A day after a judge set a new date for the bribery trial of Carolina insurance executive Greg Lindberg, the US Securities and Exchange Commission said Lindberg and an associate defrauded clients out of $75 million using undisclosed assets.
The SEC report alleges that Lindberg and Christopher Herwig, of Raleigh, North Carolina, and Malta-based Standard Advisory Services violated federal laws and committed fraud, according to the lawsuit.
The regulators say the defendants embezzled more than $57 million in client fees and that Standard Advisory collected more than $21 million in advisory fees related to the schemes.
“In an effort to conceal the fraud, Lindberg allegedly orchestrated the schemes through complex business and related companies and allegedly used the funds to pay themselves or divert the funds to other Lindberg businesses,” the SEC said in a statement.
Lindberg owned Standard Advisory Services, where Herwig was managing director, the complaint said. The action also involved four North Carolina insurance companies owned by Lindberg.
Lindberg, who owned several insurance and reinsurance trusts, served 21 months in prison after being found guilty of bribing a North Carolina insurance commissioner in 2018, seeking favorable treatment from state regulators. The verdict was overturned in June by a federal appeals court, which said the trial judge erred in following the jury’s instructions, and Lindberg was released from prison.
On Monday, a federal judge set a new date of March 2023.
In a statement sent on Tuesday, a spokesperson for Lindberg said that the SEC is now “increasing,” and the suit came despite the fact that regulators have seen thousands of papers that prove they are wrong in their opinion.
“They didn’t say anything; “We showed them the disclosures,” Lindberg spokeswoman Susan Estrich said in a statement. money. We looked for money that he couldn’t find.”
The SEC’s complaint, which was filed in federal court in North Carolina, acknowledged that the transactions were a cover-up — an elaborate effort to hide the alleged fraud.
“The basic purpose of the defendants’ fraudulent scheme is simple: Lindberg,
Herwig, and SASL, both believers, repeatedly advocated and joined in the process
which was not disclosed and was not in the best interests of their clients,” the lawsuit said. “However, a
The machines he used to carry out the fraud were sophisticated in design.”
Until around 2017, Lindberg acquired 100% ownership of four North Carolina insurance companies and a reinsurance trust, “which gave him the power to control millions of dollars from policyholders. Although the money was supposed to be used to pay the claims of insurance policyholders, Lindberg saw the money as his own property and used the money for whatever he thought was in his best interest,” the SEC said.
Lindberg then told his insurance companies to engage in “unwise” financial advice.
service contract with SASL. From July 2017 to 2018, Lindberg, Herwig and SASL breached their duties, acted on their behalf and destroyed their clients’ assets, the SEC attorney said.
In another alleged scheme, Lindberg and Herwig instructed their Carolina insurance companies to sell their interests in certain Lindberg-affiliated special vehicles (“SPVs”) and then
to resell the same business through another sales vehicle at a higher price.
“Lindberg pocketed the difference, which was more than $57 million,” the suit says. In 2017 and 2018, Lindberg and Herwig arranged for insurers to participate in 13 such transactions and the men allegedly used the fraudulent profits to enrich Lindberg and support his other businesses.
“All along, the board members of NC insurance companies were left in the dark about Lindberg’s alleged misconduct,” the complaint reads.
As a result of the schemes, “the long-term financial health of NC insurance companies was disrupted and they were placed into receivership,” it said.
Lindberg and Herwig refused to testify in the SEC investigation, citing their Sixth Amendment right against self-incrimination.
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