Shaw v. Department of Financial & Professional Regulation ( 2020 )

2020 IL App (1st) 181834-UTHIRD DIVISION
May 13, 2020
No. 1-18-1834
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent
by any party except in the limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
______________________________________________________________________________
JACK SHAW and SHAW REAL ESTATE GROUP, INC., ) Appeal from the Circuit
) Court of Cook County
Plaintiffs-Appellants/Cross-Appellees, )
)
v. )
) No. 16 CH 15693
ILLINOIS DEPARTMENT OF FINANCIAL AND )
PROFESSIONAL REGULATION, ) Honorable
) Celia Gamrath
Defendant-Appellee/Cross-Appellant. ) Judge Presiding.
_____________________________________________________________________________
JUSTICE McBRIDE delivered the judgment of the court.
Presiding Justice Ellis and Justice Cobbs concurred in the judgment.
ORDER
¶1 Held: Where respondents failed to appear for an evidentiary hearing regarding violations
of the Real Estate License Act, the Department of Financial and Professional
Regulation did not violate their due process rights by proceeding with the hearing
and imposing discipline in their absence. Additionally, the discipline imposed by
the Department—including suspension of respondents’ real estate licenses and
fines—was not an abuse of discretion, and the circuit court improperly reduced the
fines on administrative review.
¶2 Plaintiff-Appellants/Cross-Appellees, Jack Shaw and Shaw Real Estate Group, Inc.,
(SREG) (collectively, Shaw respondents) were sanctioned by the Illinois Department of Financial
and Professional Regulation (Department) for violations of the Real Estate License Act of 2000
No. 1-18-1834
(Act), 225 ILCS 454/1-1 et seq. (West 2018). Shaw respondents failed to appear at their scheduled
hearing, and the Administrative Law Judge (ALJ) conducted a hearing in their absence. After the
hearing, the Department Director suspended Jack’s real estate broker license and SREG’s broker
corporation license each for a minimum of three years, and imposed separate $18,000 fines against
each of them. The Director also denied Jack’s application for a real estate managing broker license,
pursuant to section 20-20(a) of the Act. The circuit court, on administrative review, reduced the
fines to $5000 for Jack, and $13,020 for SREG, and otherwise affirmed the Director’s decision.
¶3 In this appeal, Shaw respondents raise due process challenges to the Department procedure,
and contend that the discipline imposed is “overly harsh” and “not supported by clear and
convincing evidence.” The Department, through the Attorney General, cross-appeals, alleging that
the circuit court improperly reduced the fines assessed by the Department.
¶4 The record shows that in July 2013, the Department filed an administrative complaint
against SREG, a licensed real estate broker corporation; Anne Shaw, a licensed real estate
managing broker at SREG; and Robert Sher, a licensed real estate leasing agent at SREG. 1 The
complaint alleged various violations of the Act regarding their operation of a rental finding service.
On December 10, 2013, the Department filed a first amended complaint, adding Jack Shaw as an
additional respondent, and on September 28, 2015, the Department filed the second amended
complaint that is at issue in this appeal.
¶5 The second amended complaint alleged that respondents entered into rental finding
services contracts with clients in exchange for payments. These contracts failed to contain
information required by Department regulations, including a detailed statement of the services to
be performed, a notification that funds would be refunded if the contract became null and void,
1
The record shows that Jack is Anne’s father, and Sher is Anne’s brother-in-law.
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No. 1-18-1834
and descriptions of the rental units. After entering into these contracts, clients were not shown
properties that met their placement criteria, were not shown properties within the time agreed, were
shown properties in poor condition, or were otherwise not found apartments by SREG. After
SREG failed to find apartments for their clients, SREG denied the clients requests for refunds. The
complaint further alleged that Jack and Sher wrongly held themselves out as managing brokers of
SREG—which was a licensing status greater than the one they actually possessed—and that
respondents failed to provide documents in response to requests by the Department.
¶6 The complaint alleged that such conduct was grounds for discipline against Jack’s real
estate broker license and SREG’s real estate broker corporation license, for fines against them, and
for denial of Jack’s pending application for a real estate managing broker license. Specifically, the
complaint alleged that the respondents’ conduct violated the Act on the following eight grounds:
§ 20-20. Grounds for discipline.
(a) The Department may refuse to issue *** a license, may *** suspend *** any
license *** or take any other disciplinary or non-disciplinary action as the
Department may deem proper and impose a fine not to exceed $25,000 upon any
licensee or applicant under this Act *** for any one or any combination of the
following causes:
***
(10) Making any substantial misrepresentation or untruthful advertising.
***
(12) Pursuing a continued and flagrant course of misrepresentation or the
making of false promises through licensees, employees, agents,
advertising, or otherwise.
***
(16) Failure to account for or to remit any moneys or documents coming
into his or her possession that belong to others.
***
(18) Failure to make available to the Department all escrow records and
related documents maintained in connection with the practice of real estate
within 24 hours of a request for those documents by Department
personnel.
***
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No. 1-18-1834
(21) Engaging in dishonorable, unethical, or unprofessional conduct of a
character likely to deceive, defraud, or harm the public *** .
***
(25) Any other conduct, whether of the same or a different character from
that specified in this Section, that constitutes dishonest dealing.
***
(27) Failing to provide information requested by the Department, or
otherwise respond to that request, within 30 days of the request.
***
(40) Disregarding or violating any provision of this Act or the published
rules adopted by the Department to enforce this Act or aiding or abetting
any individual, foreign or domestic partnership, registered limited liability
partnership, limited liability company, corporation, or other business
entity in disregarding any provision of this Act or the published rules
adopted by the Department to enforce this Act.
225 ILCS 454/20-20(a)(10), (12), (16), (18), (21), (25), (27), (40) (West 2012).
¶7 Regarding administrative regulations violated, the complaint also cited 68 Ill. Admin. Code
§ 1450.785, which sets forth obligations owed to clients by operators of “rental finding services,”
defined as “any business that finds, attempts to find or offers to find, for any person who pays or
is obligated to pay a fee ***, a unit of rental real estate or a lessee to occupy a unit of rental real
estate not owned or leased by the business.” 68 Ill. Admin. Code § 1450.785(a)(1) (West 2012).
Finally, the complaint alleged that respondents had engaged in unprofessional conduct as set forth
in the regulations, defined as “Failure to act in the best interests of the client.” 68 Ill. Admin. Code
§ 1450.900(a) (West 2012).
¶8 While the Department filed its complaint and two amended complaints, the respondents
filed motions to dismiss the original complaint and the first amended complaint, disputing the
merits of the complaint and the application of the Act.
¶9 On May 8, 2014, an administrative law judge denied respondents’ motion to dismiss the
first amended complaint, finding that the respondents’ arguments that the “facts as alleged by the
Department are either not true or are misinterpreted, and, therefore, [they] are not in violation of
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No. 1-18-1834
the *** Act” was a “determination to be made after all of the evidence is heard at a formal
evidentiary hearing and not upon pleadings in a motion to dismiss.” Respondents were ordered to
file an answer to the complaint.
¶ 10 In their answer, respondents denied that they operated a “rental finding service.” The
respondents also denied the facts of certain violations of the Act, and asserted that other
requirements of the Act did not apply to them due to their “unique business model.”
¶ 11 During the course of the administrative proceedings, respondents were represented by three
attorneys or sets of attorneys: Shaw Legal Services, Robert Orman, and Myron Mackoff.
