'Tip of an iceberg': Evidence in NC bribery case hints at more intrigue

Recorded conversations, texts and emails name-checked a who's who of North Carolina elected officials as Greg Lindberg, who owns a slew of businesses based in Durham, pressed for a lighter regulatory touch on his insurance companies.

When Lindberg didn't get what he wanted, he sent out the word: No more checks for anyone – not in North Carolina, not in Washington, D.C.

"Pass the word to all NC GOP leaders," Linberg wrote, according to an email in evidence at his federal bribery trial.

Causey wore an FBI camera that took in not only evidence of the crime, but also offhand remarks that tease at a larger tale, leaving substantial questions unanswered.

In one conversation, Gray told Causey that the $2.4 million Lindberg donated to benefit Lt. Gov. Dan Forest's 2020 gubernatorial run was "not even the tip of an iceberg," adding that he couldn't say more.

Gray texted House Speaker Tim Moore at one point "relative to your ask" for the House Republican Caucus.

Lindberg himself referenced a dark money group backing Gov. Roy Cooper, breaking down its basic structure as he pitched Causey on a covert way to take campaign cash.

This was a relative thing, though, for an apparent billionaire.

"Half a million is going to be disclosed in the second quarter here, which is fine," Lindberg says on one of the recordings, laying out a campaign spending plan. "No big deal. Whoop-de-doo ... and a half a million will be disclosed sent to GOP second quarter, which is fine. They can do some more articles on me."

The promise was always simple, though the details shifted: If Causey would replace the regulator leading a review of Lindberg's insurance companies and how they invested their money, Lindberg would put up to $2 million toward the insurance commissioner's re-election bid.

But, as he recorded conversations in 2018, Causey expressed worries that the donations would draw too much attention, since he wasn't even up for re-election until 2020.

Lindberg came from political obscurity in 2017, donating more than $3.4 million to North Carolina political campaigns. About $2.4 million of that went to groups supporting Forest, who, although he hadn't made it official, everyone knew was running for governor.

Lindberg is Forest's biggest financial supporter by far.

"Well, some of what happened to Dan Forest was, was strategic, and there's more to it," Gray told Causey during a May 2018 phone conversation. "What you can see of it is not even the tip of an iceberg. There's a lot more to it than anybody knows, and I'm not at liberty to discuss it."

Even though Causey didn't ask for details, Gray kept stressing discretion.

"It's just not the kinds of things to be discussed publicly," he said, according to an FBI transcript.

"Well, I certainly appreciate," Causey began, before Gray cut him off.

"The best way to win a primary is not to have one," he said.

Lindberg invested early in Forest's campaign to ward off primary challengers, Gray said, adding that "Dan is the right person to be the next governor."

"Pat is not," he said. "Phil Berger is not."

"Pat" is former Gov. Pat McCrory, who some expected to take another run at the governor's mansion this year after losing a close race in 2016 to Cooper. After leaving office, McCrory did some consulting work for Lindberg, but he has largely declined to discuss that relationship.

Berger is the Senate's top Republican, and rumors spread every four years that he'll run for governor. In the tapes, Gray never clarified what he meant by "just the tip of an iceberg." Causey said Tuesday that he has no idea.

Federal prosecutors and FBI agents attached to the case have repeatedly declined interview requests, but there's no evidence Forest was ever a target of their review. Gray's legal team declined an interview for him. The evidence – dozens of hours of it – makes it clear Gray is a talker.

"You don't know if there was any grain of truth in it or just talk," Causey said, speaking only generally about conversations they had.

Forest's campaign spokesman said it's "impossible to speculate" what Gray meant, and he accused WRAL News of trying "to smear the solid reputation of the lieutenant governor by innuendo, hearsay, guilt by association or any other means available."

"With the trial over, it should be obvious and conclusive to WRAL, and the general public, that the Lt. Governor was never questioned, summoned, deposed or indicted in the case," campaign spokesman Andrew Dunn said in a written statement.

Dunn noted that federal prosecutors didn't try to seize any of Forest's campaign donations, like they did with the money Lindberg put into political committees meant to support Causey's re-election. In written filings ahead of the trial, prosecutors specifically said they weren't alleging that other campaign donations that might be mentioned during the trial were illegal.

"I’m sure you understand that means the federal government found nothing wrong with the contributions to entities that support Dan Forest, or Roy Cooper’s Democratic Party, or chairman of the Democratic Party Wayne Goodwin or anyone else," Dunn said in his statement.

Goodwin was North Carolina's insurance commissioner until Causey beat him in 2016, and he was the first North Carolina candidate Lindberg supported, spending more than $340,000 between Goodwin's campaign and a separate political action committee that supported his re-election.

Goodwin, who is running against Causey again this year, now chairs the North Carolina Democratic Party, and Lindberg gave the party $750,000 in 2018.

In March 2018, Causey met with Lindberg, Gray and Palermo in a conference room at the Statesville airport.

As in other meetings, Causey wore a video camera set up by the FBI. After a while, Causey asked to speak to Lindberg alone, and the two got down to brass tacks.

