WISAM 1, Inc. v. Illinois Liquor Control Commission , 2014 IL 116173 ( 2014 )

Illinois Official Reports
Supreme Court
WISAM 1, Inc. v. Illinois Liquor Control Comm’n, 2014 IL 116173
Caption in Supreme WISAM 1, INC., d/b/a Sheridan Liquors, Appellant, v. ILLINOIS
Court: LIQUOR CONTROL COMMISSION et al., Appellees.
Docket No. 116173
Filed May 22, 2014
Rehearing denied September 22, 2014
Held Where municipal liquor licensees were barred from activity prohibited
(Note: This syllabus by federal law and a liquor store’s license was revoked after its
constitutes no part of the manager’s conviction on federal money laundering charges, a claim of
opinion of the court but denial of due process was rejected where there was no challenge to the
has been prepared by the appropriateness of the penalty or the sufficiency of the evidence and
Reporter of Decisions where there had been a meaningful opportunity to be heard at every
for the convenience of stage by presenting relevant evidence and defenses.
the reader.)
Decision Under Appeal from the Appellate Court for the Third District; heard in that
Review court on appeal from the Circuit Court of Peoria County, the Hon.
Michael E. Brandt, Judge, presiding.
Judgment Affirmed.
Counsel on Daniel G. O’Day, Daniel Hanuska, and Robert J. Hanauer, of Cusack,
Appeal Gilfillan & O’Day, LLC, of Peoria, for appellant.
Lisa Madigan, Attorney General, of Springfield (Carolyn E. Shapiro,
Solicitor General, and Christopher M.R. Turner, Assistant Attorney
General, of Chicago, of counsel), for appellee Illinois Liquor Control
Commission.
Sonni Choi Williams, Interim Corporation Counsel, for appellees City
of Peoria et al.
Justices JUSTICE THEIS delivered the judgment of the court, with opinion.
Chief Justice Garman and Justices Freeman, Thomas, Kilbride,
Karmeier, and Burke concurred in the judgment and opinion.
OPINION
¶1 This appeal arises out of a decision by the Illinois Liquor Control Commission, which
affirmed the decision of the deputy local liquor control commissioner of the City of Peoria
(Local Commissioner) to revoke the liquor license of WISAM 1, Inc., doing business as
Sheridan Liquors (Sheridan Liquors). The circuit court of Peoria County and the appellate
court affirmed the decision on administrative review. 2013 IL App (3d) 110607-U. At issue is
whether Sheridan Liquors was denied due process at the revocation proceeding before the
Local Commissioner. For the following reasons, we hold that its due process rights were not
violated and affirm the decision of the Commission.
¶2 BACKGROUND
¶3 Since 2002, Sheridan Liquors operated a liquor store at 2415 North Sheridan Road in
Peoria, Illinois, and held a valid liquor license issued by the City of Peoria (the City). Adnan
Asad was the president and owner of the business. His brothers, Mohamed (Mike) and Jalal
Asad, managed and operated the business.
¶4 In 2009, Mike and Jalal were indicted in federal court on five counts of violating or
conspiring to violate the Money Laundering Control Act of 1986 (31 U.S.C. § 5324(a)(3)
(2006)).1 That Act requires a bank involved in a cash transaction exceeding $10,000 to file a
report with the Secretary of the Treasury. 31 U.S.C. § 5313(a) (2006); 31 C.F.R. § 103.22(b)
(2009). The purpose of this requirement is to ferret out criminal activity hidden through money
laundering and other financial devices. United States v. MacPherson, 424 F.3d 183, 188 (2d
Cir. 2005). The Act further makes it illegal to break up a single transaction above the reporting
1
Jalal fled the country prior to trial and is currently a wanted fugitive. www.interpol.int/
notice/search/wanted/2009-11204. His conduct is not at issue here.
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threshold into two or more separate transactions for the purpose of evading the reporting
requirement. 31 U.S.C. § 5324(a)(3) (2006); 31 C.F.R. § 103.11(gg) (2009).
