SEC asks judge to force Greg Lindberg to explain missing $57 million

The Securities and Exchange Commission (SEC) is asking a North Carolina judge to force embattled financier Greg Lindberg to explain what happened to the $57 million he allegedly siphoned off the insurance companies he once owned.

The SEC is suing Lindberg in the U.S. District for the Middle District of North Carolina, claiming he teamed up with former insurance executive Christopher Herwig to defraud investors of $75 million.

A large chunk of that money came from the insurance companies Lindberg owned at the time: Southland National Insurance Corp., Colorado Bankers Life Insurance Co., Bankers Life Insurance Co. and Southland National Reinsurance Corp. They were placed into rehabilitation by a state court order in 2019.

“In some instances, Lindberg and Herwig simply stole the money outright through an illogical and opaque set of transactions designed to hide their misappropriation,” the SEC brief reads. “They also treated the insurance companies as their private piggybanks. They routed millions to Lindberg to bankroll his lavish lifestyle and his unrelated businesses by advising the companies to use their good assets to buy bad assets.”

Herwig reached a settlement agreement with the SEC in July 2023.

Wants it both ways

Lindberg is trying to have it both ways, the SEC argues, claiming to have returned the $57 million while refusing to provide any evidence or answer questions.

The money was diverted to the Lindberg-owned Academy Financial Assets. Lindberg claims he returned the money via payments from AFA to Global Bankers Insurance Group, the Lindberg-owned holding company for his insurers, court documents say.

“But GBIG is a separate legal entity from the [insurers], so it’s unclear whether any of the $57 million that AFA obtained went back to the NC Insurance Companies, and, if so, when and how the money made its way back,” the SEC writes.

“Lindberg has failed to give straightforward answers to those straightforward questions,” the brief reads. “Lindberg responded by generically pointing to AFA’s bank records, without identifying a single document. But Lindberg has refused to identify a single transfer of money that AFA purportedly made to GBIG based on those documents.”

Lindberg’s publicist did not respond to a request for comment.

On Monday, the Fourth Circuit Court of Appeals affirmed a $524 million judgment for Universal Life Insurance Co. against Lindberg.

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.”

Convicted in May

Lindberg is already staring at decades in prison.

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.

The SEC complaint names a Malta-based registered investment adviser, Standard Advisory Services Limited, and two top executives: Lindberg and Herwig.

From July 2017 through 2018, according to court documents, Lindberg and Herwig violated their fiduciary oath to advisory clients by fraudulently causing them to engage in undisclosed related-party transactions that were not in their best interest.

© Entire contents copyright 2024 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

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.