By Matthew Hendley
By Monica Alonzo
By Monica Alonzo
By Monica Alonzo
By Stephen Lemons
By Jason P. Woodbury
By Dulce Paloma Baltazar Pedraza
By Ray Stern
Highs and lows; peaks and valleys; you win some, you lose some.
That's how Marlene and Charlie remember the past eight years. It all began when the elderly Phoenicians sustained neck and back injuries in an auto accident and failed to recover sufficient insurance money to pay medical expenses. After years of juggling doctor and hospital bills, Marlene and Charlie gave up. They filed personal bankruptcy in 1992.
When their bankruptcy was discharged later that year, they were broke, depressed, still physically disabled by the earlier accident.
Then something truly incredible happened. Just a few months after emerging from bankruptcy, Marlene and Charlie entered a sweepstakes sponsored by a beer company--a $1 million sweepstakes. And they won! An angel must have been looking out for them, they thought. After $300,000 was sent in to cover taxes, they paid cash for a new house. But Marlene and Charlie were determined not to go on any spending sprees. They planned to invest the remaining sweepstakes winnings so they could live off interest income in their golden years.
As they were casting about for safe investment possibilities, Theodore J. Segal, the lawyer who'd represented them in their bankruptcy, suggested they place $216,000 with him. Segal promised a 12 percent return on their "investment." It would be paid monthly. In a signed 1992 "agreement," he even promised to return the entire sum any time Marlene and Charlie demanded it. So they gave him the $216,000.
"Just don't tell anyone about this," they remember the attorney telling them.
They trusted Segal. He was, after all, their lawyer. And he certainly appeared to be "a real nice, competent guy," Charlie says. Sure, there were signs that Segal lived a flashy lifestyle; he drove a 1993 white Lexus with gold trim, boasted of frequent gambling expeditions to Las Vegas and Laughlin, sported gold neck chains and large rings.
But Marlene and Charlie were happy that their successful lawyer cared enough to help them with their investments.
They are a lot less happy now. In fact, they have asked that their real names not be used in this story. The reason: They're embarrassed, terribly embarrassed.
Ted Segal has suckered them out of more than $150,000 of their winnings.
There are a lot of other people who have been embarrassed by Segal.
Dozens of public records and interviews with clients and other creditors reveal that since 1989, Segal's legal career has been accompanied by a litany of serious charges that include misappropriating hundreds of thousands of dollars in client funds, lying to clients and police, amassing huge credit-card debts and failing to pay casinos for advances.
Victims were often unsophisticated clients who simply trusted Segal. In one case, he even held on to $5,000 he'd collected from his daughter's good friend. (After the girl complained, she got her money back.)
In recent years, Ted Segal has also filed bankruptcy and been charged with three felony crimes--forgery, attempted arson and fraud.
At least as early as 1993, Segal's clients were telling the State Bar of Arizona--the semigovernmental body charged with regulating attorney behavior--just how bad Segal was.
The bar association did not take action to suspend Segal's law license until this summer--after he was charged in criminal court with torching a west-side bar in an insurance scam.
And Segal's license is only temporarily suspended. At a hearing that has yet to be scheduled, a hearing officer will recommend what, if any, punishment Segal should receive. Punishments range from what amounts to a slap on the wrist to disbarment.
Bar officials say clients' complaints that their lawyers misappropriated their funds are among the most serious. It usually takes the bar association from four to six months to take the first steps necessary to discipline the lawyer in such cases, bar officials contend. But it took bar officials three years to act against Segal. And they won't explain the delay, citing secrecy rules that prevent them from commenting on disciplinary cases.
In fact, the bar association's only public record of Segal's disciplinary history is a request for the temporary suspension of Segal's license filed with the Arizona Supreme Court in April. In that document, the state bar lists ten client complaints against Segal.
The first complaint, alleging misappropriation of funds, was filed in 1993. Next, Marlene and Charlie filed a complaint in 1994. Another client complained in 1994 that Segal forged her insurance check and kept the money for a year. In 1995 and 1996, the bar received seven additional complaints that now are "under investigation." Those cases center on complaints by Segal's clients that Segal forged insurance checks, lied and siphoned off money for personal use. In some cases, he returned money after being confronted by clients. In many others, he did not.
There is no record of Segal's response to the bar complaints--if he responded at all.
And clients who complained say the bar association told them not to talk about their complaints.
Ironically, the bar association recognizes that its secrecy rules arouse public suspicion. "Some people distrust us because they think we're the fox guarding the chicken coop," chief bar counsel Margaret Downie allows.