¶5 The indictment alleged that Mike and Jalal were involved in the management and operation
of Sheridan Liquors, and that as part of the business, in addition to selling liquor and other
products, they cashed checks for a fee. As a result of the check-cashing operation, they needed
a substantial amount of cash. The cash generated from the sale of liquor and other products was
insufficient to provide the amounts needed to cover the checks that were being cashed. From
June 2003 to March 2007, they withdrew large amounts of cash from Sheridan Liquors’ bank
account by writing checks payable to cash and, knowing of the federal reporting requirements,
structured the withdrawal of more than $4 million from that account to evade the reporting
requirements. For example, the indictment alleged that on the same date in 2006, two checks
were written for $9,500 on Sheridan Liquors’ account at different branch offices in Peoria. The
next day, a $9,800 and a $9,000 check were cashed at these same branch offices. The next
month, eight checks were cashed in separate transactions each in increments of $9,000, $9,500,
and $9,800 at various branch offices.
¶6 In June 2010, a jury found Mike guilty on all five counts in the federal indictment. He was
subsequently sentenced to three years in prison. He did not appeal.
¶7 One month later, the City of Peoria issued a notice of hearing to Sheridan Liquors charging
a violation of section 3-28 of the Peoria Municipal Code (the Code). That section prohibits, in
relevant part, any liquor licensee or its agent or employee from engaging in any activity or
conduct in or about the licensed premises that is prohibited by federal law. Peoria Municipal
Code § 3-28 (adopted Apr. 20, 1993). The City alleged that between 2003 and 2007, Mike, as
Sheridan Liquors’ agent or employee, engaged in illegal activity in or about the premises by
conspiring to unlawfully structure financial transactions related to Sheridan Liquors’
operations to evade the federal reporting requirements, as charged in the federal indictment.
¶8 On August 4, 2010, an administrative hearing was held before the Local Commissioner. At
the outset of the hearing, the City entered into evidence a stipulation between the parties. The
stipulation, which was read into the record, provided as follows:
“1. At all dates and time[s] as indicated in the notice of charge against the licensee,
[Mike] Asad, was acting as a manager or employee or agent of the licensee.
2. The attached Exhibit A is an accurate and true copy of the indictment against
[Mike] Asad in the federal criminal case 09-10110 before the U.S. Central District
Court.
3. That [Mike] Asad was found guilty and convicted by a jury for committing
federal criminal offenses, counts 1 through 5, as charged in [the] indictment contained
in the federal criminal case 09-10110 before the U.S. Central District Court.
4. The federal criminal offenses of which [Mike] Asad was convicted all related to
the financial and business operations of Sheridan Liquors located [at] 2415 N.
Sheridan, Peoria, Illinois.
5. That as part of Sheridan Liquors’ business, [Mike] Asad and other employees of
Sheridan Liquor[s] cashed checks for its customers.”
¶9 In addition to the stipulation and the attached indictment, the City introduced the three
volume transcript from the federal criminal trial. Sheridan Liquors objected to the admission of
the transcripts because the business and its owner, Adnan, were not parties to the criminal
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proceeding against Mike and had no opportunity to defend in that proceeding or cross-examine
those witnesses. The Local Commissioner admitted the evidence over objection.
¶ 10 After entering into evidence the stipulation, the attached indictment, and the trial
transcripts, the parties made what they referred to as “opening statements.” Sheridan Liquors
maintained that Mike’s federal conviction should not have preclusive effect against it in this
case because Adnan, the owner, was never given an opportunity to present a defense in the
federal criminal proceeding. Counsel stated that Adnan would seek to introduce evidence that
he had a bona fide reason for structuring the transactions in amounts under the reporting
requirement. Counsel additionally maintained that the indictment provided only that the
transactions that were the subject of the federal offense occurred at the bank and not in or about
the premises as required under section 3-28 of the Code. He provided the Local Commissioner
with a packet of various ordinances and case law to support his arguments.
¶ 11 After responding to Sheridan Liquors’ arguments, the City then sought what it called a
“directed finding” that Mike, as Sheridan Liquors’ agent, violated section 3-28 of the Code
based upon the evidence it had presented.2 The Local Commissioner made an initial finding on
the record that “there is a clear violation [of section 3-28] based upon the federal indictment.”
