Thousands of Retirees Can't Withdraw Savings Invested in Firms Controlled by Indicted Financier Greg

[question everything]

Thousands of Retirees Can’t Withdraw Savings Invested in Firms Controlled by Indicted Financier Greg Lindberg

Mark Zintel, a retiree who lives near Tampa, Fla., is furious that $700,000 in annuities he bought from an insurer have been frozen for almost four years. He is one of tens of thousands of people whose money was rendered unreachable as the empire of self-described billionaire Greg Lindberg slowly imploded. Many may never recover a portion of their money, and some have died while waiting.

Mr. Lindberg, meanwhile, moved nearby and lives in luxury. He moors his 214-foot yacht near Tampa and recently bought a 10-bedroom estate and another spacious house in the area. The 52-year-old executive was indicted last month on federal charges that he defrauded his insurers by lending $2 billion of their funds to companies in his private conglomerate, while allegedly siphoning off huge sums to finance his lavish lifestyle. He has pleaded not guilty and is out on bail. Until last July, Mr. Lindberg was in federal prison on bribery charges related to the insurers. He was released after 21 months when an appeals court overturned the conviction. A retrial is scheduled for November.

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What rankles Mr. Zintel and others is that they believe Mr. Lindberg is using their money to fight his legal entanglements, allowing him to continue living extravagantly even as they cut back. Among the alleged extravagances: The divorced executive has spent millions of dollars on gifts for women, according to court documents, including paying some women to produce offspring for him. Some 70,000 holders of annuities totaling $2.2 billion are unable to withdraw their money, filings show. Many are retirees or conservative investors who bought five- to seven-year annuities in 2017 and 2018. Financial advisers typically marketed them as a safe, higher-yielding alternative to bank CDs.

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A spokesman for Citizens Bank, which sold the annuities to many customers, declined to comment on specific clients but called the overall situation a “large-scale fraud” and said it has offered help to those in hardship. Like bank accounts, life-insurance products are insured, in this instance by industry-funded guaranty associations that typically protect annuity owners up to $250,000. There’s a rub: Consumers aren’t paid until insurers are put into liquidation, a move that Mr. Lindberg is opposing.

Even if the insurers go into liquidation, some 1,600 annuity owners wouldn’t be fully covered, because they collectively invested about $250 million more than their state’s reimbursement caps, filings show. North Carolina regulators say they are optimistic they can fill most, if not all, of that gap through pending legal actions against Mr. Lindberg.

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[badhair77]

1. What a slimeball.

Hope these good-faith investors get some money back.

[bucolic_frolic]

2. Diversify, diversify, Floriduh, Floriduh, and never trust gurus to manage

Lax regulation in some states. There was a real estate implosion in the 1920s in Florida. Palm plantations sold as housing tracks as I recall. I think it was in the book "Only Yesterday".

But aside from that, state regulation is important. States regulate banks, and insurance companies. Some regulate more than others. Some have collusive ties with those they regulate. In some states, there are state banks. Some not. Must be a reason.

Don't know if the investors should be blamed for doing dumb things. But if you've amassed $700k, you'd think you'd know enough to diversify, find a well-known investment company, and do a little sniffing around.

[PoindexterOglethorpe]

3. I agree.

This is reminiscent of those who invested everything with Bernie Madoff, even though he was completely opaque about how he got his returns.