The now-defunct Near North insurance brokerage has been fined $1.4 million in connection with the embezzlement activities of its former chief executive officer.
U.S. District Court Judge Ruben Castillo in Chicago imposed the fine on what was once one of the nation's premier brokerage operations.
The firm was convicted last year of 7 counts each of mail and insurance fraud related to the more than $20 million embezzled from the company's premium trust fund by Michael Segal, its onetime CEO.
Randall Samborn, a spokesman for the Northern District of Illinois U.S. Attorney's Office, said Near North was fined $100,000 for each count and ordered to pay $841,527 in restitution. The bulk of the payments will go to the Chicago Transit Authority, he said.
Judge Castillo also sentenced the former bookkeeper for Near North, Daniel Watkins, to two years probation and six months home confinement for his role in the embezzlement scheme. Mr. Samborn said Mr. Watkins was also ordered to pay a $5,000 fine and $109,333 in restitution.
Mr. Watkins cooperated with prosecutors in the investigation, wearing a hidden recorder to business meetings to help secure evidence of the scheme.
The judge condemned the firm for knowing about Mr. Segal's practices but doing nothing about it until after a large deficit in the fund was discovered.
Mr. Segal was sentenced Nov. 30 to 10 years and one month in federal prison. He was also ordered to pay $800,000 in restitution and has a $30 million judgment against him for his assets.
According to a spokeswoman for the Illinois Department of Insurance, Near North is no longer in business.
Shortly after the allegations came to light, the firm's licensed was revoked, but the action was held-up pending a hearing. Since then, all the members of the firm have left, she said. The firm's license was officially cancelled in April, said the spokeswoman, and no longer exists as a licensed insurance entity in the state.
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