Segal Found Guilty; He Faces at Least 20 Years in Prison
A federal jury convicted politically connected Chicago broker Michael Segal of embezzling more than $20 million from his own Near North Insurance Brokerage Inc. Segal—known for having close ties to powerful politicians in both parties—was found guilty on all 26 counts of mail fraud, wire fraud, making false statements, embezzlement, tax conspiracy and racketeering.
Assistant U.S. Attorney William Hogan said he faced at least 20 years in prison, though the length of his prison stay depends upon U.S. District Judge Ruben Castillo’s interpretation of federal sentencing guidelines. Hogan said it could be months before a sentencing date is set. Segal spokeswoman Kitty Kurth said it is “very likely” that Segal will appeal his conviction. Defense attorneys declined comment after court.
Near North was also was convicted of the 11 counts it faced, including charges of mail fraud and embezzlement. The following day, the jury in the case recommended that Segal be ordered to forfeit $30 million and 60 percent of his stake in NNIB.
“I’m disappointed but I’m holding up,” the 61-year-old Segal said after the verdict. He was out on $1 million bail but Castillo deemed Segal a flight risk and he was immediately taken into custody after the jury decided the fate of his fortune.
During the trial, prosecutors called numerous witnesses to testify Segal took money from a restricted account despite warnings it was illegal to do so, and spent the money on a lavish lifestyle and expanding his business. Assistant U.S. Attorney Virginia Kendall said the money came from a premium fund account that Segal was required by law to hold in trust for customers. “Instead, he was stealing it,” she said.
Prosecutors also said Segal kept a VIP list of customers, including politicians and other prominent Chicago business people, who would receive insurance discounts—some of 100 percent, a practice barred by state law. They said then-Gov. George Ryan called the Illinois Department of Insurance when it was looking into Segal’s business and expressed his hope Segal would be OK.
The defense said Segal was a victim of shoddy accounting practices and scheming underlings who were motivated by greed and vengeance. Attorney Daniel Reidy repeatedly told jurors no customer of Near North was hurt. The jury took about nine hours to convict Segal and his brokerage on all counts.
Prosecutor Dean Polales said that although Segal was able to borrow money to pay back the trust fund before clients lost money, that “does not diminish the gravity of the crime. We didn’t have to wait for a collapse in this case to see what was going on,” Polales said. “We hope we send a message to all others who have a great deal of control over massive amounts of money that they should take their trust seriously.”
Polales said Castillo will determine the assets Segal must give back to the government and how they will be distributed. Randall Samborn, spokesman for the U.S. attorney, said the verdict was the largest forfeiture judgment by a federal jury in Chicago.
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