Former insurance broker Michael Segal, out of the slammer after seven years and back in Chicago, is determined to get some of the money back he was forced to forfeit after his fraud conviction.

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  • Segal was convicted in 2004 of stealing at least $20 million from an insurance premium trust account.
  • The federal government seized almost everything of value from Segal, including his $22 million beachfront mansion in Highland Park.
  • Segal is not certain what he’ll do next, but he says he’s talked with a freelancer about writing a book.

The peppery former boss of now-defunct Near North Insurance Brokerage was convicted in 2004 of steering to his own use at least $20 million from an insurance premium trust account.

His is just one of many riches-to-rags falls from grace in the last decade, although Segal is the only such major figure in the commercial insurance brokerage business. He once roamed the halls of a $22 million lakefront mansion on Lake Michigan before being forced to share a cell with fellow prisoners.

Now almost 70, Segal was released in May from the federal prison in Oxford, Wis., better known as Oxford Camp. He had been held in the prison’s minimum-security section, with no bars, fences or prison jumpsuits. One fellow inmate was George Ryan, the former Illinois governor who was convicted of federal corruption charges. The late Chicago congressman Dan Rostenkowski spent 17 months at Oxford in the 1990s (he was pardoned by President Clinton in 2000).

Segal slept in a dorm-like room with three other inmates and worked in the kitchen, where his nickname was the “risk manager.” There was another advantage to kitchen work: no lines for chow. He ate early—dinner was served between 3 and 4 p.m.—with the kitchen staff. The food, he says, was “passable.”

‘I adapted to the environment. I fit in.’

One day was pretty much like another. “I adapted to the environment,” Segal says. “I fit in.” Up at 6 a.m., he’d go to breakfast, then hang out in the prison library researching his case. He reviewed about 6,000 pages of trial testimony and 21 boxes of legal materials. He concluded that much of the evidence against him was “murky” and based on “an obscure little insurance regulation” that half the states don’t have.

Sometimes he’d just look out the window at surrounding forest, which, he says, was quite lovely. “I was friendly with everyone but close to no one,” he says, “young people who’d been in gangs, doctors, lawyers.”

He says he counseled some of the youthful prisoners on how to apply their drug-selling skills to more productive (and legal) ends in legitimate business. But Oxford was no place to prepare for visits with lawyers, which Segal did from time to time. He had no word processor, and although he had access to a typewriter, he doesn’t type.

“All I could have,” Segal says, “was a pencil and a piece of paper.”

‘What they said I did with premium trust funds in Illinois was not illegal in Wisconsin or Iowa.’

He watched newscasts and read books. He tuned to CNN when he could, but that usually involved arguments with other inmates who preferred Jerry Springer. So Segal made friends with the guys who controlled the remote and sometimes explained the news—the debt and the national economy—to anyone who asked.

He thought constantly about his family—his wife Joy, daughter Robin, son Jonathan—each of whom visited occasionally. But, in time, the pressure from Segal’s ordeal led to his divorce. He and Joy still spend time together in her Chicago condo. Robin, a longtime Chicago lawyer who’s been active in the Lupus Institute of America, made Segal a grandfather three times while he was in prison. They first saw him in Oxford as toddlers. “I don’t know what they know,” Segal snaps, an evident irritation in his voice. “She didn’t tell me what they told them.”

The feds seized almost everything of value from Segal, including his $22 million beachfront mansion in Highland Park, which was later sold. One thing he didn’t lose was his right to vote; Illinois is one of a dozen states that allows convicted felons to cast ballots, although Segal says he hasn’t yet made a choice between Barack Obama and Mitt Romney. “I’m gonna vote for the best man,” says the man who claimed friendships with both Mayors Daley, Rostenkowski and many others sewn into Chicago’s rumpled political tapestry.

Other brokers, Segal says, can learn from his experience. He claims the federal tripwire for cases such as his is discriminating. “What they said I did with premium trust funds in Illinois was not illegal in Wisconsin or Iowa,” he says.

Right now, money doesn’t appear to be a critical problem. He’s collecting a monthly Social Security check, although he declines to say how much. And many friends, he says, have given him money over the years. In November, Segal intends to ask a federal court to have some of his seized assets returned on the grounds that no one was hurt by his illegal activities—a position he has stuck to since before his conviction.

On this point, the federal judge in his case, Ruben Castillo, agrees. He wrote that what Segal did, “for a lot of different reasons, did not result in a loss to his clients.” As a result, the judge chopped three months off Segal’s sentence.

Segal is not certain what he’ll do next, but he says he’s talked with a freelancer about writing a book. His story, he says, would make a good movie.

Regaining his insurance license is almost certainly out of the question, though there is a process that allows convicted felons to make a case for restitution to Illinois insurance authorities.

“I haven’t thought about that,” he says, though he confesses to a continuing passion for the industry.

“I got a bad turn in the road here,” Segal says. “I’m going to make the best of it and seek my remedies.”