2024 IL App (1st) 230786-U SIXTH DIVISION May 31, 2024 No. 1-23-0786
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________
IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ KIMBERLY SAUNDERS, ) Appeal from the Circuit Court ) of Cook County. Plaintiff-Appellant, ) ) v. ) No. 22 CH 5068 ) CHICAGO HOUSING AUTHORITY, ) Honorable ) Alison C. Conlon, Defendant-Appellee. ) Judge, presiding. )
JUSTICE C.A. WALKER delivered the judgment of the court. Justices Hyman and Tailor concurred in the judgment.
ORDER ¶1 Held: We reverse the circuit court’s order dismissing appellant’s writ of certiorari and upholding the administrative agency’s decision to terminate appellant’s housing voucher where the administrative agency’s evidence was insufficient to establish appellant concealed income, had a business, or committed fraud in violation of the federal housing program. No. 1-23-0786
¶2 Appellant Kimberly Saunders 1 appeals from the circuit court’s order denying her writ of
certiorari and upholding the Chicago Housing Authority’s (CHA) administrative decision to
terminate her housing voucher under the Housing Choice Voucher Program (HCVP), claiming the
record did not support the CHA’s conclusion that she violated her HCVP family obligations. For
the following reasons, we find that the evidence was insufficient to establish that Saunders had a
business, business income, or committed fraud. Because the CHA hearing officer’s termination
decision was based on evidence that was insufficient to establish a violation of the federal housing
program, we reverse both: (1) the circuit court’s order dismissing appellant’s writ and upholding
the CHA’s termination and (2) the hearing officer’s termination decision. Hence, we reinstate
appellant’s housing voucher.
¶3 BACKGROUND
¶4 Appellant Saunders applied for and received a HCVP voucher in 2014. The HCVP assists
low-income families through rent subsidies and is operated by the CHA through funding from the
United States Department of Housing and Urban Development (HUD). The CHA is governed by
the applicable provisions of the Code of Federal Regulations (CFR). 24 C.F.R. § 982.1 (2015).
Saunders received the voucher up to and including November 2021.
¶5 On November 30, 2021, the CHA mailed Saunders two “document outstanding” notices,
which explained the CHA had learned Saunders received two loans from the federal Paycheck
Protection Program (PPP) (administered by the Small Business Administration (SBA)). Each
notice corresponded to one of the loans, and the CHA stated that HCVP participant families “are
required to report all income to the CHA, including business income, as it directly impacts their
eligibility.” The CHA instructed Saunders to provide “required documents” to the CHA, including
1 Appellant’s last name is listed as “Dale” throughout the record.
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“business income information” and: (1) her Federal and State tax returns and tax transcripts form
2018-2020; (2) a tax form Schedule C or “Corporate Taxes Filed”; and (3) business income
records, such as ledgers or payroll sheets. The CHA also requested, “All applications submitted to
the SBA or authorized bank/lender(s) for the PPP Loan, including but not limited to” the borrower
application form, the borrower application “for Schedule C Filers Using Gross Income,” and “Any
supporting documents provided to the SBA to verify eligibility.” Both notices indicated Saunders
needed to submit the documents within 10 days (by December 10, 2021), or she would be in
violation of her family obligations and could face voucher termination.
¶6 On January 31, 2022, the CHA mailed Saunders an intent to terminate voucher letter (ITT).
In the ITT, the CHA stated Saunders’ received $42,000 between two loans, and failed to report
that amount as income. The document continued that Saunders supplied tax transcripts from 2017-
2020 in September 2021, but failed to provide other documents as requested in the notices. The
ITT alleged Saunders violated three of her family obligations: (1) she did not supply true and
complete information; (2) she did not provide information the CHA requested “for use in a
regularly scheduled re-examination or interim re-examination of family income”; and (3) she
committed fraud “in connection with” a federal housing program. The CHA proposed voucher
termination, but informed Saunders she could request a hearing, which she did.