¶ 12 Shaw Legal Services was the first to appear on behalf of respondents, filing a motion for a
continuance of the preliminary hearing on August 14, 2013, a motion for a prehearing conference
on September 10, 2013, and a motion to dismiss the complaint on October 2, 2013. Shaw Legal
Services also filed an answer to the first amended complaint in May 2014.
¶ 13 On July 15, 2014, Shaw Legal Services appeared for a status hearing, and the case was
scheduled for a formal hearing on November 12, 2014. Thereafter, the Department tendered
discovery to respondents on August 26, 2014.
¶ 14 On September 29, 2014, Orman filed an “additional appearance” on behalf of respondents,
and the November formal hearing date was stricken at his request. After additional continuances
and an order requiring the respondents to tender discovery, Orman moved to withdraw as
respondents’ counsel on March 9, 2015, stating that he was “no longer able to represent
Respondents” but that respondents would “suffer no prejudice” because “[t]he Shaw Law Offices
and its attorneys [were] presently co-counsel in this matter.” Orman was granted leave to withdraw
on March 10, 2014, and the order was served on Shaw Legal Services.
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¶ 15 On March 23, 2015, after the Department filed a motion for discovery sanctions against
respondents, Mackoff filed a motion for leave to appear for respondents and an appearance on their
behalf. He stated that he was “chosen by Respondents to take over from Mr. Ormon [sic] and
continue the defense of this case.” Mackoff entered a “substitute appearance.” The case was
continued multiple times, and the Department filed the second amended complaint on September
28, 2015. Mackoff filed an answer to the second amended complaint on behalf of respondents in
November 2015, and the matter was set for formal hearing on March 30 and 31, 2016.
¶ 16 On March 21, 2016, Mackoff moved to withdraw as counsel for Jack, Sher, and SREG, but
not Anne. Mackoff stated that Jack, Sher, and SREG “no longer want[ed]” him to represent them.
The next day, the Chief ALJ granted Mackoff’s motion, noting that Shaw Legal Services had not
withdrawn from the case. The Chief ALJ further ordered that the formal hearing remained
scheduled for March 30 and 31, 2016, and that Jack, SREG, and Sher “must appear” for the formal
hearing. The order was served on Shaw Legal Services and Mackoff, as well as Jack, SREG, and
Sher.
¶ 17 After withdrawing as counsel for the other respondents, Mackoff continued to represent
Anne, and entered into a consent order between Anne and the Department. In the consent order,
Anne stipulated that as the managing broker at SREG, she failed to adequately supervise the
activities of SREG and its employees in violation of 68 Ill. Admin. Code §§ 1450.700 and
1450.705 (West 2012). Anne further agreed that the violations were grounds for discipline
pursuant to 225 ILCS 454/20-20(a)(40) (West 2012). Anne agreed to accept a reprimand and to
complete a 12-hour management broker continuing education course. She also agreed to cooperate
with the Department, and testify if called, regarding the real estate activities of Jack, SREG, and
Sher.
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No. 1-18-1834
¶ 18 At the beginning of the administrative hearing on March 30, 2016, the ALJ noted that Sher
was present, but neither Jack, nor any representative from Shaw Legal Services—the counsel of
record for all respondents—was present. The ALJ also acknowledged that Anne was not present
because she had previously entered into a consent order with the Department.
¶ 19 The respondents’ former attorneys, Mackoff and Orman, were present. Mackoff reiterated
that he had withdrawn as counsel, and stated that he was at the hearing only to hand over his file
of discovery documents. Mackoff left the hearing after giving the file to Sher. Orman stated that
he had previously withdrawn as counsel for all respondents, and that Jack had subsequently
approached him to represent him alone. Orman stated that he belatedly remembered that he had
previously represented all respondents, so he believed he could not represent Jack alone unless
Sher waived the conflict of interest. Orman also stated that he was not prepared to try the case that
day. The ALJ suggested that Orman contact Sher’s counsel, Shaw Legal Services, to resolve the
conflict issue, but Orman said that he did not “know what [a] good contact number would be.”
Orman asked to be excused, and the ALJ excused him.
¶ 20 After calling the case, the ALJ again noted that Shaw Legal Services was Sher’s counsel
of record. The ALJ asked Sher if the firm was going to appear at the hearing on his behalf, and he
answered, “No, [it is] not.” The ALJ asked if he had been in contact with his attorneys of record,
and Sher replied that there “was some [e]-mail correspondence with a reminder that there’s a case
today for them.” The ALJ asked the Department’s counsel if he had heard anything about whether
Jack would appear for the hearing. The Department’s counsel said that “[t]here was an attorney
who *** presented himself and said [Jack] would not be here, or was not here currently.” The
Department’s counsel also stated that counsel had asked Sher, but Sher did not have any
information about Jack appearing at the hearing. The ALJ noted that the “Rules of Administrative
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No. 1-18-1834
Procedure, with regard to respondent’s failure to appeal for a formal hearing, will apply in this
case”—specifically, 68 Ill. Admin. Code § 1110.100 (West 2016), which states that “[f]ailure to
appear at the time and place set for hearing shall be deemed a waiver of the right to present
evidence.”
¶ 21 Sher represented himself at the hearing. The ALJ explained the hearing process to him.
Sher said that he was ready to proceed without counsel, and declined the ALJ’s invitation to make
one more attempt to reach his counsel. Later in the hearing, after a break in testimony, Sher told
the ALJ that he had contacted Shaw Legal Services by text message, and counsel indicated that it
would not represent him. The ALJ said that Shaw Legal Services “should have withdrawn from
the case then.”
¶ 22 During the two-day hearing, the Department presented four witnesses: two former clients
of SREG, Monica Esono-Sanchez, and Monique Benjamin; and two Department investigators,
Robert Wasiak, and Therese Burton. The Department also submitted exhibits consisting of
application packets of SREG clients, as well as e-mail correspondence between Benjamin and
SREG. At least one of the application packets contained Jack’s signature.
¶ 23 Esono-Sanchez testified that in November 2012, she was living in a homeless shelter with
her two young children, and contacted SREG after seeing an ad posted on the Craigslist website.
Esono-Sanchez told SREG that she was seeking an apartment on the north side of Chicago near
the Chicago Transit Authority’s Purple and Red lines, and that she wanted an apartment in this
location so that her children could commute to school. SREG charged her an upfront fee of $750,
and later sought additional fees. Esono-Sanchez ultimately paid SREG a total of $1300.
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No. 1-18-1834
¶ 24 SREG attempted to place Esono-Sanchez in an apartment on the south side of Chicago, in
the Englewood neighborhood. After she refused this apartment, SREG did not find her another
apartment, and Sher insulted her over her refusal of the Englewood apartment.
¶ 25 Benjamin testified that in February 2015, she was living in a basement with her two young
children, which was hazardous to her asthmatic daughter’s health. She needed to move by the end
of April 2015, and was seeking an apartment in Rogers Park, Skokie or Evanston. She chose SREG
because she had a past eviction and her husband had a criminal background. On the application
packet, she did not list any evictions, but she told Sher verbally about her eviction. SREG sent her
an e-mail stating that it had done a background check, was aware of her husband’s criminal record,
and that it was “okay.” Based on the past eviction, SREG began to seek cosigners, and urged
Benjamin to seek an apartment “out south.” Benjamin told SREG that the location was
inconvenient, and that it was not an area where she “would raise [her] children.”
