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Craig B. Lamm v. Michael T. Mcraith

October 19, 2012

CRAIG B. LAMM,
PLAINTIFF-APPELLANT,
v.
MICHAEL T. MCRAITH, NOT INDIVIDUALLY, BUT AS DIRECTOR OF THE DIVISION OF INSURANCE OF THE DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION,
DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County No. 09 CH 25676 Honorable Lee Preston, Judge Presiding.

The opinion of the court was delivered by: Justice Palmer

JUSTICE PALMER delivered the judgment of the court, with opinion. Justices Gordon and Lampkin concurred in the judgment and opinion.

OPINION

¶ 1 Plaintiff Craig B. Lamm appeals from an order of the circuit court denying his amended complaint for administrative review and affirming the decision entered on remand by the Director of the Division of Insurance (Director) of the Department of Financial and Professional Regulation (Department) to revoke plaintiff's Illinois insurance producer's license. Plaintiff contends that the court erred in affirming the Director's decision because plaintiff's right to due process was violated when the Director revoked his license without a hearing on remand. We reverse and remand.

¶ 2 Plaintiff was licensed as an insurance producer in 1977. In 1981, he founded Magnum Insurance Agency (Magnum). On November 20, 2007, plaintiff pled guilty to filing a false individual federal income tax return for the calendar year 1999 by underreporting his taxable income in the amount of at least $76,020. Pursuant to the plea, plaintiff was sentenced to 30 days' imprisonment and 3 years of probation and ordered to pay a fine of $30,100. On February 26, 2008, the United States District Court amended the judgment against plaintiff to conform his sentence to the requirement of law that plaintiff be placed on supervised release following his incarceration. This amended judgment noted that plaintiff's criminal conduct "ended" on October 18, 2000.

¶ 3 In the meantime, on December 11, 2007, plaintiff tendered to his attorney a signed application for renewal of his insurance producer's license. In the application, plaintiff disclosed his felony conviction for filing a false tax return. On January 16, 2008, pursuant to section 500-95 of the Illinois Insurance Code (Code) (215 ILCS 5/500-95 (West 2006)), plaintiff's attorney sent a letter to the Director, notifying him of plaintiff's conviction. The Director received notice of plaintiff's conviction before the district court amended the judgment on February 26, 2008.

¶ 4 On September 11, 2008, the Director entered an "Order of Revocation," revoking plaintiff's insurance producer's license pursuant to sections 500-70(a)(2) and 500-70(a)(6) of the Code (215 ILCS 5/500-70(a)(2), (a)(6) (West 2006)). The Director found that plaintiff violated section 500-95 of the Code (215 ILCS 5/500-95 (West 2006)) by failing to report his felony conviction to the Department within 30 days of being convicted. The Director also found that plaintiff demonstrated "untrustworthiness, incompetence and financial irresponsibility" in violation of section 500-70(a)(8) of the Code (215 ILCS 5/500-70(a)(8) (West 2006)).

¶ 5 On September 29, 2008, plaintiff requested a hearing to challenge the order of revocation pursuant to section 500-70(b) of the Code (215 ILCS 5/500-70(b) (West 2006)). The Director granted plaintiff's request and a formal administrative hearing was held on February 5, 2009.

¶ 6 At the hearing, the Department presented a certified copy of the federal charge against plaintiff, alleging he had filed an individual income tax return for the calendar year 1999 and underreported his taxable income by at least $76,020. The Department also presented a certified copy of the judgment entered against plaintiff on November 20, 2007, attendant to plaintiff's plea of guilty to filing a false tax return. The Department further presented a certified copy of the amended judgment entered on February 26, 2008.

¶ 7 John Theis, an attorney, testified on behalf of plaintiff. Theis said he knew plaintiff professionally in connection with the federal tax case filed against him by the United States government. Theis said that the judgment entered on November 20, 2007, was amended because it was not an authorized disposition. As a result, on February 26, 2008, the court amended the judgment to conform with sentencing guidelines. Theis testified that February 26, 2008, was the date the judgment against plaintiff became final.

¶ 8 George San Jose testified to the positive impact plaintiff had on the Hispanic community in the Chicago area. San Jose opined that plaintiff, through Magnum, upgraded the employability of Hispanics in Chicago.

¶ 9 Plaintiff testified that the tax return that served as the basis of his guilty plea was filed in the year 2000. He said the return was done by his accountant and that he did not instruct the accountant on how to prepare the return. Plaintiff said when he was investigated by the Internal Revenue Service, he terminated the accounting firm that filed his taxes.

¶ 10 On cross-examination, plaintiff acknowledged that he had been audited before and had made accounting mistakes. He also acknowledged that Magnum had been investigated by the Department previously and fined with respect to those investigations.

ΒΆ 11 On March 30, 2009, the administrative law judge issued a written report making findings of fact, conclusions of law and recommendations. In the report, the judge found that plaintiff violated section 500-95 of the Code (215 ILCS 5/500-95 (West 2006)) by failing to report his conviction to the Director within 30 days after the entry date of the judgment. The judge noted that plaintiff was convicted in November 2007 and did not report his conviction to the Director until January 2008. The judge also noted that although the judgment against plaintiff was amended on February 26, 2008, plaintiff did not present evidence at the hearing as to when specifically the incorrect judgment was brought to the district court's attention so as to excuse plaintiff's failure to report the initial judgment to the Director in a timely fashion. The judge also found that plaintiff, by filing a false tax return, demonstrated incompetence and financial irresponsibility in the conduct of business in violation of sections 500-70(a)(6) and 500-70(a)(8) of the ...


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