¶7 On April 7, 2022, a hearing was held regarding Saunders’ voucher status before an
independent hearing officer (hearing officer). Saunders, R.S. (a CHA “presenter”), N.W. (a CHA
“witness”), and R.F. (a CHA “observer”) were also present. N.W. testified that she is employed
by Nan McKay and Associates, an organization that assists the CHA with the HCVP. N.W.
identified exhibits, including a written log of Saunders’ communications with the CHA, and
voucher-related documents signed by Saunders on May 16, 2019, wherein she acknowledged her
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obligations to abide by the CHA’s requirements, and any violation could lead to termination. N.W.
identified another exhibit, an Application for Continued Eligibility (ACE) for voucher dated March
30, 2018, in which Saunders listed her only income as “annual supplemental security benefits for
two of her children in the amount of $9000.00 per child,” and “did not list any income from self-
employment or wages from employment.” On redirect examination, N.W. stated that the ACE
“requires a participant to report all household income.” N.W. also identified “public records from
the [PPP] with respect to” Saunders, which showed she received two loans totaling $42,000 for “a
new business or one 2 years or less which provided Personal Services.”
¶8 On cross-examination, N.W. testified that on December 23, 2021, Saunders emailed N.W.
and reported she did not have any PPP loan documents “because she did not fill out the application
and was scammed.” N.W. instructed Saunders to report this to the SBA, then provide the CHA
with any documentation the SBA sent her confirming the scam. N.W. further testified that the log
of Saunders’ interactions with the CHA contained an entry for January 19, 2022, in which Saunders
told a CHA employee that she (1) received the ITT; (2) received the PPP loan money, but “thought
it was a loan that did not need to be reported”; and (3) split the PPP loan money with the individual
that prepared the applications. N.W. stated, “any and all income must be reported to the CHA.”
¶9 Saunders testified that, regarding the PPP loan, she did not understand what was applied
for, and someone told her “it was a grant that she would not need to repay.” Saunders further
testified that an unnamed individual filled out the PPP loan applications. The money was
“deposited in her bank account,” after which she “would then withdraw half the proceeds in cash
[and give it] to the people who prepared the loan application.” She indicated that at some point
before the hearing, she informed the CHA she “did not know what was submitted for the loans”
and asked for a payment plan. She did not understand she could contact the SBA and had “no
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access to the SBA or the bank that provided the loans” because “she did not know the email used
for the loan applications.”
¶ 10 On cross-examination, Saunders testified someone on Facebook solicited her to apply for
the PPP loans. She did not use the money for payroll and did not know she needed to report the
proceeds.
¶ 11 In his “Credibility Determinations,” the hearing officer stated that he found N.W. credible
and Saunders incredible. He explained Saunders claimed someone scammed her, but never
contacted the SBA. He characterized her claim that she was an “unwilling victim” as
“unbelievable” because “she voluntarily participated” in the scam and “paid an unnamed person
half of the loan proceeds in cash.” She also never asked the CHA if she needed to report the PPP
loan proceeds.
¶ 12 In his “Analysis and Mitigating/Aggravating Factors” section, the hearing officer wrote the
situation was a “discretionary termination.” He found that Saunders, by virtue of signing voucher
renewal documents, knew both of her reporting obligations and that she could not commit fraud
in connection with a housing program, but despite this knowledge, she failed to submit documents
pursuant to the notices. He stated, “A participant does not have the right to decide when or if they
will comply with requests for documents.” Moreover, after Saunders contacted the CHA on
December 23, 2021, claiming she could not supply documents related to the PPP loan applications
because someone “scammed” her, she then failed to contact the SBA as instructed. The hearing
officer concluded that Saunders, “was not a victim but an active participant in any scam,” and that
the “fact she could not access documents submitted to the SBA as part of a scam is not a defense.”
He further found that she violated the fraud provision of the family obligations, based on her
“active participation in a scheme to obtain $42,000 in PPP loans,” explaining the “nexus to the
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HCVP” was “evident” because she “received $42,000 from the SBA for a business neither of
which she reported to CHA in violation of her Family Obligations,” and the $42,000 “was income
that was not reported to the CHA. This intentional nonreporting prevented the CHA from
calculating the proper amount of assistance it would provide [Saunders].”
