said.

Likewise, the court also dismissed the remaining items in the receivership case. The ruling could finally open the door for the state liquidation of Lindberg's former insurance companies.

On June 27, 2019, Southland National Insurance Corp., Colorado Bankers Life Insurance Co., Bankers Life Insurance Co. and Southland National Reinsurance Corp. – all owned by Lindberg – were placed in rehabilitation by order of the Superior Court of Wake County, North Carolina.

Since then, regulators have worked to unwind the complex financial web of companies and accounts controlled by Lindberg. InsuranceNewsNet wrote about the mysterious receivership process in July 2022.

Causey celebrated last week's state Supreme Court ruling as a victory for policyholders.

“The Supreme Court’s decision to dismiss the baseless appeal of the order placing Colorado Bankers Life and Banker’s Life into liquidation opens the door for policyholders to finally receive long-overdue relief from the various state guaranty associations," Causey said in a statement. "As this process unfolds, I will continue to aggressively pursue every option to ensure that all the policyholders are repaid."

Convicted in 2020 on bribery and fraud charges, along with associate John Gray, Lindberg served 633 days behind bars before the conviction was vacated due to improper jury instructions. Lindberg and Gray were convicted a second time in May and face 30 years in prison.

Prosecutors say Lindberg and Gray gave, offered, and promised Causey millions of dollars in campaign contributions and other things of value in exchange for the removal of his senior deputy commissioner, who was responsible for overseeing the regulation and the periodic examination of Lindberg’s Global Bankers Insurance Group.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.