CHARLOTTE, N.C. — The former chair of the North Carolina Republican Party pleaded guilty Wednesday in connection with federal charges that he lied to the FBI.
Court documents claim Robin Hayes and three other people, including mega-donor Greg Lindberg, ran a scheme to try to bribe the state's insurance commissioner, using millions of dollars in donations meant for the Republican Party.
The commissioner cooperated with investigators and is not being charged.
Hayes was facing five counts of the indictment but prosecutors dropped counts 1 through 4. Hayes agreed to cooperate in the investigation and testify if needed. He did not make any statement in court on Wednesday.
According to federal documents, Hayes admitted he made false statements to the FBI during the bribery investigation.
"At the time that the defendant made the materially false statements, he knew that it was unlawful to lie to the FBI, and he knew that his statements were false because the defendant had in fact spoken with the North Carolina Insurance Commissioner about Greg Lindberg and John Gray, as well as Greg Lindberg's request that the North Carolina Insurance Commissioner move certain personnel within the North Carolina Department of Insurance," the factual basis says.
Hayes, Lindberg, John Gray and John Palermo Jr. were indicted by a federal grand jury on charges of conspiracy to commit honest services wire fraud and bribery.
Former FBI Assistant Director Chris Swecker said in cases like this, the goal of prosecutors is to get people like Hayes to plead and cooperate.
"When they have the type of evidence that I have read about in this case, if he goes to trial, he takes a huge risk of getting significant jail time," Swecker said.
The maximum sentence Hayes could receive is five years in prison and a fine of $250,000, but prosecutors had agreed to seek punishment on the lower end of that spectrum in exchange for Hayes' cooperation.
He will be sentenced at a later date.
With the guilty plea, Swecker expects Hayes will face no more than 6 months in a minimum-security prison.
"It's a serious offense," Swecker said. "But it doesn't carry of a huge penalty with it, particularly on the first offense and particularly if you are pleading guilty and accepting responsibility."
The indictment charges Lindberg, 48, of Durham, who is founder and chairman of Eli Global LLC and the owner of Global Bankers Insurance Group; John D. Gray, 68, of Chapel Hill, who is a consultant for Lindberg; Palermo, 63, of Pittsboro, who is chairman of a Chatham County political party and an Eli Global executive; and Hayes, 73, of Concord, with conspiracy to commit honest services wire fraud and bribery concerning programs receiving federal funds and aiding and abetting.
Hayes was also charged with three counts of making false statements to the FBI.
All four men made their first appearances in Charlotte on April 2, pleading not guilty, and were given $100,000 unsecured bails.
“These men crossed the line from fundraising to felonies when they devised a plan to use their connections to a political party to attempt to influence the operations and policies of the North Carolina Department of Insurance,” said FBI Special Agent in Charge John A. Strong. “The FBI will root out any and all forms of public corruption. We remain committed to ensuring those who violate the public’s sacred trust are held accountable.”
The criminal indictment alleges that in January 2018, the elected Commissioner of Insurance of the North Carolina Department of Insurance reported concerns to federal law enforcement about political contributions and other requests made by Lindberg and Gray, and agreed to cooperate with the federal investigation that was initiated.
According to allegations in the indictment, from April 2017 to August 2018, Lindberg, Gray, Palermo and Hayes devised a scheme to defraud and deprive the citizens of North Carolina of the honest services of the commissioner -- an elected state official -- through bribery.
As alleged in the indictment, the defendants engaged in a bribery scheme involving independent expenditure accounts and improper campaign contributions for the purpose of causing the commissioner to take official action favorable to Lindberg’s company, GBIG.
The defendants then gave, offered and promised the commissioner millions of dollars in campaign contributions and other things of value in exchange for the removal of NCDOI’s senior deputy commissioner, who was responsible for overseeing regulations and the periodic examination of GBIG.
During the time frame in the indictment, Lindberg, Gray, Palermo and the commissioner held numerous in-person meetings at different locations, including in Statesville, and had telephonic and other communications with each other, and with Hayes, to discuss Lindberg’s request for the personnel change in exchange for millions of dollars, and to devise a plan on how to funnel campaign contributions to the commissioner anonymously.
In order to conceal the bribery scheme, Palermo allegedly set up, at the direction of Lindberg, two corporate entities to form an independent expenditure committee with the purpose of supporting the commissioner’s re-election campaign, and funded the entities with $1.5 million as promised to the commissioner.
Also, at Lindberg and Gray’s direction, Hayes allegedly caused the transfer of $250,000 from monies Lindberg had previously contributed to a North Carolina state party of which Hayes was chairman, to the commissioner’s re-election campaign.
On Aug. 28, 2018, FBI agents interviewed Hayes about his involvement with and knowledge of the alleged improper campaign contributions. During the interview, Hayes allegedly lied to FBI agents about directing funds, at Lindberg’s request, from Lindberg’s campaign contribution to the North Carolina state political party to the commissioner’s re-election campaign; about having any discussions with the commissioner about Lindberg or Gray; and about discussing with the commissioner personnel issues related to the commissioner’s office.
The FBI is in charge of the investigation, which is ongoing.