¶ 13 In aggravation, the hearing officer listed that Saunders ignored the document notices, did
not contact the SBA, actively participated in a “scam,” and failed to report her business/self-
employment or her receipt of $42,000 to the CHA. In mitigation, the hearing officer noted
Saunders’ lack of any earlier HCVP violations, and that two members of her household had a
“disability.”
¶ 14 The hearing officer found that Saunders (1) provided both false and incomplete information
to the CHA, (2) did not comply with her requirement to provide all information the CHA requested
for income re-examination, (3) did not report her business or her receipt of $42,000, and (4)
committed fraud in connection with the HCVP. Based on these findings, and after considering the
aggravating and mitigating factors, he recommended upholding the CHA’s termination.
¶ 15 The hearing exhibits were included in the record on appeal. In Saunders’ CHA voucher
application, dated March 30, 2018, she indicated her income consisted of Supplemental Security
Income payments for Parnelius and Kimora Saunders at $9000 annually, as well as food stamps.
The form states, “If you fail to report all household income, you may lose your voucher.”
¶ 16 In the PPP loan application approved on August 3, 2020, the “business” is listed as “New
Business of 2 years or less,” the business type is listed as “Sole Proprietorship” with a description
reading “All Other Personal Services,” and the spaces for “Race/Ethnicity” and “Gender” are left
blank. In the PPP loan application approved on March 12, 2021, the business is described as “Child
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Day Care Services,” and information regarding Saunders’ race, ethnicity, and gender is again
omitted.
¶ 17 In the communications log, a CHA employee made an entry dated January 19, 2022,
indicating that the employee spoke with Saunders that day, who “confirmed receipt of the ITT and
stated she didn’t know what to do since she did get the PPP loan money, but she understood it was
just a loan and didn’t need to be reported.” Saunders reported that she split the money with the
person who completed the application. The CHA employee continued, “I let [Saunders] know that
by requesting a hearing, she would have an opportunity to share her story.”
¶ 18 On April 14, 2022, the CHA officially terminated the voucher, and on May 26, 2022,
Saunders filed a writ of certiorari seeking review of the CHA’s administrative decision. She
contended she made “unintentional mistakes,” and thus should have been given time to repay, and
noted the mitigating factors that she was a domestic violence survivor and had disabled minor
children.
¶ 19 In her memorandum of law in support of her writ of certiorari, Saunders contended that
she had no business, thus no employees or payroll, and she testified as such at the hearing. The
CHA entered no contradictory evidence showing she had a business. On the failure to report
violation, Saunders argued the evidence showed she did not know she had to report the $42,000,
and thus her failure to report the money could not be grounds for voucher termination because it
was unintentional. She further argued she had no obligation to report her receipt of the $42,000
because the money was a loan, and a loan is not income. Finally, regarding fraud, Saunders stated
that even if the person completing the PPP application committed fraud, it was unrelated to her
housing.
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¶ 20 In CHA’s response to Saunders’ memorandum, it argued “Plaintiff equates her PPP
application to her belief that it was a grant but did not explain why she failed to contact SBA or
take any further action once she learned that it was, in fact, a business loan.” It continued “Thus,
either Plaintiff represented to SBA that she had a business when she did not have a business, or
she had a business, received PPP proceeds for that business, and concealed that business from
CHA.”
¶ 21 On April 3, 2023, the circuit court denied Saunders’ writ of certiorari. This appeal followed.
¶ 22 JURISDICTION
¶ 23 The circuit court denied Saunders’ timely writ of certiorari on April 3, 2023, and Saunders
filed her notice of appeal on May 2, 2023. This court therefore has jurisdiction pursuant to Illinois
Supreme Court Rule 303 (eff. July 1, 2017).
¶ 24 ANALYSIS
¶ 25 On appeal, Saunders claims that the CHA terminated her voucher erroneously because the
record did not support the hearing officer’s bases for termination.
