SEC Accuses Greg Lindberg and His RIA of $75 Million Fraud Scheme

Earlier this summer season, insurance coverage government Greg Lindberg left jail after efficiently interesting bribery and fraud convictions. Now he finds himself in authorized hassle once more. 

The SEC Tuesday sued Lindberg, affiliate Christopher Herwig, and their Malta-based registered funding advisory agency, Normal Advisory Providers Restricted, accusing them of defrauding purchasers out of greater than $75 million by undisclosed transactions that benefited themselves and their firms.

The U.S. Securities and Change Fee seal


Andrew Harrer/Bloomberg

The regulator filed civil prices in opposition to the 2 males and the agency in a federal court docket in North Carolina, in search of financial penalties, everlasting injunctions, and the return of allegedly ill-gotten beneficial properties.

It’s the newest authorized entanglement for Lindberg, who was beforehand charged with bribing a North Carolina state official and convicted in 2020. In June, a federal appeals court docket overturned the conviction, ruling {that a} decrease court docket decide had erred with regard to jury directions.

And earlier this yr, a North Carolina state court docket ordered Lindberg to show over management of a whole lot of his personal firms to a particular board as a part of an effort to salvage 4 financially troubled insurers.

With regard to the SEC case, Lindberg denied allegations and vowed to battle again. “We did nothing incorrect and we intend to show it in court docket,” he mentioned in an announcement.

Lindberg referenced his time in jail and mentioned authorities use “excessive strain techniques to attempt to roll over defendants and get them to confess issues they by no means did.” He mentioned that he had equipped the SEC with “thousands and thousands of pages” of paperwork in response to their queries. 

He added that the SEC “proposed a settlement on this case that might have required me to confess issues that I by no means did. It was egregiously false and unacceptable.”

A spokesperson for the SEC declined to remark.

An lawyer for Herwig mentioned in an announcement: “Mr. Herwig will vigorously defend himself in opposition to these allegations.” Each males are residents of North Carolina.

The SEC case. By 2017, Lindberg had acquired full possession of 4 North Carolina insurance coverage firms and a reinsurance belief, in keeping with the SEC’s authorized grievance. He additionally managed Normal Advisory Providers. Lindberg, Herwig, and Normal Advisory Providers all had a fiduciary obligation to behave of their purchasers’ finest curiosity, the regulator says. As an alternative they allegedly breached that obligation by fraudulently inducing their purchasers to have interaction in undisclosed transactions that weren’t of their finest curiosity, the SEC says. 

As an illustration, Lindberg and Herwig allegedly had the North Carolina insurance coverage firms promote their pursuits in Lindberg-affiliated special-purpose automobiles after which repurchase primarily the identical investments by a special funding automobile at a better worth, the SEC’s authorized grievance states. Lindberg allegedly pocketed the distinction. The SEC alleges he had the insurance coverage firms enter into 13 such transactions.

Lindberg and Herwig generally misrepresented that investments they in reality managed had been being managed by outsiders, the SEC alleges.

Lindberg and Herwig additionally endeavored to evade limits on the insurance coverage firms’ means to buy funding merchandise from affiliated entities, in keeping with the SEC.

The regulator says the alleged misconduct passed off from July 2017 by 2018. Herwig served on the boards of the insurance coverage firms Lindberg owned, and in addition served for a two-year stint as Lindberg’s chief funding officer, the SEC says.

Normal Advisory Providers is predicated in Valletta, Malta’s capital. It was registered with the SEC from 2016 to 2019.

Lindberg, Herwig, and their agency allegedly misappropriated greater than $57 million in shopper funds, in keeping with the SEC. Normal Advisory additionally allegedly collected greater than $21.4 million in advisory charges generated in reference to these schemes, in keeping with the regulator. 

Lindberg allegedly hid the misconduct by complicated funding constructions and an internet of affiliate firms, the SEC says. Lindberg, 52, and Herwig, 43, declined to testify through the SEC’s investigation, asserting their Fifth Modification proper in opposition to self-incrimination, in keeping with the regulator’s authorized grievance.

“We allege an enormous fraudulent scheme, involving distinctive monetary constructions and numerous complicated investments, orchestrated by the defendants for their very own profit over their advisory purchasers’ profit,” Osman Nawaz, chief of the SEC’s Division of Enforcement’s complicated monetary devices unit, mentioned in an announcement. “In the present day’s submitting demonstrates that the SEC will take motion to guard traders from funding advisers who try to evade basic fiduciary obligations.” 

Write to Andrew Welsch at [email protected]

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