Judge rules against loosening receivership over Greg Lindberg finances

A bid by disgraced financier Greg Lindberg to loosen the receivership controls over his business assets was rejected last week by the North Carolina Court of Appeals.

The ruling leaves in place stringent controls over Lindberg’s business entities and affirms a key receivership ruling. Lindberg’s challenge to an expanded restraining order was deemed procedurally abandoned.

Lindberg is assisting a special master to unwind his business entities in order to make victims whole. That includes hundreds of policyholders from the four insurance companies that Lindberg once controlled.

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.

Lindberg moved those insurers to North Carolina in 2014 and struck a deal with former insurance commissioner Wayne Goodwin, allowing him to invest up to 40% of his insurance company assets into affiliated companies. In other words, in other investments controlled by Lindberg.

After Goodwin lost his bid for reelection in November 2016, new Commissioner Mike Causey reduced the allowable cap on insurers’ affiliated investments to 10%.

As the deadline neared for Lindberg to meet the new order, regulators grew concerned that the insurers’ investment decisions could jeopardize the companies’ ability to meet obligations. In response, the parties agreed in May 2019 to negotiate a restructuring of the affiliated entities’ obligations.

On June 27, 2019, the parties entered into a memorandum of understanding under which Lindberg agreed to place certain special-purpose insurance companies — known as special purpose captive insurers, or SACs — under a new holding company governed by an independent board tasked with protecting policyholders.

In November 2024, Lindberg pleaded guilty to engineering a $2 billion fraud. Lindberg was convicted for a second time in May 2024 of trying to bribe Causey.

SACs formed by agreement

The agreement required the restructuring to be completed by Sept. 30, 2019, and expressly excluded non-SAC affiliated entities. Lindberg also agreed that the insurers would enter rehabilitation, giving regulators direct or indirect control over most of the SACs and authority to transfer them into the new holding company.

When the restructuring was not completed by the deadline, the insurers filed suit on Oct. 1, 2019, alleging breach of the memorandum of understanding and fraud. The plaintiffs sought specific performance of the agreement, as well as compensatory and punitive damages, and requested a temporary restraining order.

The trial court granted the restraining order, barring Lindberg and related parties from selling, encumbering, or otherwise devaluing the SACs. The order also applied to affiliated companies, citing the complex corporate structure through which Lindberg controlled capital flows, and restrained the defendants from dissipating personal assets, court documents say.

The parties later agreed to extend the restraining order and it remains in effect.

Following a bench trial held in June 2021, the trial court ruled in favor of the plaintiffs and ordered specific performance of the memorandum of understanding, but declined to award damages.

Frequent spending detailed

A North Carolina trial court tightened restrictions on entities tied to Lindberg in mid-2024 after finding repeated violations of the TRO.

On April 15, 2024, the rehabilitator, on behalf of the insurance companies, asked the court to modify the existing TRO and appoint a receiver, alleging that Lindberg-controlled entities had violated the order. That request was granted.

The court formally modified the TRO on May 10, expanding restrictions on Lindberg and any entities he directly or indirectly controlled. The revised order required court approval for transactions exceeding $10,000 and obligated defendants to give the receiver at least 72 hours’ notice before executing such transactions.

In a June 18 report, the receiver flagged several transactions that potentially violated the modified order, including a $633 million preferred-equity transfer, payments covering more than $500,000 in Lindberg’s personal expenses, and a payment exceeding $1 million to a non-insurance affiliate. Following a June 25 hearing, the court indicated it would further amend both the TRO and the receivership order.

Before the court issued those amendments, defendants sought approval for a $500,000 distribution from a trust to Lindberg's company, Global Growth. The defendants then asked the court to grant the receiver broader authority to approve transfers of funding for Global Growth’s personal and business expenses.

Minutes after that request was filed on July 12, the court issued a re-modified TRO, citing prior violations. The new order lowered the transaction threshold requiring approval to $5,000 and extended the restriction to transfers involving Lindberg or Global Growth, even when funds originated from non-insurance affiliates.

The receiver later opposed the defendants’ request for expanded authority, citing “numerous flagrant and repeated violations” of court orders and asking the court to address ongoing noncompliance.

On July 29, the lower court denied the defendants’ motion, leaving the stricter restrictions and receivership provisions in place.

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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 [email protected]. Follow him on Twitter @INNJohnH.