The state of Illinois is not obligated to sue the city of Chicago for failing to turn over $11 million in uncashed city-issued checks, which whistleblowers claimed they brought to the state's attention, because the city's failure to turn over the checks did not harm the state, a split appeals court has ruled.
The March 31 decision in Illinois' First District Appellate Court was penned by Justice Jesse Reyes, with concurrence from Justice Bertina Lampkin. Justice Robert Gordon dissented, saying the state exhibited "glaring evidence of bad faith" in its refusal to act against Chicago.
The majority's ruling was issued under Illinois Supreme Court Rule 23, which could limit its use as precedent.
Clinton Krislov
According to court documents, John Thulis and James Webb learned, through the Freedom of Information Act, that Chicago had held onto 22,231 uncashed checks it had issued various people from 1988 to 2018, amounting to more than $11 million. Thulis and Webb were among those issued checks. Thulis' check was for $12.73, and was issued in 2017. Webb's was issued in 2014 for $330.
According to Thulis and Webb, such checks are considered abandoned after three years, under the Illinois Revised Unclaimed Property Act, and are to be forwarded to the state treasurer for safekeeping until they're claimed by the intended recipients or their heirs.
In 2018 in Cook County Circuit Court, Thulis and Webb sued Chicago, citing the Illinois False Claims Act. The Act allows those who uncover a fraud upon the state, to sue on the state's behalf, in a so-called qui tam action. Such people are known as relators, and can be in line to collect a portion of any money recovered.
In 2019, Cook County Associate Judge James E. Snyder dismissed the action at the state's request.
The state contended the information developed by the relators was not original to them, because the Chicago Tribune published a story in 2008 about uncashed checks. In addition, the state said there was no fraud in play, because the state was already aware of the checks, and was negotiating the matter with the city. Further, the state pointed out that if legal action was called for, the state treasurer has authority to enforce the Unclaimed Property Act, without resorting to the False Claims Act.
On appeal, Justice Reyes found the state has discretion to pursue such cases, barring any "glaring evidence of fraud or bad faith," as outlined in a 2006 Third District Appellate Court decision. Unfortunately for Thulis and Webb, they did not show such fraud or bad faith, according to Reyes.
"'To require judicial review of the Attorney General’s decision to dismiss an action,'" Reyes said, quoting the same 2006 decision, "'would give the court veto power over the state’s decision to dismiss, essentially usurping the Attorney General’s power to direct the legal affairs of the state and putting that power in the hands of the court.'"
Reyes also noted the "underlying property interests belong to the relators and the thousands of other payees on the uncashed checks," not the state.
Reyes said he believed a private lawsuit between the relators and Chicago would be the proper course.
In dissent, Gordon knocked Reyes' ruling, saying, "The majority basically finds that the State has an unlimited authority to dismiss such cases regardless of its basis or reasoning."
Gordon continued: "The State provided no evidence of valid reasons to allow the City to continue in not complying with the Act, and the trial court held no evidentiary hearing to make any findings."
Gordon acknowledged the relators did not ask for a hearing, but said findings are required and the judge should still have conducted one.
"At a minimum, the conduct of the State shows glaring evidence of bad faith when no reasons are given by the State for allowing the City to continue its alleged wrongful conduct," Gordon said.
Thulis and Webb have been represented by attorney Clinton Krislov, of Krislov & Associates, of Chicago.
The state has been represented by Assistant Illinois Attorney General Christopher Turner.