¶ 26 Benjamin paid a $180 service fee to SREG and $950 for her first month’s rent. SREG asked
Benjamin to help it by locating properties for rent. Benjamin, while pregnant, drove around after
work with her children in the car to look for rental signs with phone numbers to contact. After
emailing SREG the phone numbers, she would call SREG to discuss them. Benjamin estimated
that she sent SREG over 50 numbers, and she questioned whether anyone from SREG ever called
the phone numbers. Around April 15, 2015, Benjamin went to the SREG office in person because
no one had responded to her e-mails in a week or more, and she needed to move quickly. She
spoke with Jack, who said he was the owner of SREG. Jack told her that he was not aware of her
emails and refused her request for a refund. Jack promised to find her an apartment within a week,
but did not. Ultimately, Benjamin obtained an apartment in June 2015 through Hunter Properties.
Benjamin stated that she never received a refund from SREG.
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No. 1-18-1834
¶ 27 Department Investigator Wasiak testified that he investigated complaints received from
clients of SREG, including Esono-Sanchez, Benjamin, Genevieve Bael, Karina Fausto, and Janice
Jackson.
¶ 28 Wasiak testified that Esono-Sanchez sought an apartment in Rogers Park near her
children’s school, however, she was instead shown a single property on the South Side that she
considered unsafe. An unlicensed employee from SREG showed her the apartment.
¶ 29 Benjamin told Wasiak that SREG instructed her to drive by herself to locate properties,
and to report to Sher if she found a suitable apartment. Benjamin also told Wasiak that when she
later requested a refund of her deposit, she was offered a partial repayment in an unspecified
amount.
¶ 30 Regarding Bael, Fausto, Jackson, and Benjamin, Wasiak’s investigation disclosed that each
was required to pay both an application fee and first month’s rent as a deposit in total respective
amounts of $1080, $1200, $880, and $1130. Jackson told Wasiak that she dealt with a man named
Shaw. SREG did not secure an apartment for any of these clients, and it did not refund their first
month’s rent payments.
¶ 31 During Wasiak’s investigation, counsel for respondents told Wasiak that some client
interactions with Jack or Sher had been video recorded. Wasiak requested the recordings but he
did not receive them.
¶ 32 Wasiak concluded that, despite Anne being the managing broker at SREG, Jack and Sher
were both holding themselves out as having statuses greater than their licenses, and were operating
the brokerage in supervisory roles. Particularly, in one interview with a television news reporter,
Jack said that he was the manager of SREG.
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No. 1-18-1834
¶ 33 Department investigator Burton testified that she investigated a complaint filed by LaToya
Irwin and Kenneth Perry (the “Perrys”) in 2012. The Perrys reported that they gave SREG $120
as a credit check fee, along with a $1200 deposit. SREG told the Perrys that their credit would not
be an issue in finding an apartment. The Perrys did not find an apartment through SREG, and were
not refunded their deposit. They were shown a single unit, which was not painted, had missing
cabinets, and lacked sturdy locks. When the Perrys rejected the apartment and sought a refund,
Irwin spoke with Sher. Sher told Irwin that SREG had to show her only one apartment, and that
she was not getting her money back.
¶ 34 During the course of her investigation, Jack told Burton that Anne put him in charge of the
office when she was not there. Burton asked Jack for documents regarding the Perrys, and also
requested escrow records from SREG. Neither Jack nor SREG produced the requested documents
and records, and Jack told Burton that she would need a consent form to obtain the documents
regarding the Perrys. Jack also told Burton that she did not have the right to visit the SREG office
unannounced.
¶ 35 The Department entered into evidence the client agreements for the clients at issue, and
rested. Sher chose not to testify and presented no evidence.
¶ 36 The ALJ subsequently issued his report and recommendation, including the following
findings of fact. Jack and Sher operated SREG, which advertised on the Craigslist website its
ability to find apartments for people who had barriers to tenancy, such as bad credit, criminal
backgrounds, or past evictions. Jack was an owner of SREG, he was a licensed real estate broker
there, he exercised the authority to sign SREG contracts and to refuse to issue refunds to clients,
and he was in charge when Anne, the licensed managing broker, was not available. Sher was also
in charge when Anne was not available, and actively participated in most of the client matters at
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No. 1-18-1834
issue. Sher signed most of the contracts at issue, refused refunds, and answered Department
investigators’ questions on behalf of SREG.
¶ 37 The ALJ concluded that SREG was a “rental finding service” under the administrative
regulations, and any person who operates a rental finding service is required to comply with the
regulations. 68 Ill. Admin. Code § 1450.785(a)(1), (2) (West 2012). Under the regulations,
operators of rental finding services are required to furnish extensive information to clients,
including the following:
“b) Contract *** .
***
7) A statement that information furnished concerning possible rental units
may be up to two days old; and
8) A statement requiring the refund of all fees paid in connection with the
contract if the contract is null and void for any reason *** .
c) Disclosure *** .
1) The name, address and the telephone number of the owner of each
rental unit or the owner’s authorized agent;
2) A description of the rental unit;
***
5) A statement describing utilities that are located in the rental unit and
included in the rent;
6) The occupancy date and the term of lease; [and]
7) A statement setting forth the source of the rental information (i.e.,
owner, owner’s authorized agent).”
68 ll. Admin. Code § 1450.785 (West 2012).
¶ 38 The ALJ found that Shaw respondents and Sher failed to provide clients virtually any of
the above information. He determined that this conduct hid the clients’ legal protections from
them, and that such conduct was of a character likely to deceive, defraud, or harm the public. The
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No. 1-18-1834
ALJ further found that SREG found no rental unit for four clients, and only a damaged and
unsecure apartment was shown to another. Despite failing to locate rental units for these clients,
the clients did not receive refunds of the service fees and rental deposits. The ALJ determined that
the failure to provide refunds, for which the respondents were responsible, constituted
unprofessional conduct (68 Ill. Admin. Code § 1450.900 (West 2012)), and conduct not in the best
interests of the client (225 ILCS 454/15-15(a)(2)(F) (West 2012)), in violation of the Act.
¶ 39 Regarding Esono-Sanchez, the ALJ determined that SREG failed to find her a rental unit
in her preferred location as promised, and had employed an unlicensed assistant who showed a
property to her. The ALJ explained that this violated 68 Ill. Admin. Code § 1450.740(c), (d), and
(e) (West 2012), and that it was also against the best interests of the client, unprofessional conduct,
and dishonest dealing in violation of 68 Ill. Admin. Code § 1450.900(a) (West 2012). After failing
to find an apartment in Esono-Sanchez’s preferred location, Sher, acting on behalf of Shaw
respondents, “demean[ed] [her] into not enforcing Respondents’ promise.” The ALJ determined
that through this conduct, all three failed to act in the client’s best interest; engaged in dishonest,
unethical, or unprofessional conduct; and engaged in conduct of a character likely to deceive,
defraud or harm the public. 68 Ill. Admin. Code § 1450.900(a); 225 ILCS 454/20-20(a)(40) (West
2012)). The ALJ determined, however, that the evidence did not establish that SREG had failed to
provide Esono-Sanchez a refund.
¶ 40 The ALJ also found that the evidence proved that Jack told Burton during her investigation
that he was the managing broker in charge of SREG when Anne was not available, and that he
represented himself to be the manager of the brokerage in a televised news documentary. He
determined that this conduct was a misrepresentation to Burton and an obstruction of the
investigation, constituting dishonorable conduct. 68 Ill. Admin. Code § 1450.900 (West 2012).
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No. 1-18-1834
Sher also falsely held himself out as the managing broker when Anne was not available, which
likewise violated the Act.