He later clarified that his finding was based on the federal conviction. Thereafter, the following
colloquy took place:
“MR. O’DAY [counsel for Sheridan Liquors]: Can we present some evidence
about the case, or are we precluded?
MR. TURNER [Local Commissioner]: Well, since this is a more relaxed
atmosphere, I don’t have a problem with you presenting any additional information.”
¶ 12 Sheridan Liquors introduced various items of evidence into the record. It offered some
insurance policy declarations pages which purported to show relevant business insurance
coverage with limits of $10,000 for cash on the premises. It explained the purpose in
introducing these policies was to support a defense theory that the reason for structuring the
transactions below $10,000 was not to evade the reporting requirements but, instead, because
the insurance coverage on the premises was limited to $10,000 cash on hand. Sheridan Liquors
requested that the policies be admitted into evidence,3 and sought a finding that they were not
admitted at the federal trial. It additionally introduced a subpoena for Adnan in the federal
criminal trial, but explained that Adnan was never called to testify. It also asked the court to
take judicial notice of various sections of the Code, and then stated, “that’s all I have.”
¶ 13 The Local Commissioner allowed Sheridan Liquors the opportunity to make a further
record. Sheridan Liquors presented various legal arguments, including that the finding of guilt
against the agent should not be binding on the licensee in the revocation proceeding. The City
responded to those arguments, and the Local Commissioner addressed those legal arguments.
A directed finding is generally made by a defendant at the close of the plaintiff’s case where the
2
defendant contends the plaintiff has not established a prima facie case. See 735 ILCS 5/2-1110 (West
2010). We will refer to it simply as a finding.
3
The record reflects that some of the policy declarations pages covered periods outside the time
period alleged in the City’s notice of hearing and the indictment, and provided coverage limits of only
$5,000 inside the premises which was inconsistent with the defense theory.
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¶ 14 The parties then presented evidence related to the penalty phase of the proceedings. In
support of the revocation of the liquor license as a penalty for the violation, the City presented
testimony from a neighbor and several local police officers regarding loitering, litter, and
potential drug use around the store. Additionally, the City entered into evidence a 2005 order
from the local liquor commissioner, finding that Sheridan Liquors had sold liquor to a minor in
violation of section 3-28 of the Code. Counsel for Sheridan Liquors then cross-examined each
of the witnesses and entered into evidence letters from the Peoria police department indicating
that the establishment had subsequently complied with law enforcement with regard to the sale
of alcohol to minors.
¶ 15 In its defense, Sheridan Liquors presented the testimony of Adnan. In response to a
question from counsel, Adnan testified that he was familiar with “the insurance declarations
pages that we’ve put into evidence.” Adnan stated that he was familiar with the insurance
provisions which covered up to $10,000 if money was stolen in a robbery at the store. Adnan
further reiterated that he attempted to limit the amount of cash on hand in the store to less than
$10,000 for insurance and safety purposes and denied that it was to avoid currency transaction
reporting requirements. Adnan acknowledged that the store had a sign indicating that it cashed
paychecks and that the liquor store employees would cash checks for its customers in order for
the customers to have money to spend in the store.
¶ 16 At the conclusion of the two-and-a-half-hour hearing, the Local Commissioner made the
following statement:
“I don’t take the City’s request for revocation lightly. So what I want to do is I want
to review all of the testimony, the exhibits, and the evidence that has been presented
here today over the next few days and render a decision that is based on the findings of
fact and the information that was presented here today.”
¶ 17 Thereafter, the Local Commissioner issued a written order revoking Sheridan Liquors’
license. Therein, he made the following findings of fact. Based on the stipulation, Mike was
acting as a manager and employee or agent of Sheridan Liquors at all dates and times indicated
in the notice of hearing, Mike was found guilty by a jury of committing counts I through V as
charged in the federal indictment in the federal case, and the federal criminal offenses for
which Mike was convicted all related to the financial and business operations of Sheridan
Liquors. Additionally, the Local Commissioner found that, based on the testimony presented
during the federal trial, the operation of Sheridan Liquors was “intricate and central to the
motive, means and manner in which the federal criminal offenses were committed.”
