Legal Update: December 2025
In re Harnack: Don’t Ignore Discovery and the Court’s Orders
In re Harnack, 2025 IL App (1st) 240835, 2025 Ill. App. Unpub. LEXIS 1094, 2025 LX 124170 (Ill. App. June 24, 2025) serves as an admonition to litigants that are obstinate and refuse to follow the court’s order. Frequently, this happens in connection with discovery and paying judgments. This case serves as a reminder that there is a cost to failure to comply and follow a court’s order.
Dr. Joyce Brothers, perhaps the first psychologist to gain fame through television, once said, “My husband and I have never considered divorce. Murder sometimes but never divorce.” While that would certainly be one way for marriage to lead to prison, In re Harnack, 2025 IL App (1st) 240835, 2025 Ill. App. Unpub. LEXIS 1094, 2025 LX 124170 (Ill. App. June 24, 2025) describes another way and reminds us that courts do not take kindly to parties that refuse to comply with their orders.
Background
Pamela Harnack (“Wife”) and Steve Fanady (“Husband”) married in October 2003. Less than five years later, Wife filed for divorce.[1] Initially, Husband participated in the process, but by March 2010, he ceased to appear for hearings or respond to Wife’s counsel or court notices. The trial court entered a default judgment finding, among other things, that a marital estate value of approximately $7.3 million, consisting primarily of 280,000 Chicago Board Options Exchange (“CBOE”) shares titled in Husband’s name. During the divorce proceeding, one of Husband’s business partners filed a breach of partnership action asserting a claim on 40,000 of the CBOE shares. The trial court ordered Husband to put 40,000 shares in escrow against the business partner’s claim and transfer half of the remaining shares, 120,000, to Wife (the “Dissolution Order”).[2]
What followed was an impressive display of noncompliance, including four prior appeals.
Husband initially sought to vacate the Dissolution Order because, he claimed, it was based on a misunderstanding of the size of the marital estate. The trial court denied the motion, and the court of appeals affirmed the trial court based on Husband’s “complete refusal to participate in the dissolution proceedings for more than 15 months, his attempts to evade service of process, and his refusal to comply with the court’s orders regarding payment of maintenance and with its restraining orders and injunctions barring him from [the] transfer of any assets held by him or his enterprises.”[3] In that ruling, the appeals court also noted that Husband:
- Had attempted to evade the jurisdiction of Illinois courts and defrauding a Florida court where he obtained a dissolution of marriage under false pretenses;
- Had forged a dissolution judgement in order to obtain a religious divorce;
- Attempted to hide marital assets by selling a presumptively marital asset and moving the proceeds to Switzerland; and
- Moving 120,000 presumptively marital shares from partnership accounts.
Over the next several years, Wife made repeated attempts to obtain satisfaction of the Dissolution Order, but Husband had already concealed all the CBOE shares except those that were the subject of the partnership litigation. Since those shares were the subject of prior claims, the trial court denied Wife’s efforts to obtain at least partial satisfaction from that account. The trial court conducted a three-day bench trial resulting in a finding that Husband, in for his attempts to deceive Wife and his former business partners, had transferred an additional 120,000 shares of stock to locations which he refused to divulge. Because Husband had already received and transferred his share of the partnerships’ holdings, the trial court concluded that the remaining shares belonged to the business partners. Neither Husband nor Wife had a claim on the 120,000 shares remaining in the business’ accounts. While the trial court sympathized with Wife’s arguments, Wife was left to chase Husband for her share of the marital estate. Wife appealed that ruling, to no avail.
In December 2019, Wife renewed her claims in the lower court with a petition to enforce the Dissolution Order asserting that Husband had “‘delayed the enforcement of the [judgment for dissolution of marriage] by filing frivolous and fraudulent legal actions against’ her and requested that the trial court ‘end [Husband]’s delay tactics and enforce’ the judgment. [Wife] further requested, ‘in the event [Husband] is no longer possessed of said shares,’ that he be required to ‘pay [Wife] the value of said shares in an appropriate amount along with any interest, dividends, or other monetary benefits collected by [Husband] while he was in possession of said stock.’”[4]
In April 2020, Husband filed a motion to dismiss Wife’s petition, claiming that it was “impossible” to comply with the Dissolution Order because the shares she had been awarded “no longer existed” and that requiring him to pay the value of those shares in the alternative would “improperly engraft” an additional obligation onto the original judgment.
In June 2020, following a hearing on Husband’s motion to dismiss, the trial court determined that the Dissolution Order did not specify particular shares of stock belonging to either Husband or Wife, but identified a body of shares that belonged to the marital estate and ordered that 120,000 of those shares be transferred to Wife. The trial court denied Husband’s motion to dismiss the petition.
In November 2020, Husband filed a motion for summary judgment, which Wife opposed. Following yet another hearing in December 2020, the trial court denied the summary judgment motion finding that it had “no basis in law or fact.” On December 11, 2020, the trial court issued an order granting Wife’s petition and ordering Husband to transfer 120,000 shares of CBOE stock to Wife, along with any monetary benefits accruing to such shares from the date of the Dissolution Order by December 19, 2020. The December 11, 2020 order further provided that if Husband was no longer in possession of the stock, he was to pay Wife the monetary value of those shares plus any interest, dividends, or monetary benefits he had collected.
Once again, Husband appealed (Harnack III) and the appeal court affirmed the trial court’s denial of Husband’s motion for summary judgment. In that ruling, the appeals court noted, Husband “could not ‘escape his obligations to [Wife] by swindling his business partners, ensuring that the assets awarded to [Wife] under the judgment are unavailable.’ [The appeals court[5]] also explained that [Husband’s] ‘attempts to relitigate the judgment, and his continued arguments that it was unfair or based on an overstated marital estate, are not persuasive. Those arguments were considered and rejected more than seven years ago, in Harnack I.’”
