Shaw v. Department of Financial & Professional Regulation

2020 IL App (1st) 181834-U

• Court: Appellate Court of Illinois
• Decided: May 13, 2020
• Docket: 1-18-1834
• Status: Unpublished

Opinion

2020 IL App (1st) 181834-U

THIRD 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. 2 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. ***

3 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

4 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.

5 No. 1-18-1834

¶ 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

6 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

7 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.

8 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.

9 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.

10 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

11 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

12 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).

13 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

14 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.

15 No. 1-18-1834

¶ 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

16 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.

17 No. 1-18-1834

¶ 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

18 No. 1-18-1834

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

19 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–

20 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

21 No. 1-18-1834

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).

22 No. 1-18-1834

¶ 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.

23 No. 1-18-1834

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

24 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

25 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

26 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.

27 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

28 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

29 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

30 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

31 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

32 No. 1-18-1834

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

33 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.

34 No. 1-18-1834

¶ 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.