United States v. Lindberg

• Decision Date: 04 August 2020
• Docket Number: Docket No. 5:19-CR-00022-MOC-DSC
• Court: U.S. District Court — Western District of North Carolina
• Parties: UNITED STATES of America, v. Greg E. LINDBERG and John D. Gray, Defendants.

476 F.Supp.3d 240

UNITED STATES of America,

v.Greg E. LINDBERG and John D. Gray, Defendants.

Docket No. 5:19-CR-00022-MOC-DSC

United States District Court, W.D. North Carolina, Statesville Division.

Signed August 4, 2020

Dana Owen Washington, William Thomas Stetzer, Benjamin Bain-Creed, U.S. Attorney's Office, Charlotte, NC, James Craig Mann, Department of Justice, Washington, DC, for United States of American.

Alexandra Shae Davidson, Brian S. Cromwell, Sarah Fulton Hutchins, Parker Poe Adams & Bernstein, LLP, Charlotte, NC, for Defendants.

ORDER

Max O. Cogburn, Jr., United States District Judge

THIS MATTER comes before the Court on Motions for Judgment of Acquittal or for New Trial, which were filed by the defendants, Greg Lindberg, Doc. No. 213, and John Gray, Doc. No. 214. Through an indictment, a grand jury charged the defendants with conspiring to commit honest services wire fraud and with federal funds bribery by corruptly offering millions of dollars in campaign contributions to Mike Causey, the Commissioner of the North Carolina Department of Insurance, in exchange for removing his Senior Deputy Commissioner responsible for overseeing the regulation of Lindberg's insurance companies. After a three-week trial and three days of deliberation, a jury found the defendants guilty of both offenses. Now, the defendants raise a host of purported errors with that verdict, asserting that the Government presented insufficient evidence and that the Court erred in its evidentiary rulings and in instructing the jury. The defendants are incorrect. For reasons discussed below, their motions to overturn their convictions are denied.

I. BACKGROUND

On March 18, 2019, a grand jury in the United States District Court for the Western District of North Carolina returned an indictment, charging the defendants, as well as John Palermo and Robin Hayes, with one count of conspiracy to commit honest services fraud, in violation of 18 U.S.C. § 1349, and one count of bribery concerning programs receiving federal funds and aiding and abetting the same, in violation of 18 U.S.C. §§ 666(a)(2) and 2. The indictment alleged that, from about April 2017 to August 2018: Lindberg served as chairman of Eli Global, LLC, an investment company, and as owner of Global Bankers Insurance Group ("GBIG"), an insurance and reinsurance management company; Gray worked as Lindberg's consultant; Palermo was vice president of Eli Global and chairman of the Chatham County Republican Party; and Hayes chaired the North Carolina Republican Party ("NCGOP"). Doc. No. 3 ¶¶ 3–7. In those capacities, the grand jury asserted that they conspired to and "corruptly gave, offered, and promised things of value to [the Commissioner of the North Carolina Department of Insurance], including millions of dollars in campaign contributions ..., in exchange for specific official action favorable to GBIG, including the removal of the Senior Deputy Commissioner of the [Department] responsible for overseeing the regulation, including the pending periodic examination, of GBIG." Id. ¶ 14.

The defendants and Palermo pleaded not guilty and exercised their constitutional right to a jury trial,¹ which ran from February 18 to March 5, 2020. The defendants were ultimately convicted, so, for these motions, the Court summarizes the trial evidence in the light most favorable to the Government. See United States v. Burgos, 94 F.3d 849, 862–83 (4th Cir. 1996) (en banc). At trial, the bulk of the Government's evidence was introduced through Commissioner Mike Causey. His testimony—alongside the testimony of Senior Deputy Commissioner Jackie Obusek—provided the jury with a foundation to understand the Department's objectives, its relationship to Lindberg, and the circumstances leading up to the defendants’ offenses. To begin, Causey testified that, as Commissioner, he is responsible for overseeing the periodic reexamination of domestic insurance companies, including GBIG, Lindberg's parent insurance company, and Eli Global, a GBIG affiliate. See Tr. 132–35. Those examinations were conducted by the Department's financial analyst division. Obusek examined Lindberg's companies in particular. See Tr. 137–38; see also Tr. 65–66.

Prior to Causey's 2017 election, Obusek was not the Senior Deputy Commissioner. See Tr. 138. But she had served in the Department for about twenty years. See Tr. 52. Graduating with an accounting degree from East Carolina University, Obusek started as an entry-level financial examiner and worked her way up the organizational chart. See Tr. 52–54. She excelled through her continuous "outstanding performance evaluations," at least three of which were signed by her predecessor, Ray Martinez. Tr. 54. Once Causey was elected, he chose to let Martinez go. Tr. 94. In his stead, he appointed Obusek, as he had "confidence in her abilities." Tr. 138. Martinez left to work for Lindberg. See Tr. 83.

