People ex rel. Fahner v. Colorado City Lot Owners and Taxpayers Ass'n

• Decision Date: 22 March 1985
• Docket Number: No. 59685,59685
• Citation: 86 Ill.Dec. 908,476 N.E.2d 409,106 Ill.2d 1
• Parties: , 86 Ill.Dec. 908 The PEOPLE ex rel. Tyrone FAHNER, Attorney General, Appellant, v. COLORADO CITY LOT OWNERS AND TAXPAYERS ASSOCIATION et al. (Mark P. Binstein, Appellee).
• Court: Illinois Supreme Court

Page 409

476 N.E.2d 409

106 Ill.2d 1, 86 Ill.Dec. 908

The PEOPLE ex rel. Tyrone FAHNER, Attorney General, Appellant, v. COLORADO CITY LOT OWNERS AND TAXPAYERS ASSOCIATION et al. (Mark P. Binstein, Appellee).

No. 59685.

Supreme Court of Illinois.

March 22, 1985.

Neil F. Hartigan, Atty. Gen. of Ill., Kathleen Hogan Morrison, Asst. Atty. Gen., for appellant.

WARD, Justice.

This appeal is from an order of the circuit court of Cook County which modified a consent decree entered earlier, the terms of which had been agreed upon by the Attorney General, Mark P. Binstein and the Colorado City Lot Owners and Taxpayers Association. The Attorney General appealed, contending that the court was without authority to modify a consent decree without the consent of the parties. The appellate court affirmed (119 Ill.App.3d 691, 75 Ill.Dec. 122, 456 N.E.2d 943), and we allowed the Attorney General's petition for leave to appeal under our Rule 315 (87 Ill.2d R. 315). The respondent Binstein filed a brief pro se in the appellate court. No brief for the respondent has been filed in this court.

On December 20, 1978, the Attorney General filed a complaint in the circuit court seeking injunctive and other relief against Mark Binstein and a nonprofit corporation, the Colorado City Lot Owners and Taxpayers Association (Colorado Association). The complaint alleged that Binstein, a resident of New Jersey, had violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill.Rev.Stat.1977, ch. 121 1/2, par. 261 et seq.) (the Act) by misrepresenting and by failing to disclose material facts in soliciting Chicago-area owners of lots in Colorado City, Colorado, to join an action pending in the United States district court at Chicago against Great Western Cities, the developer of Colorado City, a residential complex. On February 2, 1979, a consent decree agreed to by the Attorney General and Binstein was entered in the circuit court. The decree described Binstein's complained-of activities and enjoined their practice. The decree set out, inter alia, that Binstein had represented to Colorado Association members and to members of similar associations that he was an expert in investigations of land fraud, though he simply had been active in organizing lawsuits against land developers; that Binstein had claimed to have successfully exposed fraudulent land developers in lawsuits, recovering significant amounts for the lot owners, though those suits were in fact only pending; that Binstein also told association members that the research needed to uncover land fraud involved great expense; and that, from the funds collected for research, he would receive only a consultation fee. The consent decree recited that Binstein had been enjoined from operating in Indiana after a court there had found that he had misappropriated $190,000 from a similar association's funds; that he had stipulated with law-enforcement authorities in Wisconsin that he would not solicit funds in that State as an agent for property owners; and that he had been convicted in New York for securities fraud in 1971. The decree stated that Colorado Association members and members of other associations never were advised of the actions taken against Binstein in these jurisdictions. Further, Binstein's research had never, despite his representations, been proved to be of value in exposing land fraud.

The consent decree also contained injunctive provisions. Specifically, article V, section C, of the decree enjoined Binstein from organizing or establishing any association for the purpose of soliciting prospective litigants against any land developer without first entering into an assurance of voluntary compliance with the consumer fraud division of the Attorney General's office. Section D of article V enjoined Binstein from soliciting, collecting or disbursing funds on behalf of any such association formed to solicit prospective litigants.

An assurance of voluntary compliance is a device used by the Attorney General as an aid to the enforcement of the Consumer Fraud and Deceptive Business Practices Act. It is an assurance given the Attorney General that the person giving the assurance will desist from the conduct of which the Attorney General complains. The concerned statute provides that the Attorney General "may accept an Assurance of Voluntary Compliance with respect to any method, act or practice deemed to be violative of the Act from any person who has engaged in, is engaging in, or was about to engage in such method, act or practice. Evidence of a violation of an Assurance of Voluntary Compliance shall be prima facie evidence of a violation" of the Act. Ill.Rev.Stat.1977, ch. 121 1/2, par. 266.1.

After the consent decree was entered, the parties engaged in negotiations in an attempt to reach mutually acceptable assurances of voluntary compliance regarding Binstein's involvement with a number of property-owner associations. The negotiations were acrimonious. Each side alleged bad faith in the other, repeatedly interrupting the negotiations as each sought relief from the court. On January 31, 1981, the Attorney General filed a petition for a rule to show cause alleging that Binstein had violated the consent decree in that he had become involved in the Rotonda Lot Purchasers Association (Rotonda), an organization comprised in part of Illinois residents owning property in the Rotonda development in Florida, without first securing an assurance of voluntary compliance. The court, though critical of what it considered to be the Attorney General's lack of diligence in negotiating an assurance of voluntary compliance with Binstein as to Rotonda, found Binstein to be in contempt of court and fined him. (People ex rel. Fahner v. Colorado Lot Owners (1982), 108 Ill.App.3d 266, 63 Ill.Dec. 910, 438 N.E.2d 1273.) The parties subsequently, on March 27, 1981, entered into an assurance of voluntary compliance as to Rotonda.

On June 1, 1981, Binstein notified the Attorney General that he wished to enter into an assurance of voluntary compliance regarding his proposed investigation into another Florida land development, Palm Coast. Binstein requested that the assurance be identical in terms with that negotiated for the Rotonda development, but the Attorney General refused to approve an identical assurance until more information concerning Palm Coast was received. The Attorney General also stated that he would require, before an assurance would be approved, that Binstein disclose to Palm Coast association members his conviction in New York for securities fraud and provide them with an accurate report of the status of the similar litigation in which he was involved. On September 22, 1981, Binstein, under the consent decree, filed a petition for a rule to show cause against the Attorney General and an assistant Attorney General, alleging that they had unreasonably withheld an assurance of voluntary compliance for Palm Coast. During the hearings on the petition, the court was critical of the parties for bringing grievances, it said, without justiciable issues before the court and suggested that, absent any additional allegations of wrongdoing, Binstein should be given an assurance of voluntary compliance materially similar to the Rotonda assurance. Shortly thereafter, the parties agreed upon and executed an assurance of voluntary compliance in regard to Palm Coast based on the Rotonda assurance, and Binstein's petition for a rule to show cause was dismissed.

In May of 1982, Binstein sought to enter an assurance of voluntary compliance concerning Rio Communities, a development in New Mexico. He requested that the assurance be identical to the Palm Coast assurance. Before an assurance for Rio Communities could be negotiated, however, the Attorney General filed a petition for a rule to show cause alleging that Binstein, in violation of section C of the consent decree, had taken control of the Colorado Association by attempting to determine litigation strategy and by proposing unauthorized settlements in a Federal suit brought by the Colorado Association against Great Western Cities. The Attorney General also charged that Binstein had transferred $25,000 of funds of Colorado Association and a related association to his personal account. The Attorney General filed a motion to authorize his suspending negotiations with Binstein regarding any further assurances "until the Attorney General and the court are satisfied that the interests of the public will be served in such...