¶ 18 Sheridan Liquors appealed the decision to the Illinois Liquor Control Commission (the
Commission), pursuant to section 7-9 of the Liquor Control Act of 1934 (235 ILCS 5/7-9
(West 2010)). After extensive argument by both parties, the Commission affirmed the
revocation order and denied Sheridan Liquors’ petition for rehearing. The Commission found
that the Local Commissioner proceeded in a lawful manner by providing the necessary due
process to be heard and by basing his order on section 3-28 of the Code. The Commission
further found that the findings of the Local Commissioner were supported by substantial
evidence in light of the whole record. Specifically, it found that the stipulation established all
of the elements of a violation of the ordinance, and that the federal transcripts confirmed that
the premises were central to the criminal activity. Additionally, the Commission found that the
conduct was fairly related to the control of liquor, and that the transcripts were properly
admitted to identify the location of the illegal act committed by Mike.
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¶ 19 Thereafter, Sheridan Liquors filed a complaint for administrative review in the circuit court
of Peoria County pursuant to the Administrative Review Law (235 ILCS 5/7-11 (West 2010);
735 ILCS 5/3-101 et seq. (West 2010)). Therein, Sheridan Liquors alleged, inter alia, that the
Local Commissioner violated its right to procedural due process when he summarily
determined its liability without allowing it the opportunity to present a defense or be otherwise
heard. After a hearing, the circuit court affirmed the decision of the Commission. The court
concluded that Sheridan Liquors had been provided with due process, and that there was
sufficient competent evidence in the record to support the Commission’s decision.
¶ 20 The appellate court affirmed. Although it found that Sheridan Liquors “was not given the
opportunity to present its defense in the normal manner, or to cross-examine witnesses,” it
found that Sheridan Liquors could not show prejudice caused by any lack of due process. 2013
IL App (3d) 110607-U, ¶ 14. It based its determination on the facts that Sheridan Liquors had
proper notice, attended the hearing, and entered into a stipulation that the Commission found
was sufficient evidence to support the revocation. Id. The appellate court further found that the
admission of the federal transcripts was not prejudicial error where there was sufficient
competent evidence to support the revocation. Id. Justice McDade dissented. She would have
held that there was insufficient competent evidence to support a finding that the prohibited
conduct occurred in or about the premises, it was an abuse of discretion for the Local
Commissioner to admit the federal transcripts, and their improper admission resulted in
significant prejudice. Id. ¶¶ 27-29 (McDade, J., dissenting).
¶ 21 This court allowed Sheridan Liquors’ petition for leave to appeal. Ill. S. Ct. R. 315(a) (eff.
July 1, 2013).
¶ 22 ANALYSIS
¶ 23 In its brief before this court, Sheridan Liquors raises three issues: (1) the Local
Commissioner denied it due process; (2) the Local Commissioner’s findings were not
supported by substantial evidence; and (3) the Local Commissioner’s decision to revoke its
license was not supported by the record. As a preliminary matter, Sheridan Liquors concedes
that, whether the revocation was an appropriate penalty was an issue not raised below or in its
petition for leave to appeal and is therefore forfeited. People v. Fitzpatrick, 2013 IL 113449,
¶ 26 (issues not raised in the petition for leave to appeal are forfeited); Vine Street Clinic v.
HealthLink, Inc., 222 Ill. 2d 276, 301 (2006) (arguments not raised in either the circuit or
appellate court are forfeited). Additionally, we find that Sheridan Liquors did not raise a
sufficiency of the evidence claim in its petition for leave to appeal. Accordingly, that issue is
also forfeited. Fitzpatrick, 2013 IL 113449, ¶ 26. Therefore, we confine our consideration to
the issue of due process, which was preserved for review. To the extent that the sufficiency of
the evidence is relevant to Sheridan Liquors’ due process contentions, we will consider it in
that context.
¶ 24 Pursuant to section 7-11 of the Liquor Control Act (235 ILCS 5/7-11 (West 2010)),
decisions of the Commission are subject to judicial review in accordance with the provisions of
the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2010)). Where judicial
review of an agency’s decision is governed by the Administrative Review Law, “[t]he
applicable standard of review, which determines the degree of deference given to the agency’s
decision, depends upon whether the question presented is one of fact, one of law, or a mixed
question of law and fact.” AFM Messenger Service, Inc. v. Department of Employment
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Security, 198 Ill. 2d 380, 390 (2001). Whether Sheridan Liquors was provided with the
necessary due process is a question of law which this court reviews de novo. Lyon v.
