Mr. Lindberg, according to the ruling, committed fraud by failing to comply with a 2019 agreement under which North Carolina's insurance department took control of the insurers from Mr. Lindberg. The majority of Mr. Lindberg's private empire would be placed under the control of a board, which would have the authority to sell companies or take other steps to repay the insurers money owed by the Lindberg entities. According to the judge, Mr. Lindberg and his entities owe the insurers approximately $1.25 billion.
"Global Growth and Mr. Lindberg respect the court's decision and are evaluating their post-judgment remedies," said Mr. Lindberg's lawyer, Aaron Tobin. According to the new court ruling, a Lindberg executive stated that the restructuring plan contemplated by the agreement could not be carried out for a variety of reasons, including the possibility of triggering tax issues and requiring consent from third parties.
Mr. Lindberg is serving a federal prison sentence of more than seven years after being convicted in 2020 of attempting to bribe North Carolina's insurance commissioner in exchange for favorable treatment for his insurers. He has always denied any wrongdoing, and his appeal is still pending.
Mr. Lindberg took control of insurers in North Carolina, Bermuda, and elsewhere beginning in 2014. He then used their money to expand his private empire by lending more than $2 billion of their assets to companies he controlled.
Under a previous North Carolina insurance commissioner, Mr. Lindberg had a special agreement to invest up to 40% of the insurers' admitted assets in affiliated entities. Mike Causey, the new commissioner, thought the strategy was too risky. The insurers had invested more than 40% in such entities under Mr. Lindberg's direction, according to the judge's ruling.
Regulators in various jurisdictions have since seized Mr. Lindberg's insurance companies. Bermuda's insurers are being dissolved.
The insurance companies in North Carolina have sued 31 of the Lindberg entities, alleging that they are in breach of their loan agreements. The allegations have been denied by the Lindberg entities.
Mr. Lindberg, who has previously described himself as a billionaire, owns hundreds of small businesses in the United States and abroad, including eye-care chains, software companies, and a collectibles business. According to the most recent projection, his umbrella holding company, Global Growth, will have 8,500 employees and $1.4 billion in annual revenue in 2020.
Mr. Lindberg would lose control of the majority of these companies under the judge's order. Their oversight would be transferred to a board dominated by North Carolina-controlled insurer appointees and independent directors. Mr. Lindberg would retain ownership of the companies but would be barred from serving on the board.
Mr. Lindberg has suffered yet another setback as a result of the ruling. A federal judge in North Carolina ordered him to personally pay $524 million to a Puerto Rican insurer that had money invested through a trust arrangement with one of Mr. Lindberg's now-defunct Bermuda insurers earlier this month. Mr. Lindberg has claimed, among other things, that some of the Puerto Rico insurer's assets were worthless before he took over management of them.
Wake County Superior Court Judge A. Graham Shirley issued a harsh rebuke to Mr. Lindberg on Wednesday. Mr. Lindberg "acted with deceit and with the intent to defraud" the North Carolina insurers, according to the judge, by failing to fulfill his end of the 2019 agreement. The judge ruled that Mr. Lindberg received more than $100 million in loans and other benefits from the insurers after signing the agreement, but did not turn over control of his operating companies as required by the agreement.
Mr. Causey, the North Carolina Insurance Commissioner, stated on Wednesday that the decision "is a big win for the policyholders" and that his department "will continue its work to hold Mr. Lindberg to his promises and get the policyholders of these companies full access to their policies."
The insurers were placed under the commissioner's control in 2019 and had 252,000 customers as of March. State officials limited withdrawals to 10% of annuity value, or a maximum of $15,000, unless owners could demonstrate hardship. The withdrawal moratorium remains in effect, according to the department on Wednesday.
Mr. Lindberg is suing Dow Jones & Co., the publisher of The Wall Street Journal, for tortious interference with confidentiality agreements he had with two former employees. Mr. Lindberg has requested reconsideration after a federal judge dismissed his lawsuit. "We are confident in the Journal's reporting," a Dow Jones spokesman said.