North Carolina Republican Party statement regarding the indictment of Lindberg and associates:
"Early this morning, the North Carolina Republican Party was made aware of several indictments surrounding the conduct of a major donor to both major political parties and two of his associates. The Party has been cooperating with the investigation for several months, including staff members providing statements and responding to various document requests. The Party, which has its day to day operations managed by professional staff under the direction of the NCGOP Central Committee, remains fully operational and focused on its mission at hand."
IN DEPTH: North Carolina GOP chairman, major donor face bribery charges
In a series of clandestine meetings in closed restaurants and small airport terminals, the pressured insurance magnate and his associates offered North Carolina's insurance commissioner money for special treatment, federal prosecutors say.
Greg Lindberg, in 2017 suddenly a major political donor, wanted the regulator investigating his company replaced or one of his insurance executives made her boss, federal prosecutors described in newly unsealed indictments. State Insurance Commissioner Mike Causey would receive up to $2 million funneled anonymously into his 2020 re-election campaign if he went along, prosecutors said.
Or the deputy insurance commissioner could stay in her post, Lindberg consultant John D. Gray told Causey in a phone call, as long as "she doesn't breathe a word outside that office, or send a slip of paper outside that office, that is not first reviewed by John" Palermo, the Lindberg insurance executive earlier proposed as her replacement.
But Causey reported the scheme to corrupt his agency by giving favored treatment to Lindberg's company, Global Bankers Insurance Group, which was headed toward a periodic financial examination, prosecutors said. And the review discovered problems, which the company agreed in May to correct, prosecutors said.
For their efforts to turn Causey to Lindberg's cause, he, Gray, Palermo and the chairman of the North Carolina Republican Party, Robin Hayes, were charged with conspiracy and bribery. Hayes agreed to use the state GOP as a conduit to funnel $250,000 to Causey, prosecutors said, and amplified Lindberg's message urging that the unnamed deputy commissioner be sidetracked.
"They were hoping that you would, and I don't even know the lady that was apparently really, really good, in financial analysis, that they would like to see put back into that department to make sure that things got done that needed to get done," Hayes told Causey in a May telephone call, according to prosecutors.
Hayes also was charged with lying to FBI agents investigating the case.
The 73-year-old former congressman from Concord announced Monday that he wouldn't seek re-election as party chairman, citing health problems. His attorney said Tuesday that Hayes "steadfastly denies the allegations made against him."
In October, as the federal investigation was building steam, Causey turned over $250,000 in campaign donations from the state GOP to U.S. Marshals. Lindberg also had donated $5,000 directly to Causey's campaign, but the commissioner returned the money.
"Everything I did was in cooperation and with direction of the federal investigators," Causey told The Associated Press in a phone interview Tuesday.
Lindberg - largely unknown in political circles until his contributions started flowing heavily in 2017 - has given more than $5 million to North Carolina candidates, party committees and independent expenditure groups. Recipients also include the state Democratic Party and outside groups that supported then-Insurance Commissioner Wayne Goodwin, who's now chairman of the state Democratic Party, and Republican Lt. Gov. Dan Forest, who is running for governor in 2020.
Federal prosecutors alleged that between April 2017 and last August, Lindberg, Gray, and Palermo met with Causey repeatedly to discuss favors and money, prosecutors said. Palermo was an executive for Lindberg's Eli Global LLC and until last fall was chairman of a county Republican Party.
Palermo created an independent expenditure committee able to spend unlimited amounts on political campaign with limited public disclosure that was funded with $1.5 million of Lindberg's money, prosecutors said. In all, Lindberg and his associates promised Causey $2 million in donations.
The case also threatens to embroil an unidentified official who prosecutors described as speaking to Causey several times on Lindberg's behalf. Lindberg made a $150,000 contribution to a political committee backing "Public Official A" on the same February 2018 date he learned the politician was willing to help sway Causey, prosecutors said.
Federal Election Commission records show Lindberg made a contribution in that amount to Republican U.S. Rep. Mark Walker's "Mark Walker Victory Committee" around the same time. It's the only $150,000 contribution by Lindberg listed in 2018 on the FEC website.
Walker's spokesman, Jack Minor, said he couldn't confirm if Walker was "Public Official A," adding that the February 2018 contribution eventually went to the Republican National Committee and wasn't used for Walker's campaign.
"Walker is not and never has been a target of this investigation, and has committed no wrongdoing," Minor said in a statement, adding that Walker helped federal investigators.
The four defendants appeared Tuesday before a federal magistrate.
Palermo, 63, of Pittsboro, didn't return calls seeking comment. A published number for Gray, 68, of Chapel Hill, was disconnected.
"Greg Lindberg is innocent of the charges in the indictment and we look forward to demonstrating this when we get our day in court," his attorney, Anne Tompkins, said in a statement.
The state GOP cooperated with the investigation, including turning over requested documents, attorney Josh Howard said in a statement.
A spokesman for Global Bankers and Eli Global noted the companies were not charged. Global Bankers has cooperated with federal prosecutors and will continue doing so, spokesman Steven Goldberg said.
Also, Eli Global has "always worked to operate with integrity and honesty in all aspects of our business and will continue to do so," Goldberg wrote in an email.
Cox Media Group