"I guess what I'm saying is, what's in it for me?" Causey asked.

After some back and forth, Lindberg laid out "the play here," offering anonymous campaign donations if Causey would replace a regulator named Jackie Obusek, who had been hounding Lindberg's insurance companies over a long-running financial exam. That review apparently threatened hundred-million-dollar deals in other states, because it was a red flag for regulators there.

"Let's just talk about the Democrats, for example," Lindberg began. "Gov. Cooper has his own independent expenditure committee."

"They're sitting over in a nice, in the BB&T tower in Raleigh, and they've got a whole nice office and nice staff, and their budget is $10 million," Lindberg said, "and it has nothing to do with Gov. Cooper."

Moving NC Forward is a 501(c)(4) group under the U.S. tax code. It accepts unlimited donations and can keep its donors secret. It can also spend a portion of its money on ads supporting Cooper's agenda – and thus his re-election bid. It's mailing address is at the BB&T building in downtown Raleigh, which is also home to Nexus Strategies, a consulting group enmeshed in the governor's re-election bid.

On the recording, Lindberg never says he donated to Moving NC Forward. But the group's president, Tom Hendrickson, wouldn't go on the record either way, saying the group's policy is that it doesn't answer questions about donors.

"I can't confirm or deny any donation, period," Hendrickson said in a text message. "If you asked me if Donald Trump was a donor, my response would be the same."

Meanwhile, Cooper's campaign committee is hitting Forest over his Lindberg connections, pushing out statements, digital ads and a website called "What's Dan Forest Hiding?" The site makes no mention of the $750,000 Lindberg donated two years ago to the state Democratic Party, which in turn helps cover travel and office expenses for Cooper's gubernatorial campaign.

Lindberg's team went back and forth over the structure of his financial arrangements with Causey.

Eventually, they settled on this: $250,000 would flow to Causey's campaign through the North Carolina Republican Party, which, unlike individual campaigns, can take unlimited donations. It can also transfer unlimited amounts, but not at the direction of a donor – at least not legally.

But that's what happened, according to the FBI, and party Chairman Robin Hayes was also indicted for his role in the scheme. He pleaded guilty last year to lying to the FBI during its investigation, and like Gray and Lindberg, he awaits sentencing.

Lindberg agreed to put up to $2 million more into a pair of similarly named groups: the N.C. Growth and Prosperity Committee, a 527 group under IRS code, and the N.C. Growth and Prosperity Alliance, a 501(c)(4).

The 527 could spend more money on political causes but would eventually have to disclose its sole donor. The 501(c)(4) could keep Lindberg's involvement a secret.

John Palermo, a Lindberg employee and head of the Chatham County Republican Party, set up both committees in June 2018. As he researched the options, Lindberg provided guidance.

"Donor non-disclosure is a must," he wrote in a March 2018 email.

Lindberg and Gray had pitched Causey on hiring Palermo to replace the regulator they wanted out at the Department of Insurance, but that plan was eventually shelved as too risky. When Gray and Lindberg were indicted, so was Palermo, but the jury found him not guilty last week. His attorneys argued that he was kept in the dark about key details in the scheme.

In a July 2018 conversation, Palermo told Causey that he'd run the new campaign committees himself but that John Gray's girlfriend would be involved, as would his sister-in-law, Sue Gray.

John Gray's brother is Beecher Gray, a semi-retired Superior Court judge who lives in Durham, roughly across the street from Lindberg's former compound on Stagecoach Road.

In fact, the Grays helped Lindberg buy land for his mansion there, and that deal was what brought John Gray into Lindberg's orbit. He told Causey in recorded conversations that he set it up, and Beecher Gray confirmed Tuesday that he served as a pass-through, buying the land from a neighbor, then selling it to Lindberg.

At one point in the recordings, Causey questioned John Gray's role in Lindberg's empire.

"I don't claim to have any particular expertise in insurance," Gray explained, "but I have, I have some expertise in people."

In another recording, Causey and Lindberg are chatting with John Gray.

"When Beecher cycles off the bench ... can I tell him this?" Gray asks Lindberg.

"Yeah, absolutely," Lindberg replies.

"He's going to accept the board position with Global Bankers," Gray says.

Global Bankers Insurance Group is an umbrella company for Lindberg's insurance businesses, which have since been seized by Causey's department. Beecher Gray said Tuesday that the move was discussed but never happened.

"It was a possibility," he said. "Just another background possibility."

By mid-June 2018, the new committees were set up and funded, and a $10,000 down payment had flowed from the state GOP and into Causey's campaign.

But by month's end, Lindberg had had enough of Causey's promises and delays. Obusek hadn't been moved out of her job, and Lindberg felt the Department of Insurance was lingering on company exams, threatening expansion plans.

"We are shutting down donations until we see some improvement at NC DOI staff," he emailed Rod Perkins, who was then the lead lobbyist for Global Bankers.