Department of Children & Family Services, 209 Ill. 2d 264, 271 (2004).
¶ 25 The fourteenth amendment prohibits states from depriving a person of life, liberty, or
property, without due process of law. U.S. Const., amend. XIV. Initially, we note that although
a liquor license is generally regarded as a privilege, and not a property right under the Liquor
Control Act (235 ILCS 5/6-1 (West 2010)), once issued, it becomes a property right in a
functional sense for due process purposes because it is only revocable for cause. Club Misty,
Inc. v. Laski, 208 F.3d 615, 619 (7th Cir. 2000); Lopez v. Illinois Liquor Control Comm’n, 120
Ill. App. 3d 756, 760 (1983) (“a licensee must be afforded the basic rights of procedural due
process”).
¶ 26 Due process is “a flexible concept and requires only such procedural protections as
fundamental principles of justice and the particular situation demand.” Abrahamson v. Illinois
Department of Professional Regulation, 153 Ill. 2d 76, 92 (1992). Thus, in administrative
matters, due process is satisfied when the party concerned has the “opportunity to be heard in
an orderly proceeding which is adapted to the nature and circumstances of the dispute.” Obasi
v. Department of Professional Regulation, 266 Ill. App. 3d 693, 702 (1994). A fair hearing
includes the right to be heard, the right to cross-examine adverse witnesses, and impartiality in
ruling on the evidence. Abrahamson, 153 Ill. 2d at 95.
¶ 27 Nevertheless, the process due in an administrative setting does not necessarily require a
proceeding akin to a judicial proceeding, and not all judicial procedures are appropriate in
administrative proceedings. Stratton v. Wenona Community Unit District No. 1, 133 Ill. 2d
413, 433 (1990); Desai v. Metropolitan Sanitary District of Greater Chicago, 125 Ill. App. 3d
1031, 1033 (1984). Administrative proceedings are less formal and technical than judicial
proceedings. Id.
¶ 28 With these principles in mind, we consider Sheridan Liquors’ contentions of error. It raises
three due process arguments: (1) the Local Commissioner should have allowed it to relitigate
Mike’s federal criminal conviction; (2) the Local Commissioner made a premature finding on
its liability, denying it a meaningful opportunity to refute the City’s evidence; and (3) the Local
Commissioner improperly admitted the federal transcripts as substantive evidence, prejudicing
its ability to defend.
¶ 29 Right to Relitigate
¶ 30 We reject Sheridan Liquors’ argument that the Local Commissioner denied it due process
by not allowing it to relitigate Mike’s criminal conviction. Sheridan Liquors misunderstands
the nature of its liability in these proceedings. When a licensee accepts the privilege of a liquor
license, he impliedly agrees to abide by the provisions of the Liquor Control Act. A liquor
license may be revoked where the licensee has violated any valid local ordinance as long as the
violation is fairly related to liquor control. 235 ILCS 5/7-5 (West 2010); Sip & Save Liquors,
Inc. v. Daley, 275 Ill. App. 3d 1009, 1020 (1995) (citing Lopez, 120 Ill. App. 3d at 761).
¶ 31 Additionally, section 10-3 of the Liquor Control Act specifically provides:
“Every act or omission of whatsoever nature constituting a violation of any of the
provisions of this Act, by any officer, director, manager or other agent or employee of
any licensee, shall be deemed and held to be the act of such employer or licensee, and
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said employer or licensee shall be punishable in the same manner as if said act or
omission had been done or omitted by him personally.” 235 ILCS 5/10-3 (West 2010).
¶ 32 Thus, the Act holds the licensee strictly accountable for any conduct of its agent which
constitutes a violation of the Act. 235 ILCS 5/10-3 (West 2010). The purpose of holding a
licensee to a higher standard is to ensure that the holder of a license for alcoholic beverages has
an affirmative responsibility to see that his liquor business is not conducted by its employees in
violation of the law. Nappi v. License Appeal Comm’n, 50 Ill. App. 3d 329, 330 (1977)
(recognizing that the legislature sought to ensure the licensee’s accountability for violations of
the Act, knowing that a liquor licensee may conduct business through agents and employees).