¶ 41 Finally, the ALJ determined that Shaw respondents had failed to produce several
documents and exhibits requested by the Department, including escrow records, documents
regarding the Perrys, and videotapes of interactions with clients.
¶ 42 The ALJ found the Department’s witnesses to be credible. He found Wasiak’s testimony
to be open and direct, as well as internally consistent and consistent with the documentary
evidence. He noted that Wasiak, in a few instances, inadvertently substituted Sher’s name for
Shaw, but that he readily corrected himself. The ALJ also found the testimony of Burton, Esono-
Sanchez, and Benjamin to be open and direct, and consistent with the documentary evidence.
¶ 43 The ALJ determined that these findings proved, by clear and convincing evidence, several
of the counts alleged in the administrative complaint against Shaw respondents, including,
specifically, charges that they had failed to properly furnish required information to rental finding
service clients including Esono-Sanchez, the Perrys, Bael, Fausto, Jackson, and Benjamin; and
that they had improperly denied refunds to the Perrys, Bael, Fausto, Jackson, and Benjamin. The
ALJ also determined that the Department had proved that Shaw respondents employed an
unlicensed assistant who showed a property to Esono-Sanchez, that that they were responsible for
Sher’s disparaging remarks to Esono-Sanchez, and that that they did not find appropriate properties
for the Perrys as promised. The ALJ also concluded that certain other counts were not proven by
clear and convincing evidence, including that Esono-Sanchez had been improperly denied a
refund.
¶ 44 In determining discipline, the ALJ weighed factors in aggravation and factors in mitigation,
citing 20 ILCS 2105/2105-130(b)(1) (West 2018). In aggravation, the ALJ noted the presence of
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No. 1-18-1834
multiple offenses against seven different clients over a period of three years; the impact of the
offenses on the injured parties in terms of lost time and money; the vulnerability of the injured
parties, noting Esono-Sanchez and her minor children were homeless and that Benjamin’s former
apartment was hazardous to her child’s health; Shaw respondents’ lack of contrition for the
offenses; Shaw respondents’ financial gain from committing the offenses; the lack of cooperation
with the Department; and Shaw respondents’ failure to appear at the hearing. 20 ILCS 2105/2105-
130(b)(2), (5), (7), (8), (9) (West 2018). In mitigation, the ALJ found that restitution in the form
of a refund had been made to one client, but that no other factor in mitigation applied.
¶ 45 The ALJ noted that the violations at issue were not isolated incidents, and the conduct of
Shaw respondents and Sher exhibited significant indifference to the best interests of the clients.
The ALJ determined that significant discipline was appropriate for protection of the public. When
considering the appropriate discipline for Shaw respondents in comparison to Sher, the ALJ
determined that Shaw respondents should be disciplined more because they benefited financially
from the violations in a way that Sher did not, and thus, they had greater incentive to continue
violating the Act. The ALJ also noted that Shaw respondents’ lack of participation in the formal
hearing indicated “disrespect for the disciplinary process and some lack of concern for their
professional fate.”
¶ 46 The ALJ recommended that Jack’s real estate broker license and SREG’s real estate broker
corporation license be indefinitely suspended for a minimum of three years, and that each be fined
$18,000. For Sher, the ALJ recommended an indefinite suspension of his real estate leasing agent
license for at least 18 months and a $5000 fine. Finally, the ALJ concluded that Jack’s application
for a managing broker license and Sher’s application for a real estate broker license should be
denied.
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¶ 47 Following the issuance of the ALJ’s report and recommendation, the Real Estate
Administration and Disciplinary Board (“Board”) issued its recommended decision, adopting the
ALJ’s findings of fact, conclusions of law, and recommended discipline.
¶ 48 In September 2016, Shaw respondents obtained new counsel, the Franklin Law Group, and
moved for rehearing. They argued that the ALJ should not have proceeded forward with the
hearing in the absence of their counsel, that the Department had not proven any violations of the
Act by clear and convincing evidence, and that the recommended discipline was arbitrary and
unreasonable.
¶ 49 On October 28, 2016, the Director adopted the Board’s disciplinary recommendations and
denied Shaw respondents’ motion for rehearing, concluding that Shaw respondents and their
attorneys were responsible for their own failures to appear. The Director noted that Shaw Legal
Services had been counsel for Shaw respondents throughout the proceedings. The Director also
noted that the ALJ’s March 22, 2016, order emphasized that Shaw Legal Services remained
counsel in this matter, that the formal hearing remained scheduled for March 30, 2016, and that
respondents must appear. The Director stated that “[i]t was neither unreasonable or unfair, after
two and a half years of continuances, motion practice and delay in the production of discovery by
Respondents, during all of which time they were represented by Shaw Legal Services Ltd., for the
ALJ to proceed with the Formal Hearing.”
¶ 50 The Director also declined to reverse the ALJ’s factual findings, and concluded that the
ALJ had given thoughtful and thorough consideration to various factors in aggravation and had
appropriately determined discipline. He noted that the purpose of the Act is to protect the public,
and that Shaw respondents’ conduct was “alarming,” demonstrating “flagrant” and “repeated
disregard for the Act and for the protection of the public, including some of its most vulnerable
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No. 1-18-1834
members.” Accordingly, the Director declined to “undermine the Board’s expertise and experience
in determining what sanction is appropriate to protect the public interest.”
¶ 51 Following the Director’s decision, Shaw respondents filed a complaint for administrative
review in the circuit court. Shaw respondents filed briefs arguing that the ALJ should not have
conducted the hearing without them or their counsel present; that the evidence before the ALJ was
largely hearsay and unauthenticated documents; and that the recommended discipline was overly
harsh, arbitrary, and unreasonable. The Department argued in its brief that it afforded Shaw
respondents due process, its decision was not against the manifest weight of the evidence, and the
discipline imposed was not an abuse of discretion.
¶ 52 The circuit court heard oral argument on October 17, 2017. In response to the court’s
questioning about whether Shaw Legal Services was the “counsel of record throughout the three-
and-a-half year proceeding,” Shaw respondents’ counsel replied “Absolutely. And we do not
dispute that at all.” The court stated:
COURT: the notices of this hearing require Respondents’ appearance at that
hearing. Mr. Sher was there and Mr. Shaw was not. The notices require the
appearance of Respondents. We know this, right? In fact, there’s evidentiary rules
that indicate if you’re not there you're deemed to have waived any objections –
COUNSEL: Understood.
COURT: – in an administrative proceeding.
¶ 53 Counsel, argued, however, that Shaw respondents and Shaw Legal Services “had no reason
to expect they needed to be there” because they believed Orman would represent them.
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¶ 54 Regarding discipline, respondents’ counsel argued that Jack, as owner of the business, was
subject to a “double penalty,” because he was subject to two $18,000 fines, personally and for the
business.
¶ 55 Following argument, the court concluded that the ALJ’s 39-page report and
recommendation was “thorough and supported by the testimony and the record.” The court also
noted that, to the extent certain evidence constituted hearsay, “hearsay statements may be admitted
into evidence in administrative hearings if the statement has circumstantial guarantees of
trustworthiness, and if its probative value outweighs any prejudice resulting from the inability to
cross examine the declarant.” Under the “facts and circumstances,” and given the lack of objection
to the admission of such evidence, the court concluded that a reversal of the findings of fact and
conclusions of law was not warranted.
¶ 56 Regarding the discipline imposed, however, the court stated that it “[wa]s persuaded ***
that the record may reveal an overly harsh double counting of penalties between [SREG] and Mr.
