Where does Greg Lindberg rank among all-time life insurance fraudsters?

The story of Greg Lindberg includes spectacular success in the private equity world, followed by allegations of a hedonistic lifestyle funded by $2 billion siphoned off life insurance companies he acquired along the way.

Lindberg’s empire would crack in 2018 when North Carolina Insurance Commissioner Mike Causey wore a recording device to help the FBI build a case against the mercurial billionaire.

Lindberg was convicted for a second time of attempting to bribe Causey in May.

In a separate case, Lindberg pleaded guilty Tuesday to one count of conspiracy to commit offenses against the United States, including wire fraud, investment adviser fraud, and crimes in connection with insurance business, and one count of money laundering conspiracy, according to the Justice Department.

Hundreds of policyholders, most of whom had Bankers Life or Colorado Bankers Life policies, waited years for their money.

During his seven-year legal odyssey, Lindberg wrote books and claimed to be an anti-aging guru who would “live forever.” He allegedly paid private investigators to tail models he wanted to date and spent $50 million on a scorched Earth legal defense. Lindberg, 54, admitted in court documents to fathering eight children, all now under the age of 7.

He faces a maximum penalty of five years in prison on the conspiracy to commit offenses against the United States count and 10 years in prison on the money laundering conspiracy count, prosecutors said. The bribery conviction carries a maximum sentence of 30 years.

“Lindberg created a complex web of insurance companies, investment businesses, and other business entities and exploited them to engage in millions of dollars of circular transactions. Lindberg’s actions harmed thousands of policyholders, deceived regulators, and caused tremendous risk for the insurance industry,” said U.S. Attorney Dena J. King for the Western District of North Carolina.

Now that cases against Lindberg are nearing a close and only prison awaits, where does his rank among the all-time life insurance scandals? While not all of the details are known yet, based on the dollar amount and the sheer arrogance of attempting to bribe an insurance commissioner, Lindberg might stand alone on top.

Here are the most headline-grabbing life insurance scandals in U.S. history:

Equitable Life Assurance Society (Early 1900s)

Equitable Life, one of the largest life insurers of its time, faced a scandal in 1905 over mismanagement, corruption, and excessive executive compensation. Problems started with rumors that James Hazen Hyde, a vice president at Equitable Life, charged a lavish costume ball to the company's account. The ball was a Versailles-themed affair that cost an estimated $200,000, or $6,782,000 in today's dollars.

Impact: Public outcry led to significant regulatory changes, including the Armstrong Investigation in New York, which introduced regulations around policyholder protections and investment limitations for life insurers. This scandal is considered a pivotal moment in U.S. insurance regulation. Hyde resigned from the company and moved to France.

National Heritage Life Insurance Co. (1995)

A group of fraudsters took over National Heritage Life in 1990, paying with a check for $4 million, although they did not actually have $4 million. Things went downhill from there.

The New York Times described their scheme as "a series of numbingly complex mortgage and stock frauds." Sholam Weiss led fraudsters siphoning $450 million from the National Heritage. The majority of the insurer's policyholders were elderly, and federal authorities "said it ranked as the largest insurance company failure caused by criminal acts in United States history."

At the time of the insurer's liquidation in 1995, it had about 35,000 policyholders, of whom about 10,500 lived in Florida. Many lost their life savings due to the fraud, though various guaranty funds reportedly repaid policy and annuity holders about $420 million.

Impact: National Heritage's collapse was one of the largest insurance failures of the time, and it prompted insurance regulators to strengthen requirements around financial transparency and auditing. In 2000, Weiss was sentenced to 845 years in prison. On Jan. 19, 2021, President Donald Trump commuted his sentence.

Martin Frankel Scandal (1999)

Martin Frankel, a financier, used fake companies to acquire seven life insurance firms in five states, then siphoned off their funds for personal use. The complex scheme involved shell companies and international bank accounts, through which he embezzled over $200 million.

Among Frankel's final scams, he founded the St. Francis of Assisi Foundation in the British Virgin Islands, with a nominal mission of investing in insurance companies to fund hospitals. The insurers were placed in receivership when they were unable to account for assets that had been invested with Frankel's Liberty National Securities Inc.

Impact: Frankel's actions left several insurance companies insolvent, and thousands of policyholders in limbo, although a Government Accounting Office audit concluded that none lost money. Frankel fled the U.S. but was eventually captured in Germany and sentenced to 17 years in prison. Fifteen of Frankel's associates also pleaded guilty to related crimes.

Conseco Life Insurance Scandal (2000s)

Conseco Life Insurance faced accusations of deceptive practices and discriminatory rate hikes on life insurance policies sold to elderly policyholders. The company had marketed policies as affordable but later increased premiums significantly.

Conseco slid into bankruptcy in 2002, although its life insurance subsidiaries did not, and fought a public legal battle with former CEO Stephen Hilbert.

Impact: Conseco faced numerous lawsuits and was forced to settle with policyholders and regulators. This case highlighted the need for clearer disclosures in life insurance contracts and led to regulatory scrutiny of pricing practices. Hilbert moved on and today is chairman of the board and CEO of SILAC Insurance Co.

Mutual Benefits Corp. Ponzi Scheme (2004)

Mutual Benefits Corp. ran a Ponzi scheme involving viatical settlements, life insurance policies purchased from terminally ill policyholders, from approximately 1994 to May 2004, authorities said.

MBC purchased life insurance policies from persons suffering from AIDS, the chronically ill, and elderly persons. Having purchased the life insurance policies, MBC sold fractionalized interests in insurance policy death benefits, known as viatical settlements, to approximately 30,000 investors.

In promotional materials, MBC told investors that its viatical settlements offered a fixed rate of return with low risk, and that the insurance companies paid investors’ principal and returns.

Impact: Investors lost over $800 million, and the company was shut down by regulators. This scandal prompted greater scrutiny of viatical and life settlement companies and contributed to increased oversight in the industry.

In August 2014, Joel Steinger was sentenced to 20 years in prison, three years of supervised release, and was ordered to forfeit $15 million. He was the last of 13 defendants charged in the case.

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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.