United States v. Lindberg
| Decision Date | 29 June 2022 |
| Docket Number | 20-4470, No. 20-4473 |
| Citation | 39 F.4th 151 |
| Parties | UNITED STATES of America, Plaintiff - Appellee, v. Greg E. LINDBERG, Defendant - Appellant. National Association of Criminal Defense Lawyers, Amicus Supporting Appellant. United States of America, Plaintiff - Appellee, v. John D. Gray, Defendant - Appellant. National Association of Criminal Defense Lawyers, Amicus Supporting Appellant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Howard Robert Rubin, KATTEN MUCHIN ROSENMAN LLP, Washington, D.C., for Appellants. Amy Elizabeth Ray, OFFICE OF THE UNITED STATES ATTORNEY, Asheville, North Carolina, for Appellee. ON BRIEF: David A. Brown, Sr., FLANNERY GEORGALIS LLC, Charlotte, North Carolina, for Appellant John Gray. E. Joshua Rosenkranz, Joseph R. Kolker, ORRICK HERRINGTON & SUTCLIFFE LLP, New York, New York; Robert T. Smith, Rajesh R. Srinivasan, Washington, D.C., Brandon N. McCarthy, Rachel M. Riley, KATTEN MUCHIN ROSENMAN LLP, Dallas, Texas, for Appellant Greg E. Lindberg. William T. Stetzer, Acting United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Charlotte, North Carolina, for Appellee. David B. Smith, NATIONAL ASSOCIATION OF CRIMINAL DEFENSE LAWYERS, Washington, D.C.; Henry W. Asbill, Veena Viswanatha, Sarah N. Davis, Joshua L. Richardson, BUCKLEY LLP, Washington, D.C., for Amicus Curiae.
Before GREGORY, Chief Judge, TRAXLER, and FLOYD, Senior Circuit Judges.
Vacated and remanded for a new trial by published opinion. Chief Judge Gregory wrote the opinion, in which Senior Judge Traxler and Senior Judge Floyd joined. Senior Judge Traxler wrote a separate opinion concurring in the judgment.
Defendants Greg E. Lindberg and John D. Gray were convicted of honest services fraud and federal funds bribery in connection with a series of payments and offers of payment, in the form of campaign contributions, made to Mike Causey, the elected Insurance Commissioner for North Carolina. The jury found that these payments were made in exchange for Causey assigning a different Deputy Commissioner to oversee the affairs of Lindberg's insurance companies. Lindberg and Gray now challenge the district court's jury instructions and the sufficiency of the evidence supporting their convictions.
Because we find that the district court erred in instructing the jury on the elements of Count One, that the error is not harmless, and that the instructional error on Count One improperly infected the jury's consideration of Count Two, we vacate and remand. We find, however, that the district court did not err in declining to read the "official act" requirement of 18 U.S.C. § 201 into 18 U.S.C. § 666.
Greg E. Lindberg served as chairman of Eli Global LLC, an investment company, and as owner of Global Bankers Insurance Group, an insurance management company, during the relevant period from April 2017 to August 2018. Lindberg owns several insurance businesses subject to regulation in North Carolina. John D. Gray worked as a consultant for Lindberg during the relevant period. Lindberg and Gray ("defendants") were convicted of conspiring to commit honest services wire fraud and federal funds bribery for offering millions of dollars in campaign contributions to Mike Causey, the Commissioner of the North Carolina Department of Insurance, in exchange for the reassignment of a Senior Deputy Commissioner assigned to review Lindberg's insurance companies.
The North Carolina Department of Insurance oversees insurance companies doing business in North Carolina to protect consumers. One way the Department of Insurance does this is by monitoring "affiliated investments," which are investments made by one company in another company within a group of companies under common ownership. Insurance regulators monitor affiliated investments because they are seen as illiquid and, therefore, can limit the ability of an insurance company to pay policyholders. Prior to 2019, North Carolina did not statutorily limit the percent of affiliate investments of regulated companies, but the Department of Insurance had the authority to impose such limits.
In November 2016, Mike Causey was elected as North Carolina's Commissioner of Insurance. Lindberg had publicly supported Causey's opponent Wayne Goodwin in the race. When Causey took over, he promoted Jacqueline Obusek, a twenty-year veteran of the Department, as Senior Deputy Commissioner. Obusek had expressed concern with some of Lindberg's business practices as early as March 2015. Specifically, Obusek was concerned about the high percentage of affiliate investments relied on by Lindberg's companies.