Shaw.” The court stated that it was affirming “the administrative findings of fact and conclusions
of law,” but remanding “solely for the limited purpose of consideration of the penalty.” The court
asked the Department’s counsel how long she thought “it w[ould] take for a remand on this limited
issue.” Counsel stated that she was not sure, but that it “may be something where the [D]irector
can just consider on [his] own without the Board’s recommendation.” Shaw respondents’ counsel
stated that he “concur[red] with counsel,” and “d[id]n’t know if this is a matter that goes back
before the [Board], or if this is something the [D]irector and general counsel can address
independent[ly].” The court then continued the matter for status.
¶ 57 In January 2018, on remand from the circuit court, the Director issued a new order. The
Director noted that each of Shaw respondents had violated the Act 57 times, and that the Act
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authorized a fine of up to $25,000 for each violation. He determined that the fines imposed were
modest in light of the potential amount authorized by the Act, and served the Act’s purpose to
protect the public, because “appropriately substantial discipline” for “egregious and repeated
violations of the Act” deters other licensees from committing similar violations. The Director
determined that the fines, roughly three times the amount of Shaw respondents’ monetary gain,
were not overly harsh or unreasonable and were related to the Act’s purpose.
¶ 58 The Director also explicitly noted that the fines did not double-count penalties against
Shaw respondents, because the Act specifies license requirements for corporations and treats
corporations as persons for regulatory and discipline purposes. The Director concluded that the
Act “compel[led] the Department to discipline both the corporate and individual Respondent. ***
The issue of who may or may not own all or a part of the corporate Respondent should not defeat
the plain intent of the Act: to punish any and all licensees who have violated the Act.”
¶ 59 The Director also found that the discipline was reasonable in comparison among Shaw
respondents and Sher, because Shaw respondents did not respect the Department’s procedure or
participate in the disciplinary proceedings, whereas Sher did. Moreover, Shaw respondents
“benefitted from their violations of the Act by direct client payments in a way [Sher] did not.” The
Director concluded that the discipline imposed was fair, not overly harsh or arbitrary, within the
bounds of the Act, and related to the Act’s purpose.
¶ 60 In February 2018, Shaw respondents’ new counsel requested leave to withdraw, which the
circuit court granted. In March 2018, Shaw respondents, through Shaw Legal Services, filed in the
circuit court a motion to vacate the Director’s January 2018 order and for other relief.
¶ 61 After argument at the on July 23, 2018, hearing on Shaw respondents’ motion to vacate,
the circuit court granted in part and denied in part Shaw respondents’ motion. The court stated that
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No. 1-18-1834
it did “not believe that we are comparing apples to apples” when comparing Shaw respondents to
Anne, “who was cooperative, who did take responsibility for her role, and who was dissimilarly
situated than Mr. Sher, Mr. Shaw and the entity itself,” and accordingly, a sanction similar to hers
was inappropriate.
¶ 62 The court, however, found a “stark difference” in the fines imposed against Shaw
respondents and Sher. The court noted that Sher appeared at the hearing, but found that he
provided, “quite frankly, very little mitigation,” and “primarily what he did was show up.” The
court also found “no indication that [Shaw] walked away and pocketed” the $8,020 in profits from
clients, and accordingly, the court found it an “an unfair characterization to say that Mr. Shaw
himself profited” by that amount.
¶ 63 The circuit court then found that the $18,000 penalty to both Jack and SREG was “overly
harsh, arbitrary, not proportionate to the other fines imposed.” It concluded that the “appropriate
amount of penalty against Mr. Jack Shaw should be in the same amount as that charged against
Mr. Sher”—$5,000. As to SREG, the court also found “$5,000 [to be] an appropriate penalty, in
addition to the $8,020 that was deemed to be taken from clients,” for a total fine of $13,020. The
circuit court further ordered that their suspensions would stand.
¶ 64 The Department moved for partial reconsideration based on the court’s decision to reduce
the fines, and Shaw respondents appealed. After the circuit court denied reconsideration, the
Department cross-appealed.
¶ 65 In this court, Shaw respondents raise several challenges to the procedure utilized by the
Department, the factual findings and conclusions made by the Department, and the discipline
imposed. The Illinois Administrative Code (Code) provides that all final administrative decisions
of the Department are subject to review under the Administrative Review Law (see 735 ILCS 5/3–
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No. 1-18-1834
101 et seq. (West 2016)); 215 ILCS 5/407 (West 2016)). In reviewing a final administrative
decision, we review the Director’s decision and not the ALJ’s or the circuit court’s
determination. Parikh v. Division of Professional Regulation of the Department of Financial &
Professional Regulation, 2014 IL App (1st) 123319, ¶ 19. The standard of review depends on the
question presented—this court reviews factual questions under the manifest weight of the evidence
standard, questions of law de novo, and mixed questions of law and fact under the clearly erroneous
standard. Heabler v. Illinois Department of Financial & Professional Regulation, 2013 IL App
(1st) 111968, ¶ 17; Kafin v. Division of Professional Regulation of the Department of Financial &
Professional Regulation, 2012 IL App (1st) 111875, ¶ 31.
¶ 66 “It is for the Director, as the trier of fact, to evaluate all evidence, judge the credibility of
witnesses, resolve any conflicts in the evidence, and draw reasonable inferences and conclusions
from the facts.” Anderson v. Department of Professional Regulation, 348 Ill. App. 3d 554, 561
(2004). “The Director may accept or reject as much or as little of a witness’s testimony as he
pleases.” Morgan v. Department of Financial & Professional Regulation, 388 Ill. App. 3d 633,
658 (2009). It is not the function of this court to “ ‘reevaluate witness credibility or resolve
conflicting evidence,’ but rather to determine only ‘whether the findings of fact are supported by
the manifest weight of the evidence.’ ” Id. (quoting Ulysse v. Lumpkin, 335 Ill. App. 3d 886, 893
(2002)).
¶ 67 Before addressing Shaw respondents’ arguments on appeal, however, this court notes
various violations by Shaw respondents of the rules regarding appellate briefs in this appeal. In
Shaw respondents’ fact section, they cite to and describe more than 100 pages of documents that
were not included in the record on appeal, but that they claim are “available upon request” should
this court “wish[] to review them.” Large portions of the argument section are unsupported by
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citation to authority or the record on appeal (see Ill. Sup. Ct. R. 341(h)(7) (West 2016) (argument
section shall contain “citation of the authorities and the pages of the record relied on”), and when
Shaw respondents do cite authority, they often use lengthy block quotes, or quote several different
authorities in a row, with little to no discussion or analysis of those authorities (see Ill. Sup. Ct. R.
341(a) (West 2016) (“lengthy quotations are not favored and should be included only where they
will aid the court’s comprehension of the argument.”)). Shaw respondents’ fact section also
contains various remarks violating their obligation to set forth the facts “accurately and fairly
without argument or comment.” Ill. S. Ct. R. 341(h)(6) (West 2016). Moreover, Shaw respondents
make numerous improper arguments based on facts outside the record, specifically regarding
claims about their former clients and the services they provided to them, their communications
with the Department, alleged advice given to them by counsel, Jack’s limited involvement in the
scheme, and the financial impact that the discipline has had on Jack. This court will not consider
matters outside the record on appeal. Kildeer-Countryside School District No. 96 v. Board of
Trustees of Teachers’ Retirement System of State, 2012 IL App (4th) 110843, ¶ 21 (“generally, a
party may not rely on matters outside the appellate record to support his or her position on
appeal.”).
