CEO Michael Segal of Chicago-based Near North Insurance Brokerage, Inc., stepped down from his position Jan. 31 as a result of his arrest for mail and insurance fraud involving a trust fund from which he allegedly misappropriated funds.
According to the Chicago Tribune, John Harney, 38, a senior vice president, has been appointed chief operating officer.
Segal, 59, the sole shareholder of Near North, is accused of embezzling money from the firm’s trust account, which held money to be paid out for customers’ insurance premiums. The fund was short approximately $20 million.
Segal’s attorney, Harvey Silets, said Segal will vigorously defend the charges against him.
Near North, a provider of property, life, health and workers’ compensation coverages, voluntarily reported an error in the fund to the Illinois Department of Insurance, the state regulators last summer. They claimed the problem had been resolved, but Nathaniel S. Shapo, director of the state agency, stated that the matter has not yet been resolved.
Meanwhile, records revealed a $10 million dollar bank loan was obtained by Segal to mortgage his Highland Park house, deriving from company finances.
Silets insists the intention of the loan was to drive further capital into the company.
A 16-acre portion of the estate held in Near North’s name is up for collateral.
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