Investment Regulators Accuse North Carolina Insurance Tycoon of Fraud | business news | Business Insurance

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DURHAM, N.C. (AP) — Federal securities regulators on Tuesday indicted a North Carolina-based insurance magnate, an associate and his investment advisory firm of defrauding clients of more than $75 million through complex schemes involving undisclosed transactions.

Attorneys for the US Securities and Exchange Commission filed a civil suit in Durham federal court against Gregory E. Lindberg of Durham, Christopher Herwig of Raleigh, and Malta-based Standard Advisory Services Limited.

Lindberg was founder and chairman of what was then called Eli Global, a Durham-based investment firm that ultimately owned hundreds of companies, including insurers.

Lindberg has also faced other recent civil and criminal prosecutions in North Carolina. A federal corruption case resulted in criminal convictions in 2020 that were recently overturned, let Lindberg out of federal prison awaiting a new trial.

His spokesman said Tuesday that Lindberg will fight the “false allegations” against him contained in the SEC lawsuit.

The complaint accuses the two men and Standard Advisory Services of violating the anti-fraud provisions of federal laws that regulate mutual funds. The government wants them to hand over the money it alleges they made fraudulently, in addition to paying penalties and interest. The investment advisory firm had been registered with the SEC until October 2019, according to the complaint.

A press release said the alleged fraud ran from mid-2017 to 2018. It involved “unique financial structures and various complex investments, orchestrated by the defendants for their own benefit,” Osman Nawaz, head of the Complex Financial Instruments Unit within of the SEC Division. Compliance, it said in the statement.

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Lindberg owned Standard Advisory Services, while Herwig was its portfolio manager, according to the complaint. The transactions also involved four North Carolina insurance companies owned by Lindberg, the complaint alleges. The alleged fraud resulted in the misappropriation of client funds and advisory fees, according to the SEC.

The complaint came one day after a federal judge in Charlotte set a tentative March start date for a new criminal trial for Lindberg, once North Carolina’s largest political donor.

He was convicted in 2020 of attempting to bribe the North Carolina insurance commissioner to secure preferential regulatory treatment for his insurance business and sentenced to more than seven years in prison. But those convictions were overturned in June by a federal appeals court, which found the judge erred in giving jurors misleading instructions before deliberations.

Lindberg spokeswoman Susan Estrich said Tuesday that the SEC’s complaint is weak as is the unrelated criminal matter and was filed after the SEC was “shown millions of pages of documents to prove them wrong.” “.

Messages left Tuesday to Herwig’s phone numbers seeking comment were not immediately returned.

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