¶ 68 Turning to the merits of Shaw respondents’ appeal, they first argue that the Department
violated their due process rights by conducting the administrative hearing without them or their
counsel present, and by failing to conduct a new hearing on remand to reconsider the discipline
imposed against them. Where, as here, the issue involves a due process challenge—a question of
law—we apply a de novo standard of review. Sudzus v. Department of Employment Security, 393
Ill. App. 3d 814, 824 (2009).
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¶ 69 An administrative proceeding is governed by the fundamental principles and requirements
of due process of law. Abrahamson v. Illinois Department of Professional Regulation, 153 Ill. 2d
76, 92 (1992). However, due process is a flexible concept and requires only such procedural
protections as fundamental principles of justice and the particular situation demand. People ex rel.
Birkett v. Konetski, 233 Ill. 2d 185, 201 (2009); Abrahamson, 153 Ill. 2d at 92, citing Scott v.
Department of Commerce & Community Affairs, 84 Ill. 2d 42, 51 (1981), and Telcser v. Holzman,
31 Ill. 2d 332, 339 (1964).
¶ 70 “[A]n administrative hearing is not a partisan hearing with the agency on one side arrayed
against the individual on the other. Rather, it is an administrative investigation instituted for the
purpose of ascertaining and making findings of fact.” Abrahamson, 153 Ill. 2d at 94. Accordingly,
our supreme court has held that procedural due process in an administrative proceeding does not
require a proceeding in the nature of a judicial proceeding. Id., at 92. Rather, “a fair hearing before
an administrative agency includes the opportunity to be heard, the right to cross-examine adverse
witnesses, and impartiality in ruling upon the evidence.” Id., at 94; see also Chamberlain v. Civil
Service Commission of Village of Gurnee, 2014 IL App (2d) 121251, ¶ 46 (“Although due process
envisions an orderly proceeding wherein notice and an opportunity to be heard are afforded,
procedural due process in an administrative setting does not always require application of the
judicial model.” (internal quotation marks and citation omitted)).
¶ 71 We find no deprivation of due process by the Department proceeding with the hearing
against Shaw respondents, after they were ordered to appear but failed to do so. The Code
contemplates the possibility that a party may fail to appear for the hearing, and that the hearing
will be conducted in his or her absence, stating that the “[f]ailure to appear at the time and place
set for formal hearing shall be deemed a waiver of the right to present evidence ***.” 68 Ill. Admin.
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Code § 1110.100 (West 2016). This court has found no authority, and Shaw respondents point to
no authority, indicating that this regulation is unconstitutional.
¶ 72 The record here shows that the hearing date was set three months in advance, with notice
to Shaw respondents’ counsel, Mackoff. A week prior to hearing date, Mackoff withdrew at the
respondents’ request. The ALJ allowed Mackoff to withdraw, but reiterated that the hearing
remained scheduled for March 30 and 31, 2016, and that respondents were required to appear at
the hearing in person. The order was served directly on Shaw respondents, as well as on their
remaining counsel, Shaw Legal Services.
¶ 73 Neither Shaw respondents nor their counsel, Shaw Legal Services, appeared on either
hearing date, and they did not ask for a continuance or otherwise object to the hearing at that time.
After Shaw respondents and their counsel failed to appear, the ALJ heard argument and testimony
from four witnesses, received documents into evidence, and prepared a 45-page report based on
the two-day hearing.
¶ 74 Although Shaw respondents contend that they were “unequivocally entitled” to “be
present” at the hearing, they are the ones who were responsible for their own absence. The
Department notified respondents personally, and through counsel, of the hearing and their
obligation to attend, and Shaw respondents do not claim to have not received that notice. At the
hearing, the ALJ provided Shaw respondents with an impartial fact finder, as well as the
opportunity to be heard and to cross-examine witnesses. See Abrahamson, 153 Ill. 2d at 95. Shaw
respondents were, indeed, entitled to be present at the hearing, but they failed to avail themselves
of the process afforded to them. See 68 Ill. Admin. Code § 1110.100 (West 2016).
¶ 75 Shaw respondents also contend that the ALJ was “constitutionally bound to ensure [Shaw
respondents] were represented” at the hearing. However, there is no requirement that Shaw
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No. 1-18-1834
respondents be represented by counsel during an administrative disciplinary hearing. The
regulations provide only that the parties may be represented by counsel—not that they must be. 68
Ill. Admin. Code § 1110.90(a) (West 2016) (a party “may be represented by an attorney”); 68 Ill.
Admin. Code § 1110.90(c) (West 2016) (a party “may appear on his own behalf”); see also Wolfe
v. Board of Education of City of Chicago, 171 Ill. App. 3d 208, 210-211 (1988) (finding no
authority to support claim that there is a “constitutional right to be adequately represented by
counsel in a civil matter or an administrative hearing,” or that the “inadequacy of counsel
constitutes grounds for a new trial or new hearing in a civil proceeding.”).
¶ 76 Shaw respondents specifically complain, without any citation to the record, that counsel
Orman “misle[]d” them into believing that they “should do nothing but wait for [the Department’s]
order.” This court finds no support for Shaw respondents’ allegations. To the contrary, we note
that the record shows that, at the time of the hearing, Orman had withdrawn from the case at the
respondents’ request, and he was no longer representing them.
¶ 77 Nonetheless, there is no constitutional right to be adequately represented by counsel in a
civil matter or an administrative hearing, and complaints about the adequacy of counsel are not
grounds for a reversal or a new hearing. Wolfe, 171 Ill. App. 3d at 210-12 (finding that the circuit
court erred when it remanded the cause for a new hearing based on the alleged inadequacy of
counsel—under Administrative Review Law, the circuit court has no authority to order a new
hearing “due to the inadequate legal representation of the losing party.”).
¶ 78 If Shaw respondents were unsatisfied with their counsels’ representation, either based on
counsel Orman’s allegedly misguided instructions, or based on the failure of Shaw Legal Services
to appear at the hearing, other avenues of recourse were available to address their grievances. See
id., at 212 (“It would be unfair to put the prevailing party in a civil case to the inconvenience and
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No. 1-18-1834
expense of a new trial because the losing party has problems with its attorney. The ends of justice
would not be served by prolonging controversies for that reason. The losing party has other
remedies available to correct any alleged wrongdoing on the part of the law firm or attorneys who
undertook to represent him.”)
¶ 79 We also reject Shaw respondents’ claim that the failure to hold a new hearing on remand
violated their due process rights. In support of their claim, Shaw respondents rely on Lamm v.
McRaith, 2012 IL App (1st) 112123, which found a due process violation based on the failure to
hold a hearing on remand based on the facts of that case. We find Lamm distinguishable from the
instant case.
¶ 80 In Lamm, an insurance producer plaintiff sought administrative review of the revocation of
his state insurance producer’s license. Id., ¶ 1. The circuit court found that the Department had
made various errors of law in its interpretation of the Illinois Insurance Code, and that the record
did not clearly establish that plaintiff violated the Illinois Insurance Code. The circuit court
remanded the cause “for re-examination and re-evaluation,” noting the “cloudy” nature of the
evidence in the record. Id., ¶¶ 15-16. On remand, and without an administrative hearing, the ALJ
made new findings of fact and conclusions of law which the Director adopted, finding a violation
and entering the same discipline against the plaintiff.
