DURHAM, North Carolina (AP) — Federal securities regulators on Tuesday formally charged a North Carolina-based insurance magnate, associate and their investment advisory firm with defrauding clients of more of $75 million through complex schemes involving undisclosed transactions.
Lawyers for the United States Securities and Exchange Commission have 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 one of the founders and chairman of what was then called Eli Global, a Durham-based investment firm that eventually owned hundreds of businesses, including insurers.
Lindberg has also faced other recent civil and criminal lawsuits in North Carolina. A federal corruption case resulted in criminal convictions in 2020 that were recently overturned, leaving Lindberg out of federal prison to await a new trial.
His spokesman said Tuesday that Lindberg will fight the “false allegations” against him contained in the SEC complaint.
The lawsuit accuses the two men and Standard Advisory Services of violating anti-fraud provisions of federal laws governing investment funds. The government wants them to return the money they claim they fraudulently earned, along with penalties and interest. The investment advisory firm was registered with the SEC until October 2019, according to the complaint.
A press release indicates that the alleged fraud took place 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 the SEC division. of the app, said in the statement.
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, according to the complaint. The alleged fraud resulted in the embezzlement of client funds and advisory fees, according to the SEC.
The complaint came a day after a federal judge in Charlotte set a tentative start date in March for a new criminal trial for Lindberg, who was once North Carolina’s biggest political donor.
He was convicted in 2020 of attempting to bribe the North Carolina Insurance Commissioner to obtain 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 misleading instructions to jurors before deliberations.
Lindberg spokeswoman Susan Estrich said Tuesday that the SEC complaint was weak, as was the unrelated criminal case, and was filed after the SEC “showed millions pages of documents to prove them wrong”.
Messages left Tuesday at phone numbers seeking comment from Herwig were not immediately returned.
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