Obusek testified that, as a financial analyst, she was tasked with ensuring that domestic insurers could pay policyholders if a claim is filed. See Tr. 57. If an insurer was at risk for insolvency, her division would supervise, rehabilitate, and possibly liquidate the companies to protect policyholders. See Tr. 58–59. She also explained that insurance companies sometimes engage in affiliate investments, whereby one company invests in another company that is under common control. Because such investments are illiquid, they can be risky for policyholders. See Tr. 59. While North Carolina did not have limits on such affiliated investments before 2019, now, even a ten percent affiliated investment is considered "a red flag amount." Tr. 59–60.

Lindberg first moved some of his insurance companies into North Carolina toward the end of 2014. See Tr. 64. From that time onward, Obusek was involved in their regulation. See Tr. 65–66. As far back as March 2015, Obusek was concerned with Lindberg's business practices. See Tr. 72. At that time, the Department allowed Lindberg's companies to engage in up to forty percent affiliated investments. See Tr. 533. Obusek and other analysts took their concerns to Martinez, but he dismissed them out of hand, requiring the regulators to submit all communications with Lindberg for his approval. Tr. 109–10. Sometime after Causey took office and Martinez was released, Lindberg's companies and the Department reached a memorandum of understanding, where Lindberg's companies were limited to ten percent affiliated investments. See Tr. 533–34.

In 2017, a few months after Causey was elected, he was scheduled to meet with Eli Global's leadership. See Tr. 139–40. One week before, he received a call from his campaign treasurer, who notified him that he had received a $10,000 donation from the Lindbergs. See Tr. 139. Causey thought the contribution was "unusual," both because the election cycle had just ended and because it was "the only one [he had] received of that size at that point." Tr. 140. Thus, he decided to return the donation. Id. The defendants both attended the subsequent meeting. There, Gray asked Causey to call Michigan's insurance commissioner "to put in a positive word" to facilitate Lindberg's purchase of another insurance company. Tr. 143. Causey agreed and later phoned his Michigan counterpart. Afterward, Gray called Causey, stating he had spoken with Causey's fundraising agent to indicate that he and Lindberg wanted to host a fundraiser for Causey in December. He also told Causey that Lindberg had donated $500,000 to the NCGOP, and that $110,000 was to be transferred to Causey's campaign. See Tr. 144–46. Causey testified that the defendants’ behavior troubled him, as it seemed they "wanted to reward" him for making the call. Tr. 146. Thus, he called his agent to make clear they were "not going to have a fundraiser in December" and he was "not taking [the] $110,000." Tr. 146. And he raised his concerns with the Federal Bureau of Investigation, later agreeing to cooperate as an informant. See Tr. 146–48.

While cooperating, Causey recorded several conversations with the defendants, spanning from about January to August 2018. In virtually every conversation, the defendants spared no effort or expense in their attempts to remove Obusek as the regulator of Lindberg's companies. To start, on January 27, 2018, Gray again phoned Causey, generally protesting that Causey's "staff [was] trying to make it so that communication" between Lindberg's companies and the Department was "difficult." Gov't Ex. 111a at 6.² Gray then homed in Obusek, maintaining she was incorrect in her belief that their affiliated investment agreement was too "high risk." Id. at 6, 9. To him, the agreement was "too complicated and too sophisticated for her," so "she dug up some trash on the internet ... to convince folks that there [was] a real problem." Id. at 12. He then mused that Lindberg had "made a contribution to [the former commissioner's] campaign" but that "there was no connection between" the donation and the favorable agreement. Id. at 6. He also noted that the former commissioner had "asked" them to support the campaign and it would be "stupid" to refuse. Id. He also intimated, "[w]hen Mike Causey runs for re-election, if he asks [Lindberg] to contribute to his campaign, [do] you think he's not going to? [T]hat'd be crazy." Id.

Because of these perceived injustices by Obusek and others, Gray asked whether Causey would be "willing to meet with" him and Lindberg. Id. at 7. Causey agreed, but insisted that the meeting needed to be "highly confidential" because he did not want Obusek, other staff members, or "the legal folks to know anything about it." Id. He also suggested that the meeting needed to be "somewhere away from Raleigh or away from Chapel Hill where ... [they could] have privacy and nobody [would] see [them]." Id. Gray replied, "um, I don't how far you wanna go and how private you wanna be ... I can arrange for us to meet at Bald Head Island which is nobody but us or we could meet...