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Thoughts from Michael Segal

The never-ending case

Updated: Jan 11, 2019

“Jarndyce and Jarndyce drones on. This scarecrow of a suit has, over the course of time, become so complicated, that no man alive knows what it means.”


The fictional court case that Charles Dickens conjured up in his 19th century novel Bleak House to ridicule England’s chancery court system has, it would seem, a modern day true-life parallel in the case of U.S. v. Michael Segal in U.S. District Court in Chicago.


Consider that Segal was indicted in 2002, convicted in 2004, sentenced to 10 years in prison in 2005 and ordered to forfeit $30 million as well as his company, Near North Insurance Brokerage, which cost more than 900 people their livelihoods, although no customers lost a nickel and all got their insurance. Segal was released in 2012. Now, a whopping 15 years since the original charges were brought, the case still, as Dickens put it, drones on.


On the surface, this is about money - how much did Michael Segal have and what properties did he own, how much did he owe and what did he agree to pay? Explaining the intricacies of this financial dust-up would - and does - take up hundreds and hundreds of pages of legal briefs. But it basically boils down to this:


The jury that convicted Segal also ordered him to give up his businesses worth $250 million as well as forfeit $30 million of his own personal possessions. The prosecution, headed by Assistant U.S. Attorney William Hogan, persuaded the court to freeze all of Segal’s assets to ensure that the $30 million judgment was satisfied. So Segal was sent to prison for 10 years and all his money was in limbo. With more than $30 million frozen, Segal asked for the release of some of the funds to pay for family medical needs and legal fees and other pending bills, but after Hogan objected, that was denied.


Segal’s lawyers appealed and in 2007, the Seventh Circuit U.S. Court of Appeals ordered Judge Castillo to hold a hearing to determine for an accurate accounting and two years later, in 2009, the court ruled the personal forfeiture amount was $15 million, although Segal’s lawyers contended Hogan had presented inaccurate accounting evidence.

So, that was the end, right?  


Wrong.


Hogan changed the prosecution’s strategy, which meant altering his own facts. Properties that the prosecution once argued belonged to Segal, such as his investments and retirement accounts and his Highland Park home - now, according to Hogan - actually had been owned by Near North all along and therefore were forfeitable under the jury’s decision that Near North and all its holdings were to be turned over to the government.


When Segal’s lawyers argued that this was evidentiary sleight of hand, Castillo ordered a hearing to decide who owned what. Segal was at a considerable disadvantage. His computers and records had been seized a decade earlier in 2002 and never returned. He had been in prison for eight years and though he was no longer imprisoned, he still had no access to his records and no money to pay for lawyers, experts, or accountants.  As the hearing approached, Hogan offered to settle by returning $8 million of the frozen assets. A desperate Segal relented and accepted the deal.

But the case still was not over.


Now in the 15th year of this marathon, Segal’s legal team has filed a motion to modify the settlement, presenting compelling evidence that the government has taken personal assets from Segal worth more than $35 million - $27 million more than the $8 million settlement agreement and $20 million more than the $15 million that Castillo ruled was owed.


At the same time, the motion puts Hogan squarely in the crosshairs as the cause of these many years of litigation, outlining a litany of presenting false evidence, making false misrepresentations, and shifting positions and rearranging facts.


“One may ask, why is Hogan now taking a position completely contrary to the position he took at trial and the forfeiture hearing?” the defense motion asks.


“The most apparent answer is that since the inception of this case, Hogan has been on a mission to punish Segal (…) The less apparent answer (…) is that, in Hogan’s crusade to punish Segal, Hogan got caught up in a web of his own lies—lies he made to Segal, to this Court and to the Seventh Circuit—regarding certain key facts concerning the ownership and valuation of the assets the government seized and some funds Segal put into his own company that would have reduced the forfeiture amount.”


Hogan is no stranger to accusations of prosecutorial misconduct. He was found to have committed serious misconduct in the prosecution of El Rukn gang members several years ago. He lost his job as a prosecutor, but ultimately was reinstated by the U.S. Justice Department. His misconduct also was a factor in a civil lawsuit brought by Nathson Fields against the city of Chicago. U.S. District Judge Matthew Kennelly granted Fields a new trial in part because Hogan misled the judge and jury in the first trial in which the jury awarded Fields $80,000. At a retrial, with the facts fully revealed, a jury awarded Fields $22 million.


What’s the relevance?


When Segal and Near North came under investigation more than 15 years ago, his lawyers found evidence that the Hogan-led prosecution team was hiding evidence and condoning the theft of thousands of emails from Segal and his company. In effect, Segal’s legal team argued that Hogan had again crossed over the line separating aggressive lawyering from prosecutorial misconduct. In response, Hogan obtained a Rico indictment that resulted in the ensuing legal forfeiture.

Calling out prosecutors for misconduct is a risky proposition for defendants. And obtaining relief from prosecutorial misconduct in state and federal courtrooms in the United States has been historically difficult.


Recently, Thomas Sullivan, former U.S. Attorney in Chicago, and I co-authored an article published by the Journal of Criminal Law and Criminology of Northwestern University School of Law, titled “The Chronic Failure to Discipline Prosecutors for Misconduct: Proposals for Reform.” The article is a stark portrayal of the “distressing, decades-long absence of discipline imposed on prosecutors whose knowing misconduct has resulted in terrible injustices being visited upon defendants throughout the county.”


It is time for our courts to stop condoning this legal vendetta and halt the legal charade that U.S. v. Segal - Chicago’s version of Jarndyce and Jaundice - has become.

Maurice Possley is a former reporter for the Chicago Tribune. In 2008 he was awarded a Pulitzer Prize for investigative journalism. He is now senior researcher at the National Registration of Exonerations and is working with Michael Segal on a book covering his case.

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