¶ 33 Illinois case law has consistently applied the Act to hold the licensee strictly accountable
for the conduct of its agent where the violation fairly relates to liquor control and is on the
licensed premises. See, e.g., Byrne v. Stern, 103 Ill. App. 3d 601, 606 (1981) (“the law imposes
strict liability upon the licensee for the action or conduct of his agents or employees on the
premises regardless of whether the licensee has exercised control over the conduct of his
employees or agents”); Maldonado v. License Appeal Comm’n, 100 Ill. App. 3d 639, 641
(1981) (licensee accountable for the actions of his employee in performing an act of
prostitution on the premises); Cox v. Daley, 93 Ill. App. 3d 593, 597 (1981) (licensee was
accountable for agent’s battery with the use of a deadly weapon upon a patron); Daley v.
Ferguson, 21 Ill. App. 3d 888 (1974) (abstract of op.) (licensee was responsible for agent’s act
of allowing solicitation for prostitution on the premises); Daley v. Resnick, 5 Ill. App. 3d 683,
684 (1972) (recognizing that the acts of a licensee’s agent in violating a statute prohibiting the
solicitation for prostitution would be attributable to the licensee); Daley v. Richardson, 103 Ill.
App. 2d 383, 388 (1968) (licensee was strictly accountable for the assault committed by his
employee on the premises).
¶ 34 Here, the City sought to revoke Sheridan Liquors’ license based on its agent’s violation of
a liquor ordinance prohibiting illegal conduct on the premises. Section 3-28 of the Code
provides, in relevant part:
“No licensee or any *** agent or employee of such licensee shall engage in any
activity or conduct or suffer or permit any other person to engage in any activity or
conduct in or about the licensed premises which is prohibited by any *** law of the ***
United States.” Peoria Municipal Code § 3-28 (adopted Apr. 20, 1993).
Specifically, the City alleged that Mike, as an agent or employee of Sheridan Liquors, had
engaged in illegal activities on the licensed premises between June 2003 and March 2007, by
conspiring to structure financial transactions relating to the operation of the premises to evade
federal reporting requirements in violation of section 5324(a)(3) of the Money Laundering
Control Act (31 U.S.C. § 5324(a)(3) (2006)). Thus, the City sought to hold Sheridan Liquors,
the licensee, strictly accountable for the conduct of its agent, Mike.
¶ 35 The parties stipulated that Mike was an agent of the licensee, and stipulated that Mike was
found guilty by a jury in the federal criminal proceeding of conspiring to structure the financial
transactions to evade the federal reporting requirements. Sheridan Liquors does not dispute
that a licensee can be held accountable for the conduct of his agent. Rather, Sheridan Liquors
argues that, because it was not a party to the criminal proceeding, it should be able to challenge
Mike’s conviction in the administrative proceeding.
¶ 36 We disagree. To allow the licensee to relitigate its agent’s federal conviction would render
the strict accountability provisions of the Act meaningless. As indicated, the licensee stands in
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the shoes of his agent. 235 ILCS 5/10-3 (West 2010). Therefore, based on Mike’s criminal
conviction, Sheridan Liquors could not relitigate the fact that Mike’s conduct violated federal
law.
¶ 37 That is not to say that Sheridan Liquors’ claim, that it had a legitimate reason to structure
the financial transactions, was irrelevant. Rather, it was relevant to whether the revocation of
the license was an appropriate sanction as a consequence of Mike’s conviction. A licensee may
always challenge whether revocation is warranted, notwithstanding the conduct of its agent.
See, e.g., Byrne, 103 Ill. App. 3d at 606-07; Hanson v. Illinois Liquor Control Comm’n, 201 Ill.
App. 3d 974, 984 (1990). Indeed, Adnan, the owner of Sheridan Liquors, testified in this regard
during the penalty phase of the hearing. He testified that he had a legitimate business reason for
structuring the transactions under the reporting requirements, and that he directed his
employees to maintain less than $10,000 on the premises because of coverage limitations in his
business insurance policies and for safety reasons.
