An appeal of his 10-year prison term by Michael Segal, the former chief executive of Near North convicted of stealing millions from his company, has been rejected.
But the 7th District U.S. Court of Appeals in Chicago, while upholding Mr. Segal's prison sentence, did order a rehearing of the $30 million that U.S. District Judge Ruben Castillo ordered Mr. Segal to forfeit when he sentenced him in 2004.
The appeals court said it could not be determined how much of the $30 million was actually embezzled by the chief executive for his own personal use and how much was funneled into the company. The court indicated that the forfeiture should only cover Mr. Segal's personal use.
He was also ordered to pay $841,527 in restitution and interest on the proceeds of a racketeering enterprise.
Mr. Segal was convicted in 2004 of using the Chicago-based Near North Insurance Brokerage firm's premium fund trust account for his own and company expenses. The account is set up to hold clients' insurance premium payments until they are paid to the insurer, and it is illegal to use the fund for any other purpose.
In 2001, the account was found to have a deficit of $30 million. Mr. Segal replaced $10 million and secured loans from two insurers for the remaining $20 million. However, Near North executives reported the violation to the Illinois Insurance Department, which eventually led to Mr. Segal's conviction.
During the trial, the jury was asked how much of the $30 million was the personal responsibility of Mr. Segal and should be forfeited. The jury said he should be held responsible for 60 percent. However, the appeals court said the error on Judge Castillo's part was in allowing the jury to make such a recommendation in the first place.
The court upheld Mr. Segal's conviction on 19 counts of fraud, racketeering, embezzlement and tax conspiracy.
Judge Castillo sentenced Mr. Segal to 10 years and one month in prison. He is currently serving his sentence at a federal minimum security prison. Mr. Segal would be in his mid-70s if he serves most if not all of his term.
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