Over two days in December 2017, Louisiana Commissioner of Insurance James “Jim” Donelon received three $5,000 campaign contributions, one from a North Carolina insurance executive Greg Lindberg and two from companies owned by Lindberg, Eli Research, LLC and Dunhill Holdings, LLC, and about five months later, on May 25th, 2018, Donelon received yet another $5,000 from Eli Research, LLC.
Around the same time, at the behest of the Federal Bureau of Investigation, North Carolina’s Insurance Commissioner Mike Causey was secretly recording conversations with Lindberg. As a result, last month, Lindberg was indicted for conspiring to bribe Commissioner Causey.
While Lindberg’s criminal indictment was widely reported in April and well-known among insurance industry professionals, Donelon has not returned the $20,000 in contributions from Lindberg or his companies, according to his most recent campaign finance reports. It is not clear whether or not the FBI has reviewed any potential illegalities stemming from these contributions or a prior regulatory victory Lindberg secured from Commissioner Donelon.
Since 2015, Donelon has received approximately $680,000 in campaign contributions from insurance companies and agents, according to a comprehensive review conducted by Douglas Heller, a nationally-renowned insurance expert. In mid-April, Donelon’s campaign reported $863,206.91 cash-on-hand.
Before making these contributions, Lindberg had won approval from Donelon to expand his growing insurance empire in a transaction that raises new questions in light of the federal indictment. In 2016, Donelon approved the sale of a two insolvent Louisiana life insurance companies, Mothe Life and DLE Life, to another Lindberg company, Southland National Insurance Company. Donelon’s Department selected Southland from nine companies that had submitted letters of intent to bid on the insolvent companies, according to a transcript of the courthearing that approved the sale.
Despite the Department of Insurance’s stated plan of seeking a buyer among “larger companies and life companies that were here in Louisiana,” Donelon recommended a sale to Southland, a relatively small and obscure North Carolina insurance company that, only two years prior, had been an Alabama-based burial-policy insurer.
Lindberg’s company purchased Southland National in 2014, part of a strategy of acquiring small insurance companies with assets he could invest in his other ventures. As the Wall Street Journal reported, Lindberg “looked for small insurers that wouldn’t cost much…. His purchases eventually included a Louisiana insurer bought out of receivership and a struggling Dutch insurer acquired for €1.”
Donelon approved the sale of that Louisiana insurer (Mothe Life and its subsidiary DLE); records indicate the purchase price was approximately $100,000.
Additional information that has come to light in the wake of the federal indictment adds to the concern about Donelon’s approval of the sale to Lindberg and the Commissioner’s later receipt of $20,000 in contributions.
Reporting by Politico in October 2018 found that only days after Donelon issued the final approval of the sale of Mothe/DLE to Southland, the Florida Office of Insurance Regulation sought to stop Southland from doing business in that state because the company was “financially impaired.” That Florida order was issued on April 1, 2016, just two weeks after Donelon’s Department handed over Mothe/DLE to Southland.
A review of the Louisiana Secretary of State’s corporations database reveals only one company associated with Lindberg as registered to do business in the state, Colorado Benefits Administrators, LLC. Neither Eli Research nor Dunhill Holdings, the two companies from which Lindberg donated to Commissioner Donelon, have ever been active businesses in Louisiana, and despite Donelon’s approval of the sale, Southland appears to have not yet filed requisite documents with the Louisiana Secretary of State.
Undoubtedly, the Louisiana Department of Insurance, which had previously aimed to sell Mothe/DLE to a well-capitalized insurer, would have been able to see the same financial impairment that so concerned Florida regulators. It is not clear why the Louisiana department did not identify any possible financial concerns when it presented its support for Southland’s purchase of Mothe/DLE to the East Baton Rouge District Court overseeing the matter.
On its website page about the insolvency and sale to Southland, the Louisiana Department of Insurance explains to Mothe/DLE policyholders, “The companies were purchased by Southland National Insurance Company who will continue to write policies and service your existing policies.” However, according to its own website, “Southland National is no longer issuing new policies.”
Louisiana is one of only twelve states with an elected Commissioner of Insurance. All told, since 1961, seven people, all men, have been elected to the position. Three of Donelon’s four most recent predecessors served time in federal prison after being found guilty of various federal crimes related to their official duties.