U.S. District Judge Max Cogburn will preside over the case involving Greg E. Lindberg, who quickly became one of North Carolina’s largest political donors before his indictment last March. Also accused of fraud conspiracy and bribery counts identical to Lindberg’s are John Gray, a Lindberg consultant, and John Palermo, a former local GOP leader who worked for Eli Global, an insurance holding company Lindberg owned.
The trial begins on Tuesday with jury selection in Charlotte federal court. The case likely wouldn’t have surfaced without state Insurance Commissioner Mike Causey, the focus of the defendants' alleged scheme. Causey is a Republican whom prosecutors said alerted law enforcement voluntarily about Lindberg and Gray and agreed to cooperate with authorities.
The case highlights the influence a businessman little known outside his industry and with little political experience attempted to impress upon government policy largely through a checkbook, according to prosecutors.
All three defendants have pleaded not guilty. Recent court filings suggest they’re expected to argue their activity didn’t meet the definitions of “honest services fraud,” or that they were unlawfully entrapped by Causey.
A brief filed by Palermo’s lawyers previewing his defense said the government recorded over 80 hours of “consensually monitored telephone calls and in-person meetings between Causey, the defendants and others.”
A fourth person indicted, former state Republican Party Chairman Robin Hayes, also was accused of lying to federal agents about his role in shifting money to Causey’s campaign. Hayes, a former congressman, accepted a plea agreement late last year and agreed to help prosecutors.
Prosecutors described a case in which Lindberg sought to replace or later work around a senior deputy commissioner within Causey’s office whose job it was to scrutinize Lindberg’s Global Bankers Insurance Group.
In late 2017, Lindberg was angry with lending limits that deputy Jackie Obusek was placing upon Global Bankers, leading to several heated exchanges between them, according to Palermo’s brief. Meetings ensued between the three defendants and Causey, according to the indictment. By January 2018, the government says, Causey had contacted law enforcement.
During a March 2018 meeting in Statesville with the now defendants, Causey agreed with an earlier suggestion that he could hire Palermo to replace Obusek or become her boss, the indictment says. According to the indictment, Causey then spoke alone with Lindberg and asked, “What’s in it for me?” Lindberg responded that he would create an independent expenditure committee to support Causey’s 2020 reelection and give as much as $2 million, the indictment says.
Lindberg ultimately wrote checks for two such committees totaling $1.5 million, according to prosecutors, while another $250,000 would move through the state Republican Party to benefit Causey. Causey later backed off hiring Palermo and agreed instead to move oversight of Lindberg’s companies to another division head, the indictment said.
Lawyers for Palermo and Lindberg said Cogburn should keep out of court evidence of Palermo’s potential hiring by Causey since it never happened. No bribe occurred because there was “corrupt intent” in asking that Obusek be replaced, Palermo’s attorneys wrote, since the defendants “just felt Obusek was not qualified to be administering the regulations.” But the government responded that the scheme to replace Obusek with Palermo is “intrinsic evidence of the honest services fraud conspiracy.”
Campaign finance reports show Lindberg, a registered independent from Durham recorded as voting only once, gave more than $5 million since 2016 to North Carolina candidate and party committees and independent expenditure groups.
The donations have gone in part to groups that supported GOP Lt. Gov. Dan Forest and then-Insurance Commissioner Wayne Goodwin, who is now chairman of the state Democratic Party. Neither Goodwin nor Forest has been accused of crimes.
Causey and Forest are on next month’s Republican primary ballot — Causey for commissioner and Forest for governor. Goodwin is already the Democratic nominee for commissioner. The U.S. attorneys also want to offer evidence about political contributions for others besides Causey, including someone the government has identified as “Public Official A.” Public records and Gray have identified that official as U.S. Rep. Mark Walker, R-N.C.
The indictment said Walker spoke twice to Causey on Lindberg’s behalf. Walker was never a target of the investigation and committed no wrongdoing, Walker’s spokesman has said. Prosecutors aren’t seeking to persuade jurors that other contributions were unlawful, but rather to show the defendants had previously provided large contributions and could do the same for Causey. The defendants want this information left out of the trial, calling it irrelevant.