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People Ex Rel. Edgar v. Miller

OPINION FILED NOVEMBER 4, 1982.

THE PEOPLE EX REL. JAMES EDGAR, SECRETARY OF STATE, ET AL., PLAINTIFFS-APPELLEES,

v.

JAMES HAROLD MILLER ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Sangamon County; the Hon. Richard J. Cadagin, Judge, presiding.

JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

Rehearing denied December 13, 1982.

A "Blue Sky Law" case.

Miller and Cooper were enjoined from illegally selling securities and their bank accounts were frozen.

We affirm.

Pursuant to the Illinois Securities Law of 1953 (Ill. Rev. Stat. 1981, ch. 121 1/2, pars. 137.1 through 137.19), the Secretary of State filed verified complaints for statutory injunction and for a temporary restraining order. The trial court issued an ex parte order restraining defendants — until further order of the court — from:

"Engaging in acts related to the selling or offering for sale of securities alleged to be tax-free municipal bonds or any other security in the State of Illinois except in compliance with the [Illinois Securities Law of 1953] as amended; [and from] removing any funds from any bank account, certificates of deposit, repurchase agreements or any other like account held in the name of the Defendants or for which the Defendants are named signatories in the State of Illinois."

The matter was continued to May 12, 1982, for hearing on the request for injunction.

Defendants were served with the complaint and the temporary restraining order on May 10, 1982. They did not file any responsive pleading, but did appear and participate in the May 12 evidentiary hearing.

Testimony at the hearing was exhaustive, but may be summarized. It was established that defendants Cooper and Miller were not registered under the Illinois Securities Law of 1953 as issuers, dealers or salespersons of securities or as investment advisors, and that Continental National Associates was not registered to issue any type of security in this State and did not employ any salespersons or dealers registered to sell such securities.

Blanche Lindgren testified at the hearing that she was 76 years old and had resided with her brother, Clarence, all her life. Sometime in the late summer or early fall of 1981, she and Clarence met defendants. They met several times over the next several months and a friendship of sorts developed. According to Lindgren, defendant Miller had held himself out as having some expertise in estate planning and when she voiced concern over planning for one of her relatives, Miller filled out financial statements and confidential information forms which she and her brother signed. These were admitted into evidence. Then, on November 4, 1981, Miss Lindgren gave Miller $88,791.16 because Miller had stated that he could get her "a lot better money on your investment." The money was to be invested in tax-free bonds — which the witness also referred to as tax-free municipal bonds, tax-exempt bonds, interest-exempt bonds or simply bonds.

Lindgren testified that she received a receipt from Miller for this money and later received some documents in a plastic envelope. She did not inspect the documents when she received them and no one explained them to her.

In January, Lindgren gave Miller additional funds totaling $30,000 for further investment in tax-free bonds. She never received any note or other documents in exchange for this money until after April 26, 1982.

Lindgren indicated that she had filled out an application for insurance and had given Miller a check for the premium, but that no insurance coverage was issued and her check had been returned. She also related that she and her brother made a $6,000 personal loan to defendant Miller and had ...


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