¶ 81 On appeal, this court noted that “administrative agencies are not required to conduct an
additional hearing each time they revisit a decision on remand.” Id., ¶ 28. However, under the
particular circumstances of the case, this court concluded that the failure to hold a new hearing on
remand violated the plaintiff’s due process rights. “After carefully reviewing th[e] order”
remanding the matter, this court “d[id] not see how” the circuit court’s order could be followed
without a new hearing on remand. Id., ¶ 24. Because the plaintiff’s violation was “unsettled by the
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No. 1-18-1834
record,” a new hearing was necessary to clarify the evidence “or to reevaluate the penalty imposed
without first clearing up the cloudy impression.” Id.
¶ 82 Unlike in Lamm, where a new hearing was warranted because the evidence in the record
did not clearly establish any violation, this court does not have the same “cloudy impression” of
the evidence in this case. Instead, there was extensive evidence presented at the two-day hearing,
which established the respondents’ participation in a scheme that violated many provisions of the
Act.
¶ 83 Moreover, and also unlike Lamm, we do not read the circuit court’s order to require such a
hearing here. Instead, in remanding the matter, the circuit court expressed concern with whether
the Department was inadvertently “double-counting” the penalties against Jack, because he was
disciplined both personally and through his ownership of SREG. This was a question for which a
new evidentiary hearing on remand was unnecessary. On remand, the Department considered the
question posed by the circuit court and entered a new order responding to the court’s concerns.
The Director explicitly noted that the fines did not double-count penalties against Shaw
respondents, concluding the Act’s purpose required separate penalties.
¶ 84 Additionally, even if we were to find that the failure to hold a hearing on remand was
erroneous, Shaw respondents invited that procedure when, at the hearing after a remand was
ordered, counsel for Shaw respondents concurred with the Department’s suggestion that the
Director may have been able to address the remand independently. See Gaffney v. Board of
Trustees of Orland Fire Protection District, 2012 IL 110012, ¶ 33 (“The rule of invited error or
acquiescence *** prohibits a party from requesting to proceed in one manner and then contending
on appeal that the requested action was error.”). Accordingly, we find no due process violation
from the Department’s failure to hold a new evidentiary hearing on remand.
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No. 1-18-1834
¶ 85 Shaw respondents next contend that there was not clear and convincing evidence that they
violated the Act because the evidence presented at the 2016 hearing was “vague, inadmissible, and
not competent.” Shaw respondents particularly challenge the Department’s consideration of
“hearsay” evidence based on the testimonies of Wasiak and Burton, and further contend that those
witnesses did not provide an adequate foundation for entry of the contract documents as exhibits.
We review an administrative agency’s decision regarding the admission of evidence for an abuse
of discretion (Matos v. Cook County Sheriff's Merit Board, 401 Ill. App. 3d 536, 541 (2010)), and
this court may affirm an order admitting or excluding evidence on any ground that appears in the
record (Carroll v. Preston Trucking Co., 349 Ill. App. 3d 562, 566 (2004) (citing Hawkes v. Casino
Queen, Inc., 336 Ill. App. 3d 994, 1005 (2003))).
¶ 86 We note, initially, that Shaw respondents waived any objection to the admission of such
evidence by failing to raise their objections at the hearing. See Jackson v. Board of Review of the
Department of Labor, 105 Ill. 2d 501, 508 (1985) (“It is well established that when hearsay
evidence is admitted without an objection, it is to be considered and given its natural probative
effect.”).
¶ 87 Waiver aside, we do not find the admission of the contracts, or the testimony from Wasiak
or Burton, to be an abuse of discretion. Department regulations allow hearsay to “be admitted if it
has circumstantial guarantees of trustworthiness, and if the probative value of the statement
outweighs any prejudice resulting from an inability to cross-examine the declarant.” 68 Ill. Admin.
Code § 1110.220(b) (West 2016). Here, the Department could have reasonably concluded that the
clients’ discussions with investigators had circumstantial guarantees of trustworthiness where they
consistently described their experiences in discussions with two separate investigators. Moreover,
the clients’ statements were corroborated by each other, as well as by the clients who did testify
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No. 1-18-1834
and were available for cross-examination, in describing a consistent pattern of violations by the
respondents. The only prejudice Shaw respondents point to from the inability to cross examine the
declarants is that the hearsay testimony led to “improper inference[s], which caused [them] to lose
their license[s] and livelihood.” However, in contending that the inferences from the evidence was
improper, Shaw respondents rely on evidence outside the record, which this court will not consider.
Kildeer-Countryside School District No. 96, 2012 IL App (4th) 110843, ¶ 21.
¶ 88 Nonetheless, this court fails to see how any prejudice could be established from Shaw
respondents’ inability to cross-examine the declarants, particularly where they failed to appear,
forfeiting their ability to cross-examine any witnesses in any event. In these circumstances, the
ALJ’s decision to admit this evidence was well within his discretion. See Dookeran v. County of
Cook, 396 Ill. App. 3d 800, 814 (2009).
¶ 89 Moreover, even if we were to conclude that the ALJ improperly considered hearsay
evidence, an administrative decision will not be overturned because the administrative judge failed
to observe the rules of evidence unless the error “materially affected the rights of any party and
resulted in substantial injustice to [the party].” 735 ILCS 5/3–111(b) (West 2016); see Kafin, 2012
IL App (1st) 111875, ¶ 38; Matos, 401 Ill. App. 3d at 541 (an evidentiary ruling, even if incorrect,
will not be reversed unless there is “demonstrable prejudice to the complaining party.”). As
explained above, we find no substantial injustice or demonstrable prejudice from the ALJ’s
admission of the relevant evidence here.
¶ 90 Finally, Shaw respondents assert that the discipline imposed against them by the
Department was improper. They do not appear, however, to challenge the circuit court’s order on
this point, instead contending that the trial court’s reasoning for reducing their fines was “true.”
On cross appeal, the Department contends that the Department’s choice of sanction was not an
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No. 1-18-1834
abuse of discretion, and that the circuit court improperly reduced the fines assessed. Because these
issues both concern the propriety of the sanctions imposed by the Department, we will consider
them simultaneously.
¶ 91 When reviewing the propriety of a particular sanction imposed by the Director, the standard
of review is whether the Director abused his discretion in the imposition of the sanction. Kafin,
2012 IL App (1st) 111875, ¶ 42; Reddy v. Department of Professional Regulations, 336 Ill. App.
3d 350, 354, (2002). The Director abuses his discretion when a sanction is imposed that is overly
harsh, arbitrary or unreasonable in view of the mitigating circumstances; or unrelated to the
purpose of the statute. Siddiqui v. Department of Professional Regulation, 307 Ill. App. 3d 753,
763 (1999); Kafin, 2012 IL App (1st) 111875, ¶¶ 42–43.
¶ 92 A reviewing court does not make its own assessment of what discipline is appropriate, and
whether a sanction is “overly harsh in view of the mitigating circumstances *** must be viewed
in light of the abuse-of-discretion standard of review.” Sonntag v. Stewart, 2015 IL App (2d)
140445, ¶ 22. “Under that standard, an agency’s decision will not be disturbed unless it is arbitrary
or capricious, or unless no reasonable person would agree with the [agency’s] position.” (Internal
quotation marks and citation omitted.) Id. This standard is “one of rationality, and the reviewing
court will not substitute its own reasoning in the absence of a clear error of judgment on the part
of the agency.” 1212 Restaurant Group, LLC v. Alexander, 2011 IL App (1st) 100797, ¶ 59.
“Agency action is arbitrary and capricious when the agency contravenes the legislature’s intent,
fails to consider a crucial aspect of the problem, or offers an implausible explanation contrary to
agency expertise.” Wade v. Illinois Commerce Comm'n, 2017 IL App (1st) 171230, ¶ 26.