Perkins wrote back to confirm, wanting to make good on promised donations at the federal level: $50,000 to a PAC linked to then-U.S. House Speaker Paul Ryan, another $50,000 for a group tied to Senate Minority Leader Chuck Schumer and other five-figure donations to national Republican and Democratic groups. The email thread also mentions the governor's and insurance commissioner's races in Kansas, a Virginia congressman and former Florida Gov. Rick Scott's run for U.S. Senate.

"We aren't writing ANY more checks to anyone until we see improvement at NC DOI," Lindberg replied. "Pass the word to all NC GOP leaders."

"I think Mark got the message and will reach out to Mike over the weekend," Palermo emailed Lindberg that day. "Net is ... in Mark's words: 'Mike needs to man up and do what he agreed to.'"

Walker's spokesman, Jack Minor, said Wednesday that the lunch was in Alamance County with GOP county chairs from around the state and that Walker "never had a one-on-one conversation with Palermo."

Walker did call Causey three days later, though, and then Causey called John Gray.

"I thought that was kind of odd that, that [Walker] would be calling me about moving some people around in my department," Causey said.

Minor said that Walker "categorically did not discuss firing or moving any personnel on that phone conversation."

Either way, the spigot turned on again within weeks. Causey met one-on-one with Lindberg at his home on July 25, while John Gray waited in another room. The next day, the rest of Causey's promised $250,000 came from the state GOP.

Also on July 25, John Gray texted state House Speaker Tim Moore.

"Good meeting with Mike Causey!" he texted. "We are ready to meet with you relative to your ask for House Caucus."

Moore's spokesman, Joseph Kyzer, turned away an interview request for the speaker, saying questions should go to the campaign apparatus.

House Republican Caucus Director Stephen Wiley said neither the caucus nor Moore’s campaign committee received contributions from Lindberg beyond what's already been reported.

House Republicans also benefit from donations to the Carolina Leadership Coalition, a 501(c)(4) dark money group that supports their agenda. The group's executive director, Michael Luethy, initially declined comment for this story, citing a policy of not discussing donors.

But after more consideration Luethy said the group, "did not receive anything from Greg Lindberg, or any of his companies, or his associates.”

In the fall of 2017, the push to ease Global Bankers' regulatory problems was moving on at least two tracks in North Carolina.

Lindberg's team was trying to win over Causey and his deputies as they examined company financial records, but they were also hoping the General Assembly would change state law, allowing Lindberg's insurance companies to keep investing more cash from policyholder premiums in other companies that Lindberg owns.

Under Goodwin, Lindberg's companies were allowed to put up to 40 percent of their assets into these "affiliated companies." Causey's team, led in part by Obusek, insisted on unwinding that, lowering the percentage and thus Lindberg's control over the companies' cash.

The legislation's key elements never even got out of committee. By November 2017, Lindberg was threatening to locate a "large new acquisition in Oklahoma, not North Carolina" because of "the anti-business attitude and lack of real world business expertise at the NC DOI."

He made similar threats repeatedly over the next eight months as Causey dragged his feet with promised changes.

But in the fall of 2017, John Gray sought to calm Lindberg with the promise of legislative success. He'd attended an event for state Rep. David Lewis, R-Harnett, the powerful chairman of the House Rules committee.

"David is on board with our regulatory revision effort," Gray wrote in an email.

Lewis didn't respond to phone messages seeking comment this week.

Gray said he also expected support from the other side of the aisle. He complained to Causey, in a May 2018 phone call, that Causey's staff was pushing back against important parts of the bill, which was a grab bag of insurance regulation changes

"The two that – that have the most resistance from your staff are the two that are most crucial," Gray said.

As the conversation went on, Gray talked about the importance of building consensus on the measure, particularly within the insurance industry, given the attention Lindberg's donations had generated.

"I think [state Sen.] Floyd McKissick's going to support it, and I think the Black Caucus will support it," Gray said. "I don't think the Democrats are going to be heavily against it unless ... it's identified as being something that's being done just for Greg Lindberg. If that's the case, it's dead!"

McKissick, a Durham Democrat who left the Senate this year for an appointment on the North Carolina Utilities Commission, said Tuesday that he had vague memories of the bill and that it would have provided "some greater flexibility with investments."

"The only thing I can recall was some discussion at some point about modernizing ... our statutes dealing with insurance and what were eligible investments," McKissick said. "I cannot recall who those conversations were really with."

He said he didn't remember any conversations about the bill within the Legislative Black Caucus.

In the months to come, Lindberg would promise $1 million in scholarship donations at historically black colleges and universities in North Carolina through a program overseen by the Legislative Black Caucus Foundation.

The evidence indicates that, throughout the scheme, the conspirators underestimated Mike Causey.

Palermo texted John Gray at one point about "a comedy of errors that could only happen with MC at the helm."

Gray suggested to Hayes, the GOP chairman, that he reach out to Causey for a quicker response: "Sometimes thinking for him helps."

And there's a text thread in evidence between Gray and Heather Whillier, Forest's campaign finance director, discussing $10,000 in Lindberg donations that Causey returned in 2017.

Gray's analysis?

"Causey not brightest."​