In an effort to make the bar association more "consumer based," Downie and other bar association officials have asked the Arizona Supreme Court to change secrecy rules and make public all attorney disciplinary procedures and records. Public comments on the proposed secrecy-rule wipeout end October 4, and the court is expected to rule later this year.
If the current secrecy rules are dropped, the Arizona Bar Association will be among the most accessible legal regulatory agencies in the country.
Of course, even if the new rules are approved, they won't be retroactive. Which means we will never know why it took so long for the bar association to act on Ted Segal.
What is clear is that many people have been complaining to the bar association for many years--to very little effect. And judging from court filings and other public records, Ted Segal may be an attorney so unethical, he gives lawyers a bad name.
Segal, now 61, tells New Times "it will be proved" that the charges against him are "not necessarily true." And that's all he will say, declining an interview for this story.
Theodore Segal graduated from Temple University Law School in Philadelphia and was admitted into the Pennsylvania bar in 1968. Four years later, he was also admitted to the New Jersey bar.
Because of secrecy policies followed by both bar associations, it is impossible to tell whether clients filed official complaints about the young lawyer. He remained a member in good standing of both bar associations until he was dropped in the early 1990s for not paying fees.
And by then, he was practicing in Arizona.
He was admitted to the Arizona bar in 1983, and almost immediately ran into problems.
Segal's early years as a Phoenix lawyer were marred by several lawsuits filed by clients who said Segal had mishandled their cases. In every instance, Segal denied he'd done anything wrong. After some back-and-forth scrapping, these early cases were dismissed. A Superior Court judge also sanctioned Segal for filing a frivolous claim.
The public-record laundry list of complaining clients lengthened considerably in the 1990s, about the same time Segal's penchant for gambling became evident. Several clients who "invested" with Segal remember--worriedly--that their lawyer talked about his frequent gambling trips to Las Vegas and Laughlin, often accompanied by his wife, Helene "Honey" Segal.
Andrew Myers, a Las Vegas attorney who claims Segal defrauded him of $12,000, recalls Honey and Ted once boasted of plopping $25,000 into high-dollar slot machines in a single weekend. He remembers that the Segals told him hotels "comped" them to free floor shows and elegant rooms--as a token of gratitude, Myers surmises, for the Segals' affection for the slot machines.
Ted Segal's financial problems, says Myers, "have got to be a direct result of gambling, gambling and gambling."
He remembers that Segal would occasionally become severely depressed, as though "life was sometimes more than he could bear."
"But he brought the circumstances on himself," Myers says.
When Segal filed for bankruptcy in 1995, he claimed debts of $455,775 and assets of $207,100. Credit-card debts alone totaled more than $66,000. Two Nevada casinos also lined up in bankruptcy court, claiming Segal owed them a total of $10,000.
Honey and Ted Segal now live in a south-side apartment. Times are hard. The Lexus is gone. Segal can't practice law. And the clients are asking for their money back.
But no one, except for Segal, knows how many clients have "invested" with him and been unable to get their money returned. Records obtained by New Times reveal Segal has failed to list in bankruptcy court at least three other clients who entrusted him with a total of $152,000.
There may be reasons Segal failed to list these client debts. They are not connected with the ten bar-association complaints against Segal. And they carry with them the heavy suggestion of misappropriation of client funds.
Of all of Segal's clients who claim they were wronged in some way by the attorney, Bonnie and Donald Johnson are the only ones who seem to have gone to the police.
The retired couple retained Segal in 1992 to represent them after Donald was severely injured in an auto accident. Bonnie remembers that Segal seemed capable enough, even though he operated at the time out of a "tiny hole-in-the-wall office" in Phoenix.
Send the medical bills to me, and I'll stay on top of this, the Johnsons remember Segal saying.
The Johnsons, who describe themselves as "family folk who don't smoke, drink or bar," say they had no reason to distrust Segal.
And, anyway, they had other worries. Donald had been permanently disabled. In the year following the accident, he had 90 therapy treatments, one operation and $42,000 worth of medical bills.
Because of the disability, the Johnsons say they repeatedly told Segal to settle for no less than $100,000. Throughout the spring and summer of 1995, the Johnsons say they frequently asked Segal about the settlement.
They didn't know that Segal had settled their claim the year before. For $75,000. Or that he'd forged the Johnsons' names to the insurance check, which had been mailed to his office because he was the Johnsons' attorney. He'd also forged two other insurance checks, totaling about $5,000, meant for the Johnsons, the police say.