¶ 93 Shaw respondents initially contend that the sanctions imposed against them were overly
harsh when compared to the other respondents, Sher and Anne. They argue that the Department
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No. 1-18-1834
“provided no justification in logic to impose a fine 360% greater against [the Shaw respondents]
than Respondent Sher and 36,000% greater against [the Shaw respondents] than Respondent
Anne.” This contention, however, is factually inaccurate.
¶ 94 The Department noted that the discipline received by Anne did not provide a relevant
comparison because she cooperated with the investigation, acknowledged her wrongdoing, and
entered a consent order. See Nwaokocha v. Illinois Department of Financial and Professional
Regulation, 2018 IL App (1st) 162614 (the fact that other parties with whom the plaintiff compared
his discipline entered into consent orders was a proper “point of distinction” justifying the
plaintiff’s more severe sanction); see also People v. Gordon, 2016 IL App (1st) 134004, ¶ 58
(noting that in the criminal context, a “sentence imposed on a codefendant who pleaded guilty as
part of a plea agreement does not provide a valid basis of comparison to a sentence entered after a
trial.”).
¶ 95 In comparison to Sher, the Department noted that Sher participated in the administrative
hearing, while Shaw respondents did not, illustrating their “disrespect for the disciplinary process
and some lack of concern for their professional fate.” Also unlike Sher, Shaw respondents
benefited financially from violating the Act by direct client payments, and thus had a “greater
incentive to continue their violations of the Act.” Accordingly, the Department concluded that
Shaw respondents warranted more significant discipline.
¶ 96 On the facts of this case, we do not find the sanctions imposed to be arbitrary or capricious,
or that no reasonable person would agree with the Department’s position that such a difference in
sanctions was warranted. The purpose of the Act is “to evaluate the competency of persons
engaged in the real estate profession and to regulate their activities for the protection of the public.”
225 ILCS 454/1–5 (West 2016). On review, “[w]e must defer to the administrative agency’s
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No. 1-18-1834
expertise and experience in determining what sanction is appropriate to protect the public interest.”
Reddy, 336 Ill. App. 3d at 354.
¶ 97 In this case, the Director found that sanctions suspending and denying Shaw respondents’
licenses and imposing separate $18,000 fines were appropriate based on a variety of factors,
including the large number and seriousness of the offenses; the vulnerability of, and harm to, the
injured parties; and Shaw respondents’ financial gain, failure to appear, lack of cooperation, and
lack of contrition. It also found that the respondents’ conduct “denote[d] a significant indifference
to the best interests of the clients. Respondents’ conduct was not an isolated occurrence, but a
prolonged series of discrete offenses over the course of several years. Significant discipline is
appropriate for the protection of the public.” Deferring to the Director’s expertise and experience,
as we must, our review of the record reveals that the sanction imposed was neither unreasonable
nor arbitrary or capricious, nor was it unrelated to the purpose of the statute. Siddiqui, 307 Ill. App.
3d at 763; Kafin, 2012 IL App (1st) 111875, ¶¶ 42–43.
¶ 98 Shaw respondents, however, specifically contend that the Act is remedial and not penal in
nature, and accordingly, they argue that the “Act does not authorize fines beyond what is necessary
to remediate the situation. As such any fine sought beyond what is required to refund each claimant
is error and an abuse of discretion.” Accordingly, they maintain that any sanction must be limited
to the amount the Department found that they failed to provide as refunds. In support of their
contention that the Act is remedial and not penal, they cite Gruwell v. Illinois Dept. of Financial
and Professional Regulation, 406 Ill. App. 3d 283, 290-96 (2010), which states that the “Act is not
a penal measure, to be strictly construed against the State, but a broad statutory system which is
remedial and therefore should be liberally construed. *** The intent of the General Assembly in
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enacting this statute is to evaluate the competency of persons engaged in the real estate business
and to regulate this business for the protection of the public.”
¶ 99 Our supreme court considered and rejected a similar challenge in Scott v. Association for
Childbirth at Home, International, 88 Ill. 2d 279, 288 (1981). In that case, the Attorney General
brought an action against an association for home childbirth under the Consumer Fraud and
Deceptive Practices Act (CFDPA). The association challenged the constitutionality of the CFDPA,
claiming that the Act was penal in nature based on the “fact that a civil penalty of up to $50,000
c[ould] be imposed” under the CFDPA. The supreme court found the argument
“entirely without merit. The Act is a regulatory and remedial enactment intended
to curb a variety of fraudulent abuses and to provide a remedy to individuals injured
by them. Its stated purpose, set forth in its preamble, is to protect Illinois consumers,
borrowers, and businessmen against fraud, unfair methods of competition, and
other unfair and deceptive business practices. The Act is clearly within the class of
remedial statutes which are designed to grant remedies for the protection of rights,
introduce regulation conducive to the public good, or cure public evils. *** [A]s in
the case of the Environmental Protection Act, the penalty is but one part of the
regulatory scheme, intended as a supplemental aid to enforcement rather than as a
punitive measure.” Id.¶ 100 Similarly here, one of the stated purposes of the Act is to regulate the activities of “persons
engaged in the real estate business” for “protection of the public.” Shaw respondents’ proposed
approach, limiting any fine to the amount they wrongly refused to refund, would undermine the
purpose of the Act, and it cannot be reconciled with the plain language of the Act, which authorizes
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No. 1-18-1834
fines of up to $25,000 for each of 46 enumerated types of violations—many of which do not
involve any direct financial gain. See 225 ILCS 454/20-20(a)(1)-(46) (West 2016).
¶ 101 In their reply, Shaw respondents contend that the supreme court’s decision in Scott, 88 Ill.
2d 279, does not apply, arguing for the first time that their licenses, as a property right, are a
“fundamental right” and that the Act is subject to “strict scrutiny,” and must be “narrowly tailored”
and “construed strictly against the [S]tate.” We find that Shaw respondents forfeited this argument
by raising it for the first time in their reply brief. Ill. Sup. Ct. R. 341(h)(7) (“Points not argued are
forfeited and shall not be raised in the reply brief.”).
¶ 102 Nonetheless, our supreme court previously rejected this argument in Hayashi v. Illinois
Department of Financial & Professional Regulation, 2014 IL 116023, ¶ 29. It stated:
“While this court has held that a license to practice medicine is a property right,
within the meaning of the constitutional guarantees of due process of law, this
simply means that proceedings to revoke medical licenses must comply with
procedural due process guarantees. The right to pursue a profession is not a
fundamental right for substantive due process purposes, however, and legislation
infringing upon that right need only be examined using the rational basis test.”
(internal quotation marks and citations omitted).
¶ 103 Although Hayashi dealt with the Medical Practice Act, rather than the Real Estate License
Act at issue here, its conclusion applies equally here.
¶ 104 Since we have found no abuse of discretion by the Director in its choice of discipline, we
necessarily agree with the Department’s argument in its cross-appeal that the circuit court
improperly reduced the fines assessed.
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¶ 105 For the forgoing reasons, we conclude that it was not unreasonable for the Director to
suspend the licenses of Shaw respondents, and impose separate $18,000 fines for their respective
violations of the Act. We therefore defer to the experience and expertise of the Department in
fashioning the appropriate sanctions. We vacate the order of the circuit court of Cook County
which reduced the fines against Shaw respondents, remand this matter for the imposition of the
discipline ordered by the Director, and affirm the circuit court’s judgment in all other respects.
¶ 106 Affirmed in part, vacated in part, and remanded with directions.
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