In Anderson v. DFI (2017AP1670), the Court of Appeals District II held that the Department of Financial Institutions’s (DFI) notice to the plaintiff regarding his liability for involvement in illegal securities transactions violated constitutional due process.
DFI sent plaintiff Gregory Anderson a notice alleging that he was engaging in illegal securities transactions. The notice informed Anderson that an order requiring takings of $3 million in restitution plus a $25,000 civil penalty would become final unless Anderson requested a hearing within 30 days. Anderson sent a request on the thirtieth day. DFI, reading an administrative rule (Wis. Admin. Code § DFI § 8.01) in conjunction with the securities statute (Wis. Stat. Ch. 551), denied Anderson’s request because it was not timely. DFI argued the request must be received by DFI within 30 days.
In an opinion written by Wisconsin Supreme Court Justice-elect Brian Hagedorn and joined by Chief Judge Lisa Neubauer, the appeals court opted not to decide whether DFI needed to receive Anderson’s filing before the thirtieth day. The court seemed to disagree with DFI’s reading of the statute, especially since no other jurisdiction sharing Wisconsin’s Uniform Securities Act has interpreted filing requirements in this way.
But without ruling on whether DFI’s reading is correct, the court ruled in favor of Anderson by determining DFI’s notice to Anderson violated constitutional due process. Both the federal and Wisconsin constitutions require government to provide sufficient notice prior to taking private property. Reasonable notice must be given as to how the recipient of the notice can prevent the taking of his or her property. In this case, DFI did not provide reasonable notice that DFI must receive Anderson’s response by the thirtieth day.
In a dissent, Judge Gundrum agreed with DFI’s reading of the code and statute and said the DFI notice to Anderson provided reasonable notice of how to timely request a hearing; therefore, the notice did not violate Anderson’s due process rights.