¶ 26 This matter arises from the decision of an administrative agency, the CHA. “The CHA
operates under the Illinois Housing Authorities Act (310 ILCS 10/1 et seq. (West 2020)). The
Illinois Housing Authorities Act did not adopt the Administrative Review Law (735 ILCS 5/3-101
et seq. (West 2020)); therefore, the appropriate vehicle for review is a common law writ of
certiorari.” Landers v. Chicago Housing Authority, 404 Ill. App. 3d 568, 571 (2010). At a
termination of voucher hearing, the hearing officer makes factual determinations based on a
preponderance of the evidence standard. 24 C.F.R. § 982.555(e)(6) (2015).
¶ 27 The appeal of a circuit court’s ruling on a petition for certiorari seeking review of an
administrative agency’s decision is treated the same way as any other appeal for administrative
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review. Stewart v. Boone County Housing Authority, 2018 IL App (2d) 180052, ¶ 22. We review
the decision of the administrative agency, rather than the decision of the circuit court. Id. The
applicable standard of review, which determines the degree of deference given to the agency’s
decision, depends upon whether the question presented is one of fact, one of law, or a mixed
question of law and fact.” AFM Messenger Service, Inc. v. Department of Employment Security,
198 Ill. 2d 380, 390 (2001); See also Lipscomb v. Housing Authority of County of Cook, 2015 IL
App (1st) 142793, ¶ 14.
¶ 28 An administrative agency's factual findings are considered prima facie true and correct.
Mireles v. Dart, 2023 IL App (1st) 221090, ¶ 56. The findings are disturbed only if they are against
the manifest weight of the evidence. Stewart, 2018 IL App (2d) 180052, ¶ 22. A factual finding is
against the manifest weight of the evidence only where the opposite conclusion is clearly apparent.
Beggs v. Board of Education. of Murphysboro Community Unit School District No. 186, 2016 IL
120236, ¶ 50.
¶ 29 If a purely legal question is at issue, the standard of review is de novo; this standard is
“independent and not deferential.” [Internal quotation marks omitted.] Goodman v. Ward, 241 Ill.
2d 398 406 (2011). Where a decision involves a mixed question of law and fact, we will not reverse
unless the decision is clearly erroneous. Lipscomb, 2015 IL App (1st) 142793, ¶ 15. A mixed
question of law and fact arises where the facts and applicable law are undisputed, and the issue on
review is whether the facts establish that the applicable law was violated. Cinkus v. Village of
Stickney Municipal Officers Electoral Board, 228 Ill. 2d 200, 211 (2008). A reviewing court will
not reverse a decision as clearly erroneous unless it has a firm conviction that a mistake has been
made. Id.
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¶ 30 The CHA’s administration of the HCVP is governed by HUD regulations. 24 C.F.R. §
982.52 (1998). Relevant here, HUD regulations require, as part of a voucher recipient’s family
obligations, that the recipient produce any information a housing agency deems necessary in the
administration of the program, including “any information requested” by the agency “for use in a
regularly scheduled re-examination or interim re-examination of family income.” 24 C.F.R.
§ 982.551(b)(1), (2) (2016). The information provided must be “true and complete.” Id. at
§ 982.551(b)(4). Additionally, “members of the family must not commit fraud, bribery or any other
corrupt or criminal act in connection with the program.” Id. at § 982.551(k). The CHA “may”
terminate a voucher “[i]f the family violates any family obligations under the program,” and if any
family member commits “fraud, bribery, or any other corrupt or criminal act in connection with
any Federal housing program.” 24 C.F.R. § 982.552(c)(1)(i), (iv) (2016).
¶ 31 Fraud “means a single act or pattern of action *** [t]hat constitutes false statement,
omission, or concealment of a substantive fact, made with intent to deceive or mislead.” 24 C.F.R.
§ 792.103 (1999). The CHA’s administrative plan (the Plan) differentiates between intentional and
unintentional errors, stating in relevant part “[t]he term error refers to an unintentional mistake or
omission,” as opposed to fraud (or abuse) per 24 C.F.R. § 792.103 (1999). CHA admin. plan ch.