Several weeks after he was elected, Causey was scheduled to meet with Lindberg and other members of Eli Global's leadership. Prior to the meeting, he received a phone call from his campaign treasurer notifying him that he had received a $10,000 donation from Lindberg. Causey testified that he thought the contribution was "unusual" both because of the size and the timing, and he decided to return the donation. J.A. 233–34. At the meeting, Gray explained that Eli Global was in the process of purchasing another insurance company based in Michigan and asked Causey to call his counterpart in Michigan "to put in a positive word." J.A. 237. Causey agreed and made the phone call. Causey testified at trial that Gray then called him to state that Lindberg had donated $500,000 to the North Carolina Republican Party ("NCGOP") with $110,000 to be sent to Causey's campaign and that Gray and Lindberg wanted to host a fundraiser for Causey in December. J.A. 238–40. Causey testified that he called his fundraising agent to say that he was "not going to have a fundraiser in December" and he was "not taking [the] $110,000." J.A. 240.1
Causey later reached out to the Federal Bureau of Investigation ("FBI") to express concerns about these offers of donations and agreed to cooperate with an FBI investigation into Lindberg and his associates. During the course of this investigation, Causey recorded telephone conversations with Gray and John Palermo, Vice President of Special Projects at Eli Global, and recorded meetings with Lindberg, Gray, and Palermo over the course of several months from about January to August 2018. During these meetings, Lindberg and Gray expressed their dissatisfaction with Obusek. They urged Causey to hire Palermo and task him with overseeing Lindberg's companies. When Causey expressed his concern about the negative public response he would receive by hiring Palermo, Lindberg instead asked that Causey replace Obusek with Debbie Walker, another employee in the Department of Insurance. Over the course of several meetings, they discussed Lindberg creating an independent expenditure committee and donating substantial amounts, between $500,000 and $2,000,000 to Causey's reelection campaign. At a final meeting on July 25, 2018, Gray stated that "if we have your assurance and a date certain by which the Debbie Walker staff realignment can occur, then the entirety of that [$]500,000 will go right in your account." J.A. 2101. Causey then agreed to complete the staff change by the end of August, after which Lindberg stated, J.A. 2101. The day after the meeting, Causey's campaign received $230,000 from the NCGOP. In total, Causey received $250,000 in donations funneled through the party.
Following the conclusion of the investigation, the defendants were each charged in March 2019 with one count of conspiracy to commit honest services fraud, in violation of 18 U.S.C. § 1349, and one count of federal funds bribery and aiding and abetting the same, in violation of 18 U.S.C. §§ 666(a)(2) and 2. Defendants pleaded not guilty, and a jury trial was held from February 18 to March 5, 2020.
At trial, defendants and the United States both objected to the district court's proposed jury instruction defining "official act" to include the "removal or replacement of a [S]enior [D]eputy [C]ommissioner by the [C]ommissioner." J.A. 1648, 1678, 1881. Both parties agreed that the issue of what qualifies as an "official act" should be left for the jury. Defendants also objected to the district court's description of the elements of federal funds bribery and argued that it should include a requirement that "something of value is given to a public official in exchange for an explicit promise to perform an official act." J.A. 1683. The district court denied both objections. Further, the district court prevented defendants from arguing or putting on evidence to show that Obusek's reassignment was not an "official act."
After three days of deliberation, Gray and Lindberg were convicted on both counts.2 Defendants renewed their Motions for Judgment of Acquittal and for New Trial, which were denied, and filed a timely notice of appeal. Defendant Gray was sentenced to a term of imprisonment of thirty months, and Lindberg was sentenced to a term of imprisonment of eighty-seven months.3
We turn first to the question of whether the district court erred when, in instructing the jury on Count One, it stated in no uncertain terms "that the removal or replacement of a [S]enior [D]eputy [C]ommissioner by the [C]ommissioner would constitute an official act." J.A. 1881. This Court reviews "whether a jury instruction incorrectly stated the law de novo." United States v. Miltier , 882 F.3d 81, 89 (4th Cir. 2018).
In McDonnell v. United States , 579 U.S. 550, 580, 136 S.Ct. 2355, 195 L.Ed.2d 639 (2016), the Supreme Court "defined honest services fraud[4 ] ... with reference to § 201 of the federal bribery statute."5 In particular, the Court imported the "official act" requirement found in 18 U.S.C. § 201 and found that "the [g]overnment was required to show that Governor McDonnell committed (or agreed to commit) an ‘official act’ in exchange for...
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