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Mohammad v. Department of Financial & Professional Regulation

Court of Appeals of Illinois, First District, Fifth Division

June 14, 2013

MOHAMMAD VALI MOHAMMAD, Plaintiff-Appellant,

Appeal from the Circuit Court of Cook County 11 CH 11663 Honorable Franklin U. Valderrama, Judge Presiding

Justices Howse and Taylor concurred in the judgment and opinion.



¶1 Plaintiff Mohammad Vali Mohammad was a registered mortgage loan originator with defendant Illinois Department of Financial and Professional Regulation (Department) when he applied for license renewal and disclosed that he had been convicted of mail fraud in 2000.[1] The Department disciplined Vali Mohammad by suspending his license for 120 days, fining him $1, 000, and placing him on two years' probation; however, Vali Mohammad completed the discipline without incident and the Department renewed his annual license in 2007, 2008, and 2009. At issue here is the Department's denial of Vali Mohammad's 2010 application for renewal based on a 2009 amendment to the Residential Mortgage License Act of 1987 (205 ILCS 635/7-3 (West 2010)) (Mortgage License Act), which indicates individuals with felony convictions for crimes involving "fraud" are ineligible for mortgage loan originator licensing. Vali Mohammad challenged the Department's denial in an administrative proceeding, arguing in part that his state and federal constitutional rights were being violated, but he was unsuccessful in that proceeding as well as in an administrative review action in the circuit court of Cook County. He appeals, contending the 2009 law should not be applied retroactively.

¶ 2 The record indicates that Vali Mohammad immigrated to the United States in 1971 and found work as a janitor at a plastic injection molding company in Des Plaines, Illinois, but by 1978 had progressed to supervising 15 people in production at the manufacturing facility. Between 1980 and 1995, he advanced from foreman to vice president of operations of a similar company in Buffalo Grove, Illinois, named Courtesy Corporation/Med-Tek. He left Courtesy Corporation/Med-Tek in part because his 10% ownership in the company meant he worked a lot of overtime hours and was at the facility as many as six or seven days a week and in part because he did not feel that his contribution was appreciated. He moved on and became plant manager of an injection molder known as Stepco Corporation that had facilities in Arlington Heights and Streamwood, Illinois. During his career in the plastic molding field, Vali Mohammad was credited in industry publications for aggressively modernizing production and reducing waste.

¶ 3 During the last 5 years of his 15-year employment at Courtesy Corporation/Med-Tek, Vali Mohammad and two of the company's primary owners sold the company's plastic waste for personal profit instead of allowing it to be sent to a landfill. This sideline ended badly for Vali Mohammad. He indicates that a third major partner at Courtesy Corporation/Med-Tek was angered by his departure for the Stepco job, sued him for diverting the company's assets, and made as many as 40 complaints to federal authorities until they charged Vali Mohammad with one count of mail fraud pursuant to 18 U.S.C. § 1341 (2000). Vali Mohammad mortgaged his house and rental properties in order to return 100% of the profits and pay the plaintiff's attorney fees, and on September 7, 2000, he pled guilty to the felony charge and was sentenced to 18 months in prison. With good behavior, Vali Mohammad qualified for early release after serving 11 months.

¶ 4 Upon his release from prison in 2001, Vali Mohammad returned to his old job at Stepco, but because manufacturing jobs were moving overseas, he also started his own loan origination and real estate company in Mundelein, Illinois. By 2006, he had five employees, owned his commercial building and five rental homes, and was the recipient of two awards from the Chicago Association of Realtors and one from the chamber of commerce for the communities of Green Oaks, Libertyville, Mundelein, and Vernon Hills, Illinois.

¶ 5 As we indicated above, when Vali Mohammad applied for renewal of his mortgage loan originator license in either 2005 or 2006, he informed the Department of his mail fraud conviction and the Department determined, in its discretion, that this warranted a brief suspension of his license, a fine, and a short term of probation. Section 1-4(hh) of the Mortgage License Act defines a "loan originator" as "any natural person who, for compensation or in the expectation of compensation, either directly or indirectly makes, offers to make, solicits, places, or negotiates a residential mortgage loan" and section 1-3(a) specifies that no person "shall engage in the business of originating residential mortgage loans without first obtaining a license." 205 ILCS 635/1-3(a), 1-4(hh) (West 2010). Section 7-1 of the Mortgage License Act indicates loan originators must be registered and authorizes the creation of rules and regulations prescribing relevant qualifications, fees, examinations, education, supervision, enforcement, and other criteria. 205 ILCS 635/7-1 (West 2006). A long-standing companion administrative rule indicates applicants must disclose any criminal convictions or adverse civil judgments involving monies, breach of trust, moral turpitude, or misfeasance or malfeasance. See 38 Ill. Adm. Code 1050.2110(a)(6) (2005). The mail fraud statute is a broadly worded federal law which states in relevant part:

"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both." 18 U.S.C. 1341 (2000).

See Rubloff Development Group, Inc. v. SuperValu, Inc., 863 F.Supp.2d 732, 745 (N.D. Ill., 2012) (commenting that the "wire and mail fraud statutes are incredibly broad, and require only 'a willful act by the defendant with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for oneself or causing financial loss to another' " (quoting United States v. O'Connor, 656 F.3d 630, 644 (7th Cir. 2011)); United States v. Martin, 195 F.3d. 961, 965 (7th Cir., 1999) ("Concern has long been expressed that the failure of the 'mail fraud statute' to define 'fraud' invites prosecutorial overreaching.") John C. Coffee, The Metastasis of Mail Fraud: The Continuing Story of the "Evolution" of a White-Collar Crime, 21 Am. Crim. L. Rev. 1, 3 (1983) ("the reach of the statute continues to be extended further into sensitive areas not previously thought to be subject to the criminal law of fraud").

¶ 6 Vali Mohammad complied with all of the Department's disciplinary terms and for the next few years his applications for license renewal were routinely granted. However, on June 30, 2010, the Department notified Vali Mohammad by mail that section 7-3 of the Mortgage License Act had been amended effective July 31, 2009, that section 7-6(a)(1) indicates renewing licensees must meet the requirements of section 7-3, and that the Department had determined that the amendment disqualified Vali Mohammad from ever again being licensed as a loan originator. 205 ILCS 635/7-3, 7-6 (West 2010). As amended, section 7-3 of the Mortgage License Act provides in pertinent part:

"Issuance of license. The Director shall not issue a mortgage loan originator license unless the Director makes at a minimum the following findings:
(2) The applicant has not been convicted of, or pled guilty or nolo contendre to, a felony in a domestic, ...

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