Near North Insurance Trial

[southsider2k5]

Dozens of prominent political and business leaders obtained discounts on automobile, homeowner and other insurance from Near North Insurance Brokerage with funds allegedly taken improperly from the company's premium trust fund, according to testimony and records presented Tuesday at the fraud trial of owner Michael Segal.

 

Angela Amaro, a former Near North accounting employee, testified that an employee of Cook County Commissioner John Daley, Segal's wife and daughter as well as a former port authority official were essentially "ghost payrollers" on Near North books -- paid for not doing any work.

 

Kitty Kurth, a spokeswoman for Segal, denied that allegation in part, saying Segal's wife, Joyce, and daughter Robin have legitimately worked at Near North since the early 1990s.

 

Segal and Near North are on trial in federal court on charges of stealing more than $20 million in insurance premiums from the trust fund, which must by law be held in reserve for insurance carriers and customers.

 

The VIP list of customers to whom Segal gave free or discounted insurance is a veritable "Who's Who" of the Chicago political and business world.

 

Among them were former Chief Judge Harry Comerford of Cook County Circuit Court, powerful Chicago Ald. Edward Burke (14th), former U.S. Rep. Dan Rostenkowski, former Cook County Board President George Dunne, White Sox and Bulls owner Jerry Reinsdorf, restaurateur Richard Melman, real-estate developer Thomas Klutznick, and Thomas Donovan and William Brodsky, former heads of the Chicago Board of Trade and the Chicago Mercantile Exchange, respectively.

 

A person named Eleanor Daley was named on the VIP list, but it could not be determined if she was Mayor Richard Daley's late mother or late sister. There were no details given about Daley on the list, and Amaro said she didn't know if Eleanor Daley had received discounted insurance.

 

Insurers are barred by state law from giving aribitrary discounts to customers because it would give them an unfair advantage over competitors and could be discriminatory against other groups of people covered by an insurer.

Many of the VIPs couldn't be reached for comment Tuesday evening, but most clearly didn't need the discounts for financial reasons.

 

Authorities haven't alleged that those who obtained discounts were criminally liable. But if any of them held elective office at the time, they may have been required to reveal any gifts.

 

According to testimony, former Chicago Ald. Edward Vrdolyak obtained a 50 percent discount on auto insurance for at least four cars, including a Porsche and BMW.

 

Vrdolyak, an attorney, said Tuesday he obtained insurance through Near North because he prefers to do business with people he knows, but he denied obtaining discounts or asking for any.

 

Vrdolyak `got no bargains'

 

"I got no bargains," he said.

 

In fact, Vrdolyak said his wife at one time insured her store through Near North, but she ended the relationship because its premiums were more than double those of competitors.

 

Chicago real-estate tycoon Victor Cacciatore, long known as a dabbler in the city's political scene, received discounts on auto insurance for numerous vintage cars--a 1947 MG and a 1978 Rolls-Royce among them, according to the records.

 

An owner of the originally-planned Rosemont casino, Donald Flynn, was a Waste Management executive when he received discounts of insurance for his 38-foot Cigarette boat, the records show.

 

Donovan, who received $48,000 in discounts, couldn't be reached for comment.

 

A man who answered the phone at the home of former state Rep. Ted Lechowicz said, "I don't know what you're talking about."

 

He then hung up.

 

Near North records admitted into evidence listed Lechowicz as having received a 100 percent discount on six insurance policies and a 50 percent discount on two others.

 

Burke didn't return a telephone message left for him Tuesday, but when the allegations surfaced two years ago, he denied receiving any discounts on insurance policies from Near North.

 

According to records introduced at trial, Burke didn't have to pay a dime of a $3,317 premium in 1999.

 

When the existence of the VIP list was revealed by the Tribune two years ago, many of the recipients denied ever knowing they had gotten a break on insurance from Near North.

 

Amaro said the discounts required Segal's approval each time the bills came due, often annually.

 

Several members of Segal's family, including his mother, also received insurance discounts. But in questioning Amaro, Assistant U.S. Atty. Virginia Kendall made the point that Segal hadn't paid the premiums out of his own pocket.

 

"Instead, that money came from the premium trust fund?" she asked.

 

"Correct," Amaro said.

 

Amaro testified that she learned the discounts were illegal when she was questioned by the FBI during a federal probe in the 1990s of Rostenkowski, then the powerful chairman of the House Ways and Means Committee. He pleaded guilty to mail fraud and was later pardoned by President Bill Clinton.

 

But Segal continued to hand out discounts to powerful friends, Amaro said.

 

Amaro also alleged that Near North had at least four people on the company payroll even though they allegedly did little or no work. Few details were provided.

 

She identified the alleged ghost payrollers as Segal's wife and daughter, the John Daley aide and Gilbert Cataldo, former executive director of the Illinois International Port District who, with John Serpico, the former port authority chairman, was convicted of mail fraud in 2001.

 

Cataldo also received a 20 percent discount on his homeowners' policy, according to records.

 

In court, Amaro named the Daley aide, a woman, but the prosecution later was unsure how to spell her last name.

 

Amaro said Near North also carried loans on its books for a long time without their ever being repaid, most notably to Chicago Ald. Burton Natarus (42nd), who received nearly $140,000, according to records admitted at the trial. Natarus has denied accepting loans from Segal.

 

Amaro said Near North records also showed a $75,000 loan to Lisa Novak, believed to be a Near North executive.

 

Amaro testified she regularly handed out company cash to Segal in white envelopes delivered to him or one of his drivers. He received $125 every Monday and one or more additional payouts each week, Amaro said.

 

"There were $1,000 days, $5,000 days if he was going out of town," Amaro said.

 

Logged as postage

 

She said she posted the cash on company books as if it were for postage expenses--on instructions from Daniel Watkins, a company accountant.

 

The cash came from the premium trust fund, Amaro testified.

 

On cross-examination, Amaro denied Segal had ever told her to post the cash in an account that listed all the company payouts to Segal, but she then admitted that's exactly what she had indeed said in testimony before the grand jury in 2002.

 

On rare occasions, Amaro said, she also gave company cash to Segal's wife, who had started a business.

 

In the mid-1990s, Amaro said, Near North went through a serious cash shortage to the point that Watkins checked the company's cash balance online in its bank before deciding which checks to mail out to insurance carriers. The stack of bills piled seven to eight inches high, she said.

 

Amaro described Segal as a hands-on boss whose approval was necessary for every expense. She also said he had a quick temper that she believes contributed to her health problems and led her to quit the company.

 

"I didn't like getting yelled at anymore," Amaro said.

 

More than once, Segal had threatened that if she ever left the company, "you would never work in Chicago again," said Amaro, who now works for another insurance brokerage.

 

After she left Near North, Segal wrote a letter warning that she was violating a non-compete clause, but Amaro said she was never sued by Segal.

 

"Did you ever tell the FBI of your hostility toward Mr. Segal?" asked Sal Cognetti Jr., a lawyer representing Near North.

 

"My hostility? No," Amaro replied.

[Texsox]

Of course he used that money to improve the Sox

[Dick Allen]

I believe Segal is a White Sox investor. Near North Insurance has an advertisement on the tarp at USCF.