14-1.A (2018).2 The Plan continues that recipients who commit “errors” are generally subject to
repayment plans, but instances of fraud or abuse may lead to termination (though less severe
options also remain available when abuse is at issue). Id. at 14-II.A, 14-II.B. 3 In Lipscomb, the
2 The plan is available at https://cha-assets.s3.us-east-2.amazonaws.com/s3fs-public/2019- 05/Admin%20Plan-Final.pdf. As the CHA notes in the briefing, though the Plan was not an official part of the record below, this is the type of public document of which we may take judicial notice. See Phillips v. DePaul University, 2014 IL App (1st) 122817, ¶ 27. 3 In considering a voucher termination issue, the Court of Appeals of Ohio in McClarty v. Greene Metropolitan Housing Authority, 196 Ohio App. 3d 256, 261 (2011), referenced the Housing Choice Voucher Program Guidebook, which, at the time of McClarty, contained express provisions requiring a finding of intent for fraud, as well as provisions expressing the preference to only terminate a voucher due
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court discussed the need for an intent showing when a family fails to report new income before
termination is appropriate, referencing the Housing Authority of County of Cook 2012 HCV
Administration plan (which, like the Plan, noted the distinction between unintentional reporting
error and abuse or fraud). Lipscomb, 2015 IL App (1st) 142793, ¶ 30. The Lipscomb court partially
based its decision to reverse termination and remand for further findings in part on the failure of
the hearing officer to sufficiently consider the recipient’s intent. Id. ¶ 31.
¶ 32 Here, the hearing officer found that Saunders (1) provided untrue and incomplete
information; (2) failed to supply information the CHA deemed necessary for an income re-
examination; (3) failed to report her business or her receipt of $42,000 to the CHA; and (4)
committed fraud.
¶ 33 We find the CHA’s voucher termination was not supported by the evidence. First, the CHA
did not establish that Saunders provided untrue and incomplete information by a preponderance of
the evidence. She testified that she provided her tax returns and had no other documents.
Additionally, because another person filed the PPP loan applications, she had no access to the
requested documents regarding the applications. Saunders did not refuse to communicate with the
CHA regarding the loans. Conversely, the CHA offered no evidence to support the conclusion she
possessed documents or information she withheld. The record before the hearing officer was,
therefore, that somebody else authored and filed the PPP loan applications at issue, and Saunders
had neither possession of, nor access to, any documents submitted in connection with those
applications. Accordingly, the hearing officer’s factual finding that Saunders provided untrue and
incomplete information was not supported by the evidence. See Miles v. Housing Authority of
to fraud or abuse, while allowing repayment in cases of error. According to HUD’s website, the current relevant Guidebook sections were being updated and not yet available at the time of this order.
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Cook County, 2015 IL App (1st) 141292, ¶ 47 (termination decision must be supported by
preponderance of the evidence).
¶ 34 Second, the CHA failed to offer sufficient evidence to establish that Saunders had a
business. Indeed, the CHA entered no evidence she had a business. Not the name of the business,
not one customer, no indication of employees or payroll. The only evidence in the record regarding
whether a business existed was the PPP loan applications, which Saunders testified, unrebutted
and unchallenged by the CHA, that she did not fill out. This testimony is corroborated by the lack
of her personal information on the applications. The record lacks any evidence a business existed,
let alone sufficient evidence to establish that fact by a preponderance of the evidence. Id.
¶ 35 Third, the CHA offered no evidence establishing a violation for failure to report income
because there was no evidence she knew the $42,000 should have been reported, then chose not to
do so. See Lipscomb, 2015 IL App (1st) 142793, ¶¶ 29-31. Instead, the record shows Saunders was
(1) surprised by the notices from the CHA because she did not know she needed to report the
$42,000 in loans as income (2) concerned over her voucher status because she did not understand
that receipt of the PPP loans could impact her housing, and (3) confused because she did not
understand the steps needed to remedy the situation. She also requested a payment plan to make
up for any discrepancy. Under these circumstances, the evidence was insufficient to show that
Saunders acted intentionally; instead, as described in Lipscomb, Saunders at worst committed an
error, not abuse, making termination for failure to report inappropriate. See The Plan at 14-1.A;
Lipscomb, 2015 IL App (1st) 142793, ¶ 30.
