Female Escorts Data Xed Out In Near North Case

By Mark E. Ruquet

NU Online News Service, June 4, 11:26 a.m.EDT?The federal jury in the $20 million Near North fraudtrial of the brokerage's founder Michael Segal will get the casewithout hearing allegations he squandered more than $200,000 incompany cash on female escorts.[@@]

The prosecution wrapped up its case with mention of non-businessoutlays by Mr. Segal, but Chicago U.S. District Court Judge RubenCastillo would not allow the government to tell the jury aboutspending that went for escort services.

He did allow prosecutors to present evidence that the paymentswere made in cash, in various amounts, for the non-businessspending.

The case was in recess yesterday before both sides make finalmotions and give their closing arguments June 10.

Mr. Segal, the former chief executive officer of Chicago-basedbrokerage firm Near North Insurance Brokerage Inc., is on trial formisappropriating more than $20 million from the firm's premiumtrust fund account over a 12-year period for his own and companyuse.

Mr. Segal and his firm have been charged with making falsestatements to the Illinois Department of Insurance to hide thealleged fraud. They have also been accused of giving rebates anddiscounts on insurance premiums financed through themisappropriations.

Randall Samborn, public information officer for the U.S.Attorney of Northern District of Illinois, said the jury isexpected to receive the case by June 14 and begindeliberations.

According to court papers filed by prosecutors, Mr. Segal isalleged to have spent more than $220,000 of the firm's funds onescort services during a 12-year period.

Other money allegedly paid for airline tickets and otherpersonal expenses of individual young women not employed with thefirm.

Evidence was also introduced linking alleged illegal discountsfor insurance policies with major Chicago area political figuresand celebrities.

Mr. Segal's defense has been that the fault does not lie withmisconduct on his part, but poor accounting practices on the partof Near North. The company, the defense argues, was in the processof straightening out its accounting mess. The firm alerted theIllinois Department of Insurance of the situation. Mr. Segal wasarrested in January of 2002 by the FBI shortly after making thesituation known to the department.

A spokeswoman for Mr. Segal, Kitty Kurth, said that "Near NorthInsurance was growing so fast under Mr. Segal's entrepreneurialleadership that it became sloppy in its accounting, and conversionto a new computer system exacerbated the problems.

"However," she continued, "the attorneys emphasized that nocustomer went without insurance coverage and no insurance companieswent unpaid."

If convicted, Near North could face five years probation andfines of $500,000 for each count. Mr. Segal could face jail timeranging from 5-to-20 years for each count and a maximum of $250,000in fines for each count.