¶ 38 Not only was that evidence presented to the Local Commissioner for consideration, the
Commission was mandated to consider the whole record which included the testimony of
Adnan and the group insurance exhibits that were made part of the record in support of his
testimony in mitigation.4 See 235 ILCS 5/7-9 (West 2010). There is no indication that the
Local Commissioner or the Commission failed to consider that evidence for its proper purpose
as mitigation. The Local Commissioner affirmatively stated on the record that he was going to
“review all of the testimony, the exhibits, and the evidence that has been presented” prior to
rendering his decision whether to revoke the license. Accordingly, we reject Sheridan Liquors’
argument that due process required that it be allowed to relitigate Mike’s federal criminal
conviction in the revocation proceeding.
¶ 39 Premature Finding
¶ 40 We next consider Sheridan Liquors’ argument that the Local Commissioner entered a
premature finding, after opening statements, that it violated the liquor ordinance, denying it a
meaningful opportunity to refute and test the City’s evidence. Sheridan Liquors correctly
asserts that Mike’s conviction alone does not satisfy the necessary elements to support its
liability for a violation of section 3-28 of the Code. To prove a violation of section 3-28, the
City had to establish (1) an agency relationship; (2) that the agent committed a violation of
federal law; and (3) that the conduct occurred in or about the licensed premises. See Peoria
Municipal Code § 3-28 (adopted Apr. 20, 1993).
¶ 41 The record established that prior to any finding on its liability, Sheridan Liquors stipulated
to the agency relationship, stipulated that Mike was convicted of the federal offenses as
charged in the indictment, stipulated that the offenses for which Mike was convicted all related
to the financial and business operations of Sheridan Liquors, and stipulated that the business
operations included check cashing on the premises.
¶ 42 In People v. Woods, 214 Ill. 2d 455 (2005), this court explained the nature and effect of a
stipulation. A stipulation is “an agreement between parties or their attorneys with respect to an
issue before the [tribunal].” Id. at 468. They are looked upon favorably because they promote
the disposition of cases, simplify the issues, and save expense to the parties. Id. “ ‘A stipulation
4
We note that in its own pretrial memorandum before the Commission, Sheridan Liquors indicated
that the insurance policies were admitted into evidence.
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is conclusive as to all matters necessarily included in it’ [citation] and ‘[n]o proof of stipulated
facts is necessary, since the stipulation is substituted for proof and dispenses with the need for
evidence’ [citation].” Id. at 469. “Generally speaking, a [party] is precluded from attacking or
otherwise contradicting any facts to which he or she stipulated.” Id. Thus, based on the
stipulation, Sheridan Liquors was precluded from attacking or otherwise contradicting the fact
of an agency relationship and, as explained, was precluded from attacking the federal
conviction.
¶ 43 With respect to whether the conduct occurred in or about the premises, Sheridan Liquors
indeed had an opportunity to refute the City’s evidence on this element prior to any finding by
the Local Commissioner. Although Sheridan Liquors characterizes its statements as merely an
“opening statement,” we note that the statement was made after evidence was admitted by its
stipulation. Additionally, during Sheridan Liquors’ “opening,” it made various legal
arguments and introduced case law and other authority. Notably, Sheridan Liquors argued that
section 3-1 of the Code defines premises to mean the area within a building for which a license
to sell alcoholic liquor is issued. Peoria Municipal Code § 3-1 (adopted Apr. 20, 1993).
Sheridan Liquors further argued that the evidence presented by the City, namely the
indictment, indicated that the transactions relating to the conviction occurred at a bank.
Specifically, counsel made the following argument:
“And in the case of this federal indictment, which is part of the stipulation here, you
know, that’s already been entered without our objection by the City into evidence, if
you turn to, for example, Page 4 of the indictment, which is attached to the stipulation.
They say that these transactions occurred at National City Bank’s facilities in or near
Peoria, Illinois. These would be the transactions that were the subject of the federal
indictment that were supposedly structured improperly to be less than $10,000 at a
time.
