A federal judge refused to dismiss conspiracy and bribery counts against a North Carolina insurance magnate and two associates, allowing the case to move toward a February trial.
Lawyers for Greg E. Lindberg, John Gray and John Palermo had argued various reasons the charges issued in a grand jury indictment last March should be canceled. But in a ruling signed Thursday and released Friday, U.S. District Judge Max Cogburn denied their motions.
“The court finds that there is a legally sufficient basis to support defendants’ indictment for honest services fraud and federal funds bribery,” Cogburn wrote. “Moreover, the indictment is sufficiently specific to give the defendants fair notice of the charged offenses. Finally, the defendants have failed to demonstrate prosecutorial misconduct warranting dismissal.”
The indictment charges Lindberg, Gray and Palermo with trying to bribe state Insurance Commissioner Mike Causey with up to $2 million in campaign funds in return for his removing or replacing the regulator that examined Lindberg's Global Bankers Insurance Group. Causey, a Republican, alerted law enforcement voluntarily to help them uncover the alleged scheme, federal prosecutors have said. Lindberg was recently a major donor to GOP causes, giving millions of dollars.
A fourth person indicted — former U.S. Rep. Robin Hayes — accepted a plea agreement in October in which he acknowledged lying to federal agents about his role in trying to bribe Causey while Hayes was chairman of the North Carolina Republican Party. Hayes has not yet been sentenced but agreed to help prosecutors with their case and potentially testify. The trial of the three other defendants is set to begin Feb. 18 in Charlotte.
Lindberg, who helped found investment firm Eli Global LLC, and Gray, his consultant, contended the indictments' details failed to meet the definitions of the counts in federal law and court cases. But Cogburn wrote that a staffing charge within the Insurance Department constituted an official act. He also rejected arguments that the indictment interferes with a citizen's First Amendment right to use campaign contributions to advocate for certain policies.
“The First Amendment will not serve as a safe harbor to protect defendants from being prosecuted for quid pro quo corruption,” Cogburn wrote.
Palermo, who worked with Lindberg and was a local Republican leader, argued government prosecutors wrongly entrapped him and participated in the "selective recording” of conversations between Causey and the defendants. Cogburn wrote that Palermo provided no credible evidence of either.
