Near North Owner Used Reserve Funds to Reward Politicians, Feds Say

February 24, 2003

Near North Insurance Brokerage Inc. owner Michael Segal diverted hundreds of thousands of dollars of the firm’s reserves to Chicago-area politicians, federal prosecutors have alleged.

Segal, under federal indictment for fraud, mail fraud and racketeering, ran a deficit of $5 to $7 million in Near North’s legally required reserve fund, according to documents filed by prosecutors in federal court.
According to prosecutors, Segal gave $139,500 as a “loan/gift” to Chicago Alderman Burton Natarus in 1996, and another $50,000 went to Dan Ross Associates, a consulting firm operated by former Illinois U.S. Rep. Dan Rostenkowski, who served 17 months in prison for mail fraud.

Near North’s competitors have long complained of that firm’s ability to get the city’s insurance business. Near North reported $107.1 million in revenues in 2001, and Segal recently signed a letter of intent to sell the brokerage operations to investment equity firm Frontenac Co. for an undisclosed sum.

Segal has pleaded innocent on all charges.

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