4 Indicted in North Carolina Insurance Commissioner Bribery Scheme

April 4, 2019

A long running investigation into illegal campaign donations to the North Carolina Insurance Commissioner has resulted in federal charges being filed against the head of the North Carolina Republican Party and a North Carolina insurance company founder.

Four people in total were indicted for their alleged participation in a bribery scheme involving independent expenditure accounts and improper campaign contributions, the DOJ said.

Insurance Commissioner Mike Causey is credited by the DOJ with reporting the scheme to the FBI and is not under indictment.

According a statement from the DOJ, a federal criminal indictment was unsealed April 2 in the Western District of North Carolina that charges Greg E. Lindberg, founder and chairman of Eli Global LLC and the owner of Global Bankers Insurance Group (GBIG); John D. Gray, a consultant for Lindberg; North Carolina Republican Party Chairman Robert Cannon Hayes; and chairman of a Chatham County political party and an Eli Global executive John V. Palermo, with conspiracy to commit honest services wire fraud, and bribery concerning programs receiving federal funds and aiding and abetting.

Hayes is also charged with three counts of making false statements to the FBI.

“The indictment unsealed today outlines a brazen bribery scheme in which Greg Lindberg and his co-conspirators allegedly offered hundreds of thousands of dollars in campaign contributions in exchange for official action that would benefit Lindberg’s business interests,” said Assistant Attorney General Brian A. Benczkowski.

The criminal indictment alleges that in January 2018, the elected Commissioner of Insurance of the North Carolina Department of Insurance (NCDOI) Mike Causey reported concerns to federal law enforcement about political contributions and other requests made by Lindberg and Gray, and agreed to cooperate with the federal investigation that was initiated, DOJ said.

The allegations in the indictment claim from April 2017 to August 2018, Lindberg, Gray, Palermo and Hayes attempted to bribe the Causey through a scheme involving independent expenditure accounts and improper campaign contributions. DOJ claims the purpose of the scheme was to sway Causey to take official action favorable to Lindberg’s company, GBIG.

As the indictment alleges, the defendants gave, offered, and promised the commissioner millions of dollars in campaign contributions and other things of value in exchange for the removal of NCDOI’s Senior Deputy Commissioner, who was responsible for overseeing regulation and the periodic examination of GBIG.

DOJ said during the time frame relevant to the indictment, Lindberg, Gray, Palermo and Causey held numerous in-person meetings at different locations, including in Statesville, N.C., and had telephonic and other communications with each other, and with Hayes, to “discuss Lindberg’s request for the personnel change in exchange for millions of dollars, and to devise a plan on how to funnel campaign contributions to the Commissioner anonymously.”

In order to conceal the bribery scheme, DOJ stated, Palermo allegedly set up, at the direction of Lindberg, two corporate entities to form an independent expenditure committee with the purpose of supporting the Causey’s re-election campaign and funded the entities with $1.5 million as promised to the commissioner.

Also, at Lindberg and Gray’s direction, Hayes allegedly caused the transfer of $250,000 from monies Lindberg had previously contributed to the North Carolina Republican Party to Causey’s re-election campaign.

On or about Aug. 28, 2018, the DOJ said FBI agents interviewed Hayes about his involvement with and knowledge of the alleged improper campaign contributions. During the interview, Hayes allegedly lied to FBI agents about directing funds, at Lindberg’s request, from Lindberg’s campaign contribution to the North Carolina Republican Party to Causey’s re-election campaign. He is also accused of lying about having any discussions with the commissioner about Lindberg or Gray, and about discussing with Causey personnel issues related to the commissioner’s office.

In October, Causey told a local news station he had handed over a donation for $240,000 he received in July from the state Republican Party. The NCDOI was subpoenaed earlier that month for information going back to 2014 on Lindberg and at least seven companies he was associated with. An additional subpoena was issued in February.

The FBI is in charge of the investigation, which is ongoing.

The North Carolina Department of Insurance said in a statement to Insurance Journal that it “is aware of the indictments from the United States District Court for the Western District Court of North Carolina that were recently unsealed. The Department continues to cooperate with the federal authorities on this investigation, as we have been doing since the onset. But, because this remains an ongoing investigation, we cannot offer any further comment at this time.”‘

The Associated Press reported Causey as saying, “Everything I did was in cooperation and with direction of the federal investigators.”

Trial Attorney James C. Mann of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys William Stetzer and Dana Washington of the U.S. Attorney’s Office in Charlotte are prosecuting the case.

The defendants made their initial appearances Tuesday before U.S. Magistrate Judge David C. Keesler in federal court in Charlotte.

“Thanks to the voluntary reporting of the North Carolina Commissioner of Insurance, we have uncovered an alleged scheme to violate our federal public corruption laws,” said U.S. Attorney Andrew Murray. “Improper campaign contributions erode the public’s trust in our political institutions. We will work with our law enforcement partners to investigate allegations of public corruption, safeguard the integrity of the democratic process, and prosecute those who compromise it.”

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