In the fall of 1995, Bonnie had had enough. She called her insurance company, only to discover that Segal--whom she calls "that little thing"--had already settled the case.
She confronted the lawyer. He mailed her a check for $75,000.
And Bonnie called the police. Ted, she said, we're not going to let you get away with this.
Do what you have to do, he said.
Later that year, in 1995, Segal was charged with one count of fraud and one count of forgery in connection with the Johnson case.
He pleaded not guilty.
Theodore Joseph Segal was called back to Superior Court this summer--to answer charges on a second criminal case. The state contends that Segal and Vince Salvione, a longtime business associate, plotted earlier this year to burn up a west-side bar in order to defraud an insurance company.
Unfortunately, the fellow they allegedly chose to do the deed was a police informant.
Both Segal and Salvione, who would not comment for this story, pleaded not guilty.
The trial is scheduled for late October.
Liz, a retired widow in her early 60s, traveled all over the country looking for a place to live out her last years. Florida was too humid. Hawaii too distant. She finally chose Phoenix. People were friendly.
For reasons that will become immediately obvious, Liz asked that her last name not be used in this article.
When she settled into a Phoenix mobile-home park in 1991, Liz decorated it with English teapots and furniture with floral prints; she soon befriended a neighbor, "Mary."
It was Mary, also an elderly lady, who introduced Liz to her "friend," the lawyer Ted Segal. He had represented Mary after she'd gotten in an accident that left her permanently disabled. Mary had invested more than $100,000 with Segal, Liz remembers her friend saying, and he paid 10 percent interest monthly. Lord knows, Mary needed the money, seeing as how her only other income was a small social security check.
(Mary confirms that she's invested money with Segal, but remains steadfastly loyal to her attorney, saying she will testify as a character witness for him, if necessary. "Ted might do things with money," she acknowledges, "but he'd never commit arson.")
Segal learned that Liz had invested more than $100,000 in tax-free municipal bonds. Sell them all, Liz remembers him saying, I pay 12 percent every month. When she inquired about the safety of her future investment, she remembers Segal saying he was "insured" for millions.
Liz remembers that when she was young, her mother told her that if something sounds too good to be true, it probably is. So she only invested $62,000--about half of her money--with Segal.
Segal put her in touch with Vince Salvione, who prepared her income tax returns. Segal's interest payments, she says, were not included on the tax returns.
For three years, Liz says, Segal delivered the interest checks regularly. It's only been in the past year that two of Segal's checks bounced, and that the payments were late.
And when she demanded her money, she remembers him saying he had to talk to the "investors" before it was released. That was several months ago, and Liz still hasn't seen her money.
"I have a feeling he gambled," says Liz.
Liz didn't call police or file a complaint with the bar association because she didn't want to rouse Segal's anger. If he thought of her as an unkind person, she says, she might never get her money back.
Liz says she knows of another woman, besides Mary, who invested a sizable nest egg with Segal. (When reached by telephone, the woman refused an interview with New Times, saying she'd just talked to Segal, who promised he'd get her money to her "one of these days.")
Despite rising suspicions that Segal had lost her money, Liz lent him another $5,000 in December 1995. She had entrusted him with a total of $67,000, half of her life savings. Her only other income is her deceased husband's social security check.
"I think my money is gone," Liz now says of her investment with Segal. "And if that is the case, I have lost a lot of faith in human nature."
She looks up from her easy chair. There's only one way to look at this, she says. It's just been a bad investment.
"Ted's lucky he didn't get strangled," says Liz.
Marlene and Charlie say they were "unsophisticated investors" when they entrusted Ted Segal with $216,000 of their sweepstakes winnings.
But were they unsophisticated?
Before signing over their money, they didn't press their attorney for a prospectus detailing where, exactly, he would invest the funds.
And when they demanded their money back, Segal returned only $50,000.
So Marlene and Charlie took their demands to Superior Court, suing their former attorney for fraud, breach of contract and malpractice. He denied he'd done anything wrong, but admitted he still owed the couple $166,000.
Now Marlene and Charlie suspect that Segal gambled away their money.
Nothing's going very well for them. Their lawsuit has been put on hold pending the outcome of Segal's bankruptcy.
And Marlene and Charlie are depressed and ashamed.
Charlie thinks back to a day in 1993, when Vince Salvione, whom they had hired as their accountant on Segal's recommendation, warned them about Segal.
"Vince says, 'Ted takes money from clients and gambles it away,'" recalls Charlie. "So I asked Ted for the money back. When I said, 'Give me my money,' Ted paled. He said it would take a little while.
"And that was the last time we saw him.