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United States v. Segal

United States Court of Appeals, Seventh Circuit

January 21, 2016

United States of America, Plaintiff-Appellee / Cross-Appellant,
Michael Segal, Defendant-Appellant / Cross-Appellee.

Argued October 30, 2015

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 02 CR 112-1 - Rubén Castillo, Chief Judge.

Before Posner, Ripple, and Hamilton, Circuit Judges.


Some years ago Michael Segal- lawyer, certified public accountant, insurance broker-was indicted along with Near North Insurance Brokerage (NNIB), a company he owned, for multiple violations of federal law. He was charged with racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the Internal Revenue Service. NNIB was charged with mail fraud, making false statements, and embezzlement. Both defendants were convicted in 2004, and the following year Segal was sentenced to 121 months in prison. United States v. Segal, 495 F.3d 826, 830 (7th Cir. 2007). After further proceedings, see 644 F.3d 364 (7th Cir. 2011), he was resentenced to time served and ordered to pay $842, 000 in restitution and to forfeit to the government his interest in the company and $15 million.

To resolve a series of disputes that arose over the forfeiture judgment and had not been resolved either by the district court or in either of the decisions (cited above) by this court, the parties in 2013 agreed to a binding settlement that specified the final ownership and disposition of certain of Segal's assets. Segal, by then released from prison, participated actively, indeed aggressively, in the negotiation of the settlement. But after the district judge approved the settlement the parties clashed over three issues concerning the disposition of Segal's assets and returned to the district court for a resolution of those issues. The judge resolved two of them against Segal and the third in his favor, giving rise to three appeals-two by Segal, one by the government-that we have consolidated for briefing, argument, and decision. (They were separate appeals, rather than a single appeal, because the orders giving rise to them had been issued by the district court at different times.) The fourth appeal, No. 14-2215, related to a writ of mandamus filed by Segal that he has now abandoned; we ignore it.

The first of Segal's two appeals relates to insurance policies on his life. The settlement agreement gave him two of the eight policies outright and an option to purchase all or some of the others, but required that he exercise the option within six months of the district court's approval of the settlement; otherwise the option would be forfeited. He opted to purchase one of the remaining six policies before the deadline and asked the court to extend the deadline for the others. He said he needed time to raise money to buy them because the government hadn't promptly released money owed to him. He also complained that the government had delayed his efforts to obtain information from the insurance companies.

The judge refused to extend the deadline, pointing out that paragraph 9(e) of the settlement agreement "sets up a very precise timeframe that doesn't condition [the deadline for exercising the right to purchase the insurance policies] on the release of other moneys." The paragraph gives Segal

a right to exercise an option to purchase all remaining insurance policies held by Near North Insurance Brokerage as listed on Exhibit A at the cash surrender value computed when, and if, the option is exercised. The option to purchase these insurance policies must be exercised no later than six months from the date the Settlement Stipulation is approved by this Court. Segal shall exercise this option by sending a letter to the United States Attorney for the Northern District of Illinois, to the attention of the undersigned Assistant United States Attorney, which identifies the policy or policies he intends to purchase. Within thirty days of receipt of the letter, the cash surrender values of the policy or policies shall be provided to Michael Segal. Fifteen days after receipt of the cash surrender information, defendant Segal shall pay good funds for the purchase of the policy or policies. If the option is not exercised or the funds are not received as required, the government shall liquidate the policy or policies.

The method of exercising the option was thus clearly stated: the dispatch of a letter to the prosecuting assistant U.S. Attorney within six months of the court's approval of the settlement. If the letter was dispatched by the deadline, Segal would have up to 45 days to pay for the policies, depending on when the government told him what their cash surrender values were.

He argues that it was unreasonable to expect him to raise the money before the six-month deadline. Maybe so; but that was not the deadline for raising the funds-it was the deadline for notifying the government that he was exercising the option. He would have had an additional 15 days at least, and 45 at most, after the six-month deadline to raise the money, but only if he exercised the option before the deadline.

He argues that the government withheld from him both information that he needed in order to determine the value of the policies that he was considering trying to buy and also cash that the government was obligated to return to him after he satisfied the forfeiture judgment. These arguments have no merit. The government helped Segal obtain information about the policies (namely their cash surrender values) prior to the option deadline by writing the insurance companies. Although one of the companies was slow to supply the information, that was not the government's fault. In any event paragraph 9(e) required only that the government inform Segal of the cash surrender values of the policies after he had exercised his option to purchase them.

As for his annoyance that the government failed to promptly release funds to which he was entitled-funds he might have used to buy the policies-the option to buy them was not conditioned on the government's release of other assets to him. Nor was the government the only potential source of money with which to buy the policies. They had value and so a bank might have been willing to lend money against them. The loan would have enabled Segal to buy the policies and repay the loan once the government released the funds owed him.

He had only himself to blame for much of the delay in the government's release of funds to him. For example, the settlement agreement required him to transfer to the government his ownership interest valued at $750, 000 in Sheridan House Associates, a real estate limited partnership. He refused on the ground that he'd conveyed half his ownership interest to his former wife back in 2003. But she had executed a release of her interest in all assets that the government had restrained, thus clearing away any obstacle to the transfer of the entire ownership interest to the government. Paragraph 11 of the settlement agreement states that if any property that was to be transferred to the government "is not available to satisfy the ...

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