A lawyer for Mr. Lindberg, Brandon McCarthy, said in an opening statement that the businessman’s donations were prompted by a question from North Carolina Insurance Commissioner Mike Causey at one early meeting: “What’s in it for me?”
But U.S. government lawyer James C. Mann told jurors the case is about “bribery, pure and simple."
Specifically, he said, Mr. Lindberg promised $2 million in campaign money for the replacement of a senior regulator who was overseeing Mr. Lindberg’s insurers with someone he deemed more favorable. He needed “a clean bill of health” for his life insurers so he could make more acquisitions to further expand his conglomerate, Mr. Mann said in his opening statement.
A self-proclaimed billionaire, Mr. Lindberg bought life insurers in the U.S. and abroad beginning in 2014 and lent at least $2 billion of their assets to entities he controlled. North Carolina regulators took control of four of the insurers last June, and those insurers have since asked a state court to appoint a receiver over hundreds of Mr. Lindberg’s private entities that owe them money.
Mr. Lindberg’s insurance empire was the focus of a February 2019 investigative article in The Wall Street Journal. A separate federal probe is continuing to investigate potential fraud in Mr. Lindberg’s business dealings, filings show.
The bribery trial began Tuesday with selection of jurors, in a case that could bring up to 20 years of jail on one charge, and 10 years on another.
This week, Mr. Lindberg has spent hours quietly sitting at a table flanked by lawyers. Two co-defendants are at adjacent tables, each with at least three attorneys.
In another sign of the large amount of money being spent on defense, four mock jurors are sitting in the courtroom to give feedback to Mr. Lindberg’s team.
The setting is a wood-paneled, high-ceilinged courtroom rich in history, but it lacks big screens and other modern technology for viewing and listening to the dozens of secretly recorded videos and phone calls that form the core of the government’s case. Those videos and phone calls were recorded in 2018 by Mr. Causey, under the direction of federal officials.
With prosecutors, defendants, their lawyers and jurors focused on small screens, the government has played about a dozen recordings so far. Defense lawyers are expected to question Mr. Causey Monday, seeking to persuade jurors that he overstepped boundaries prohibiting authorities from inducing people into wrongdoing, so-called entrapment.
The recordings came about after Mr. Causey, who was elected in November 2016, approached federal officials in late 2017 with concerns about the Lindberg insurers’ unorthodox investment strategy. He was also unnerved because Mr. Lindberg’s consultant, John D. Gray, who is a co-defendant, had told him that Mr. Lindberg wanted to aid his 2020 re-election, he testified this week.
So far in the recordings, jurors have heard Messrs.Lindberg and Gray repeatedly criticize the deputy commissioner who was overseeing the Lindberg insurers. They told the commissioner they supported robust and stringent regulation, but the deputy was unqualified to understand the insurers’ investments. She was “ruining my reputation” with other state regulators with malicious statements, Mr. Lindberg asserted.
Mr. Causey has said publicly that the deputy, Jackie Obusek, is a knowledgeable and able regulator. In the recordings, Mr. Causey defended Ms. Obusek as well-intentioned as she pushed for more detail about Mr. Lindberg’s investments. But he told the businessman he was open to replacing her—and thus came the question about how he would benefit.
From then on, Mr. Causey repeatedly asked Messrs. Lindberg and Gray about the size and nature of contributions to aid his 2020 re-election.
At first, Mr. Lindberg suggested Mr. Causey hire one of his employees, a former International Business Machines Corp. executive named John V. Palermo Jr., now the third co-defendant.
Some weeks later, Messrs. Lindberg and Causey deemed Mr. Palermo’s hiring problematic, and discussed transferring oversight of his insurers to another insurance-department deputy commissioner.
Entrapment can occur when a person with no intent to commit a crime is induced or persuaded by law-enforcement officers or their agents to commit the offense. Mr. Lindberg’s lawyers say in a filing that Mr. Causey “had strong motivation to entrap Mr. Lindberg” as he “was a major supporter” of the former insurance commissioner, Wayne Goodwin, whom Mr. Causey narrowly defeated.
Mr. Lindberg sought to do “whatever is within the bounds of North Carolina elections law,” his lawyer told jurors.
A fourth defendant, Robin Hayes, a former congressman and former chairman of North Carolina’s Republican Party, has already pleaded guilty to a single count of lying to the Federal Bureau of Investigation.