Segal Jailed After Conviction

Mr. Segal was accused of embezzling more than $20 million from the firm's premium trust fund account over a 12-year period for his own and company use. Near North, which was also indicted, was convicted as an accomplice in the case.

According to Randall Samborn, spokesperson for the U.S. Attorney in the Northern District of Illinois, Mr. Segal was convicted of 26 counts stemming from the embezzlement. The counts include three of embezzlement, 13 counts of mail fraud, seven counts of making false statements, one count of wire fraud, one for tax fraud conspiracy, and one count for racketeering.

Near North's conviction on 21 counts include 11 counts of mail fraud, seven of making false statements, and three of embezzlement.

Mr. Samborn said prosecutors sought a judgment to grant forfeiture of $35 million in Mr. Segal's own personal funds as proceeds from the embezzlement from the same jury that convicted him. The jury, he said, granted a forfeiture of $30 million and 60 percent of his stock interest in the firm. He also faces up to 20 years in prison.

Mr. Samborn said prosecutors view the jury's forfeiture decision as advisory. Prosecutors are seeking 100 percent of Mr. Segal's interest in Near North in addition to the $30 million as part of the forfeiture.

It will be up to federal Judge Ruben Castillo to ultimately decide how much will be forfeited and how much time Mr. Segal will serve.

Mr. Segal, who is in his early 60′s, was taken into federal custody after prosecutors convinced Judge Castillo that Mr. Segal was a flight risk. Prosecutors argued that because of the lengthy sentence he is facing, his age and change in his circumstances in life, there was an increased possibility he would flee to avoid a possible 20 years in prison.

Judge Castillo granted the defense 60 days to file a post-trial motion, but the judge indicated he did not feel there were any issues that raised a substantial question upon appeal, Mr. Samborn said.

The prosecution laid out a case of embezzlement that enabled the firm to give illegal discounts on insurance premiums to well-heeled Chicago politicians and other high profile individuals. Mr. Segal was accused of using some of the funds for personal use, which included payments to individuals who were not connected to the firm.

There were allegations that the funds were used for escort services, but Judge Castillo would only allow prosecutors to describe the expense as "non-business" spending during testimony.

Mr. Segal's defense was that the fault did not lie with misconduct on his part, but poor accounting practices on the part of Near North. The company, the defense argued, was in the process of straightening out its accounting mess. It also blamed conversion to a new computer system for the accounting errors. The firm noted that no individuals lost insurance or premiums went unpaid due to the accounting errors.

The firm alerted the Illinois Department of Insurance to the situation in 2001. Mr. Segal was arrested in January of 2002 by the FBI shortly after making the situation known to the department.

No date has been set for sentencing. It is not likely to occur any sooner than the end of the 60-day period granted by Judge Castillo, Mr. Samborn indicated.

A phone call requesting comment from a representative for Mr. Segal was not returned.

Reproduced from National Underwriter Edition, June 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.