And the premises of a bank of a liquor licensee would not be included within the
definition of premises in the city ordinance. Thus, when Section 3-28 refers to
premises, that would not include any conduct that occurs at a bank as opposed to on the
licensed premises themselves.”
Thus, the record reflects that prior to any finding that Sheridan Liquors violated the ordinance,
it had a meaningful opportunity to test, explain, and refute the City’s evidence by arguing that
the definition of premises in the Code did not include a bank, and by relying on the indictment
as evidence to support its position that the City did not meet its burden of proof to show that the
conspiracy occurred in or about the licensed premises. Therefore, we reject Sheridan Liquors’
contention that a premature finding was made, denying it an opportunity to refute the City’s
evidence.
¶ 44 Federal Transcripts
¶ 45 Finally, we consider Sheridan Liquors’ argument that it was denied due process when the
Local Commissioner admitted the federal transcripts as substantive evidence. Sheridan
Liquors maintains that the testimony was inadmissible hearsay that was prejudicial because it
represented the only proof that the offenses occurred in or about the premises, and Sheridan
Liquors had no opportunity to cross-examine those witnesses.
¶ 46 Generally, procedural due process protections preclude the admission of hearsay evidence
in an administrative proceeding. Abrahamson, 153 Ill. 2d at 94; Sudzus v. Department of
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Employment Security, 393 Ill. App. 3d 814, 828 (2009). However, “ ‘where there is sufficient
competent evidence to support an administrative decision, the improper admission of hearsay
testimony in the administrative proceeding is not prejudicial error.’ ” Abrahamson, 153 Ill. 2d
at 94 (quoting Goranson v. Department of Registration & Education, 92 Ill. App. 3d 496, 501
(1980)); Sudzus, 393 Ill. App. 3d at 828.
¶ 47 We agree with Sheridan Liquors that the City improperly sought to admit the entire
transcript of proceedings from the federal trial, without identifying the purpose for which it
sought to use the testimony, and without identifying what specific testimony it sought to rely
upon. The Local Commissioner could not properly consider whether the City had established
an adequate basis for admission of this evidence. Nevertheless, we need not consider whether
the testimony was inadmissible hearsay where there was sufficient competent evidence to
support the administrative decision.
¶ 48 The Commission had before it the stipulation, the attached indictment, and the testimony of
Adnan. As explained, the stipulation established that Mike was an agent of Sheridan Liquors,
and that he had been found guilty by a jury of conspiring to structure financial transactions to
evade the federal reporting requirements. Although the stipulation and attached indictment did
not expressly state that the illegal conduct occurred on the premises, the Commission was
entitled to draw reasonable inferences from the facts established. See, e.g., People v. Reynolds,
358 Ill. App. 3d 286, 298 (2005) (finding that the stipulation supported a reasonable inference
of criminal intent).
¶ 49 The stipulation provided that the conduct for which Mike was convicted related to the
business operations of Sheridan Liquors located at 2415 North Sheridan Road in Peoria,
Illinois. The stipulation and attached indictment further provided that the business operations
included check cashing on the premises. The check cashing operation on the premises was the
impetus for requiring large amounts of cash which resulted in the need to structure the cash
withdrawals to evade the reporting requirements. Additionally, Adnan testified that the
purpose of the check cashing services at the liquor store was specifically to bring people into
the store to promote the purchase of liquor.
¶ 50 Taking all of this competent evidence together, a reasonable and logical inference could be
made that the conspiracy to structure the transactions to evade the federal reporting
requirements occurred “in or about the licensed premises.” Therefore, the admission of the
transcripts was not prejudicial error warranting reversal.
¶ 51 CONCLUSION
¶ 52 Based upon our consideration of the whole record, including the 148-page transcript of the
two-and-one-half-hour hearing before the Local Commissioner, we hold that Sheridan Liquors
was not denied due process. It had an opportunity to present relevant evidence and relevant
defenses. Procedural due process does not guarantee an outcome, it only guarantees a
meaningful opportunity to be heard. Sheridan Liquors had a thorough opportunity to be heard
at every stage of the proceedings. Consequently, we affirm the decision of the Commission.
¶ 53 Affirmed.
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