¶ 36 We note this violation also fails as a matter of law because the $42,000 was a loan, and
loans are not income, but debts that must be repaid. See Thibadeau v. Thibadeau, 441 N.W.2d 281,
285 (Wis. Ct. App. 1989); see also United States v. Beavers, 756 F.3d 1044, 1057 (7th Cir. 2014)
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(rejecting defendant’s challenges to the jury instructions in tax fraud case about the definition of a
loan because a “correct statement of the law” is that “loan proceeds are not income because the
taxpayer has incurred a genuine obligation to repay the loan”); In re Marriage of Tegeler, 365 Ill.
App. 3d 448, 457-58 (2006) (finding that annual loans received by a father from the bank should
not be considered income for child support purposes, reasoning that generally loans should not be
considered income” because they “usually do not directly increase an individual's wealth” and
require repayment). The SBA maintains that PPP loan “[b]orrowers can apply for forgiveness any
time up to five years from the date that SBA issued the SBA loan number. If borrowers do not
apply for forgiveness within 10 months after the last day of the covered period, then PPP loan
payments are no longer deferred, and borrowers will begin making loan payments to their PPP
lender.” See SBA U.S. Small Business Administration (PPP Loan Forgiveness),
https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-
program/ppp-loan-forgiveness. It follows that because the funds at issue were not income as a
matter of law, the CHA erred in finding the failure to report that income could constitute grounds
for termination.
¶ 37 On this point, the CHA argues that, even conceding the $42,000 was initially not income
because it was a loan, Saunders became obligated to report the funds because the $42,000 debt
was forgiven (per the SBA’s website). This argument fails because the record contains no
information about loan forgiveness, or Saunders’ or the CHA’s awareness thereof. Accordingly,
there is no support in the record for the proposition that Saunders knew the loans were forgiven.
Saunders had no obligation to report the loans, and no violation was established here. See The Plan
at 14-1.A; Lipscomb, 2015 IL App (1st) 142793, ¶ 30.
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¶ 38 Fourth, and finally, regarding the fraud violation, the hearing officer based this violation on
the factual finding that Saunders had a business she failed to report to the CHA. As explained
above, the CHA failed to introduce any evidence that Saunders had a business, and thus there is
also no factual basis to support the finding that she committed fraud by failing to report that
business to the CHA. Moreover, to the extent the CHA contends the fraud violation was predicated
on her failure to disclose the $42,000 in loans, this theory also fails because it requires a showing
that Saunders acted intentionally, which the record does not support. See Exline v. Weldon, 57 Ill.
2d 105, 110 (1974) (fraud requires a showing that an act was done with the intent to deceive). The
hearing officer’s finding of fraud was thus not supported by the evidence.
¶ 39 Because the hearing officer’s relevant findings of fact were not supported by the evidence,
there is no valid basis to uphold the CHA’s termination of Saunders’ voucher. Accordingly, we
reverse the CHA’s termination, and the judgment of the circuit court upholding that decision and
dismissing the request for a writ of certiorari. We order the CHA to reinstate Saunders housing
voucher instanter. 4
¶ 40 CONCLUSION
¶ 41 Each finding of fact that the hearing officer used to find Saunders violated her family
obligations was against the manifest weight of the evidence. Consequently, we reverse the CHA’s
decision, along with that of the circuit court, and reinstate Saunders’ voucher instanter.
¶ 42 Circuit court reversed; hearing officer's decision reversed; and cause remanded with
directions to reinstate Saunder’s voucher.
4 Because we reverse based on insufficient evidence to support the hearing officer’s ruling, we do not reach the issues of whether the hearing officer sufficiently considered mitigating circumstances. 14