Appeal from the Circuit Court of Cook County. Honorable Everette A. Braden, Judge Presiding.
Released for Publication December 21, 1995.
The Honorable Justice Sheila M. O'brien delivered the opinion of the court: Hoffman, P.j., and Cahill, J., concur.
The opinion of the court was delivered by: O'brien
JUSTICE SHEILA M. O'BRIEN delivered the opinion of the court:
Plaintiff, Richard F. Schweig, appeals the circuit court's order affirming the decision of the Director of Insurance of the State of Illinois(hereinafter Director) to revoke plaintiff's insurance producer's license. We affirm.
On August 7, 1990, the Director entered an order revoking plaintiff's insurance producer's license pursuant to section 505.1(a)(6) of the Illinois Insurance Code, which states "any license issued under this Article may be suspended or revoked, *** if the Director finds that the licensee *** has, in the transaction of business under his license, used fraudulent, coercive or dishonest practices, or has demonstrated incompetence, untrustworthiness or financial irresponsibility." (215 ILCS 5/505.1(a)(6) (West 1992).) The Director's order of revocation stated that plaintiff had demonstrated incompetence, untrustworthiness and financial irresponsibility by being convicted on five counts of violating section 12A of the Illinois Securities Law of 1953. That section provides "it shall be a violation of the provisions of this Act for any person: *** to offer or sell any security except in accordance with the provisions of this Act." 815 ILCS 5/12A (West 1992).
On August 29, 1990, plaintiff filed a request for a hearing to object to the order of revocation. Plaintiff contended the Director erred in revoking his insurance producer's license because (a) his violations of section 12A of the Securities Act did not demonstrate incompetence, untrustworthiness, or financial irresponsibility; and (b) even if his securities offenses did demonstrate incompetence, untrustworthiness, or financial irresponsibility, they did not occur "in the transaction of business under his license" as required by section 505.1(a)(6) of the Code before an insurance producer's license can be revoked.
The Illinois Department of Insurance (hereinafter defendant) countered that section 505.1(a)(6) permits the revocation of an insurance producer's license for any incompetence, untrustworthiness, or financial irresponsibility, even if it does not occur in the transaction of business under his license. Further, defendant argued that plaintiff's securities offenses demonstrated sufficient incompetence, untrustworthiness, or financial irresponsibility to justify the Director's decision to revoke plaintiff's license.
At the hearing held on October 26, 1990, plaintiff testified he received his insurance producer's license in 1983. Plaintiff also testified he ventured into the investments field and traded securities independently of his insurance business. Unfortunately, "the trading went poorly" and his investors lost money. In an effort to assist the investors, who were his close friends, plaintiff deposited some of his own money with them. However, he lost those funds too.
Plaintiff testified that on May 30, 1990, he pleaded guilty to an amended indictment charging him with violating section 12A of theSecurities Law and, as part of his sentence, he was ordered to pay $35,000 in restitution. Plaintiff does not know to whom he is paying restitution, though, because "it [is] run through the Du Page County probation office and they don't tell [him] any details." Plaintiff also testified he pleaded guilty because he felt bad for the people who had lost money; however, he does not believe he actually violated the Securities Law.
Defendant entered into evidence the original indictment against plaintiff charging him with five counts of violating section 12F of the Securities Law, which bars "[engaging] in any transaction, practice or course of business in connection with the sale or purchase of securities which works or tends to work a fraud or deceit upon the purchaser or seller thereof." (815 ILCS 5/12F (West 1992).) The indictments alleged that in connection with various partnerships, plaintiff "failed to utilize the proceeds of such sale ofsecurities as represented and instead converted such proceeds *** thereby committing a fraud upon [various partners in those partnerships.]" In those five counts, plaintiff was accused of defrauding his clients a total amount of approximately $32,000.
Defendant informed the hearing officer that plaintiff eventually pleaded guilty to an amended indictment charging him with violating section 12A of the Securities Law, which prohibits "[offering] or [selling] any security except in accordance with the provisions of this Act." Defendant also entered into evidence the trial court's sentencing orders, which placed plaintiff on probation with the following conditions: plaintiff must immediately pay $10,000 in restitution and another $5,000 per year for five years in equal monthly installments; plaintiff must not engage in any business authorized or regulated by the Securities Act; and plaintiff must perform 100 hours of community service.
The hearing officer issued his findings of fact and conclusions of law on January 22, 1991. First, the hearing officer rejected the argument that the Director could revoke plaintiff's license under section 505.1(a)(6) only if plaintiff's act of incompetence, untrustworthiness or financial irresponsibility were committed in the transaction of business under his license. The hearing officer interpreted section 505.1(a)(6) as allowing the revocation of plaintiff's license for any acts of incompetence, untrustworthiness or financial irresponsibility.
Second, the hearing officer made factual findings that plaintiff pleaded guilty on or about May 30, 1990, to five counts of violating section 12A of the Securities Law by "[engaging] in a transaction in connection with the sale of securities which tended to work a fraud or deceit in that [plaintiff] failed to utilize the proceeds of such sale of securities as represented and instead converted such ...