Garrett Rhodes, through his company 72Vest, worked as a licensed insurance agent in Illinois. In 2016, he entered a consent order with the Illinois Securities Department to resolve a dispute involving life settlement products sold through another company. Rhodes neither admitted nor denied the allegations but agreed to certain restrictions, including a three-year bar on acting as an investment adviser or investment adviser representative.
Years later, Rhodes became suspicious that the insurance products he was marketing as an insurance agent for Nevada-based Future Income Payments (FIP) were part of a larger fraudulent scheme. He promptly reported his concerns to the FBI and Department of Justice, helped provide evidence that contributed to federal prosecutions, and halted business with FIP. He was never charged in connection with the FIP fraud. And the FIP products were never found to be a security.
Nevertheless, the Illinois Securities Department accused Rhodes of violating the 2016 consent order by allegedly acting as an unregistered investment adviser with respect to the FIP products and failing to disclose the prior order to clients. Rhodes maintained that the FIP products were not securities, that his role was that of a licensed insurance agent, and that the consent order did not restrict his FIP-related activities.
Rather than facing a neutral judge and jury in court, Rhodes was forced into an administrative hearing before the very agency that investigated and prosecuted him. The hearing officer ruled against him. The Secretary of State then permanently banned Rhodes from the securities industry in Illinois and imposed $70,000 in fines.
The right to a trial by jury was designed to prevent abuses of power exactly like this. Unlike an in-house adjudicator, a jury has no stake in the outcome of a trial and therefore no incentive to rule in its own favor.
Currently, whether someone gets a jury in a civil penalty case depends on which state is doing the punishing. Although the Seventh Amendment guarantees a jury trial for the type of charges brought against Rhodes, the U.S. Supreme Court has never applied the Seventh Amendment to the states. That means someone facing identical charges can get a jury in one state and be denied one in another.
Unwilling to give up on his right to a fair trial, Rhodes appealed the Department’s ruling in state court and is currently represented on his constitutional claim free of charge by Pacific Legal Foundation. Rhodes argues that he is entitled to a jury trial under both the Illinois and U.S. Constitutions. If Illinois courts disagree, Rhodes, with PLF’s help, is prepared to take his case to the U.S. Supreme Court to ensure that all Americans receive the same right to a trial by jury in civil cases.
A win would guarantee Rhodes a meaningful opportunity to defend himself and reinforce a principle at the heart of PLF’s fight against agency overreach: The government cannot be prosecutor, judge, and jury in its own case.
What’s At Stake?
- The Seventh Amendment guarantees the right to a jury trial when the government seeks civil penalties. That trial belongs in a real court—before a neutral judge and a jury of peers—not in an administrative tribunal where the same agency investigates, prosecutes, and adjudicates the case.
- The Seventh Amendment has not yet been applied to the states. The U.S. Supreme Court should incorporate that protection via the Fourteenth Amendment so every American, regardless of where they live, can demand that the government prove its case before a jury of their peers.
- Illinois law must provide equivalent protection. The Illinois Constitution prevents the State from imposing substantial fines and lifetime professional bans through one-sided administrative proceedings that bypass a jury.
