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CHICAGOConvicted Near North National Group Inc. owner Michael Segal was sentenced last week to more than 10 years in federal prison for his June 2004 conviction on charges of fraud, racketeering and mishandling more than $30 million in insurance premium trust funds.
In addition to the sentence of 10 years and one month, Judge Ruben Castillo of the U.S. District Court for the Northern District of Illinois ordered Mr. Segal to pay $831,528 in restitution to former Near North clients.
"It's a classic case of bigheadedness," Judge Castillo said during the sentencing hearing. "You thought you were above the law."
While expressing remorse, Mr. Segal, 63, said: "I fundamentally disagree with the verdict."
"I am not a bad person," he said. "I have never stolen a dime."
Mr. Segal plans to appeal the sentence, according to defense attorney Jeffrey Steinback.
During a six-week jury trial that began in May 2004, the prosecution alleged that, beginning as early as 1990, Mr. Segal took millions of dollars from the brokerage's premium fund trust account to expand his business and to finance a lavish lifestyle.
The defense contended that Mr. Segal was a victim of bad accounting at the brokerage and that no insurer or customer was ever harmed.
"Just because he had the wealth to cover the loss doesn't mean that he should be able to snub his nose at the (state-mandated trust fund) requirement," said Virginia Kendall, a deputy chief in the U.S. attorney's office for the Northern District of Illinois, during the sentencing hearing.
The defense also maintained Mr. Segal was a victim of a scheme by former Near North executives who tried to wrest control of the company from him and then, in retaliation, went to the FBI about the premium fund.
Mr. Segal was convicted on 13 counts of mail fraud, seven counts of making false statements, three counts of embezzlement and one count each of wire fraud, tax conspiracy and racketeering.
Late last year, Judge Castillo acquitted Mr. Segal of the seven counts of making false statements but upheld the other counts.
Since his conviction, Mr. Segal, who was considered a flight risk, had been held at a federal facility in Chicago. His sentencing was delayed twice this year in part due to psychiatric evaluations. In October, he was found mentally competent to be sentenced.
In sentencing Mr. Segal, Judge Castillo accepted some defense arguments for mitigating factors, including Mr. Segal's attention deficit/hyperactivity disorder and charitable contributions.
Near North National Insurance Brokerage Inc., once the nation's 18th-largest broker of U.S. business, based on $199.9 million in 2002 brokerage revenues, also was convicted on similar fraud charges.
After two failed attempts to sell the brokerage, Mr. Segal eventually transferred what was left to Chicago-based Mesirow Insurance Services Inc. in August 2003.
Mr. Segal is not affiliated with The Segal Co., a New York-based employee benefit consulting company.