As part of the ongoing pattern of noncompliance, Husband failed to comply with the December 11, 2020 order during the pendency of his appeal, forcing Wife to file a petition for a rule to show cause for Husband’s failure to comply with the order. In January 2021, Husband responded to that motion claiming that a Belize spendthrift trust owned all his assets. He further claimed that as it was a “blind trust,” he was unable to determine what assets it held. Further, under the spendthrift provisions of the trust, the trustee resisted any attempts from Husband to obtain a distribution of any assets other than those needed for ordinary living expenses. Therefore, husband claimed, it was impossible for him to comply with any orders requiring him to transfer millions of dollars in assets to Wife. To support this claim, Husband attached a letter purporting to be from the trustee saying that the trustees had received his request, but they could not confirm that the trust owned such stock and that, pursuant to an order from The Court of Belize, they “cannot comply with any request whatsoever as this request have [sic] been made by you under duress.” Attached to the letter was another document purporting to be an order from “the Supreme Court of Belize, ordering that the trustee ‘shall not be obliged to act in response to, in furtherance of, or in compliance with any order or process of a foreign court,’ unless the order was ‘issued, sealed, or otherwise liable to be enforced pursuant to or in accordance with the Laws of Belize.’”[6]
At a hearing in February 2021, Husband further argued that CBOE Holdings, the company whose stock he was ordered to transfer, ceased to exist in October 2017 and, therefore, the current value of its stock was “zero dollars.”[7] Wife’s counsel pointed out that CBOE continued to be a publicly traded company and that, as of December 11, 2020 (the date of the court’s most recent order directing Husband to turn over the shares or the value of them), the closing price of the stock was $85.97. Further, based on Husband’s clear deceptions, Wife requested the court enter a “body order” to enforce the Dissolution Order, which had been outstanding for nearly a decade.
The trial court agreed with Wife’s counsel and, on February 10, 2021, entered an order of civil contempt directing that Husband be held in custody at the Cook County jail until he transferred 120,000 shares of CBOE, or $10 million, into escrow with the sheriff or the court.[8]
Husband appealed the contempt order. In Harnack IV, the appellate court affirmed the contempt order, finding that Husband’s claim that the company no longer existed was not credible, but even if it were true, the order provided him with an alternative method of transferring the cash value of the shares. Regarding Husband’s claim that he did not have the money to pay the judgment, the appeals court disabused him of that notion. Husband never claimed poverty or insolvency; rather he claimed that he:
“simply transferred assets that he possessed to an account—namely, the trust in Belize—which he believes makes those assets ‘uncollectable.’ He acknowledges that ‘proceeds from the liquidation of the CBOE stock were transferred to’ the trust, but he claims that ‘the amount held by’ the trust ‘is not known by [Husband], and cannot be revealed to [Husband], pursuant to the terms of the trust.’ [Husband] also asserts that his ‘access to any such money, is very limited under the terms of the spendthrift trust,’ and all he ‘can get out of the *** trust is enough to support a modest lifestyle.’
[Husband] has never explicitly denied that the trust contains in excess of $10 million. Tellingly, in his reply brief, [Husband] compares his use of the trust to ‘winners of large lottery jackpots [who] take non-transferrable lifetime annuities rather than a lump sum *** so they can guarantee themselves a regular and safe lifetime income, rather than a large lump sum that is vulnerable.’ [Husband] asserts that through his use of the trust, he has ‘made himself uncollectable,’ but ‘in doing so he has given up a great deal of control over any money or property he had.’”[9]
On June 28, 2022, more than 12 years after the entry of the Dissolution Order, Husband was taken into custody. Over the next 20 or so months, the trial court held numerous status conferences and entertained Husband’s petitions for release claiming that continued incarceration violated his constitutional rights, and that it was impossible to comply with the underlying order as he no longer had the shares and lacked the resources to pay the $10 million. Alas, Husband provided no documentation to support his claims that he was destitute: no bank statements, no trust accounting, no brokerage account statements, and no tax records.
The trial court denied Husband’s requests, leaving Husband in jail, and the instant appeal followed.
Court Findings
The appeals court addressed Husband’s two primary issues on appeal: (1) that the Illinois Supreme Court established a finite incarceration period of six months for contempt and the passage of time is sufficient to mandate vacating the order, and (2) since he lacked resources, it had become impossible to satisfy the order making the contempt provision punitive, not coercive, and therefore should be terminated.[10]
Maximum Incarceration Period for Contempt
The court reiterated that “[v]ital to the administration of justice is the inherent power of courts to compel compliance with their orders.”[11] Courts, however, distinguish between criminal contempt and civil contempt. Criminal contempt is a punitive measure that a court may impose for prohibited behavior such as being disruptive in the court room. It punishes the contemnor for prior actions. “[W]here a person is charged with criminal contempt and the potential penalty could exceed the parameters normally imposed for a misdemeanor—i.e., six months imprisonment—that person is entitled to a jury trial.”[12] Incarceration for a period longer than six months would be allowed only on a jury reaching a verdict of guilt.
Civil contempt, on the other hand, is coercive in nature, rather than punitive. The objective of the civil contempt order is to encourage specific behavior on the part of the contemnor, rather than punish them for a prior act. The fundamental attributes of a civil contempt order is (a) the contemnor’s ability to perform the act and (b) that once the act is performed, there is no further sanction. “Because of the contemnor’s unique ability to control the imposition of sanctions in indirect civil contempt cases, the constitutional guarantee of a jury trial for criminal contempts [sic] when the penalty exceeds six months in jail is wholly inapplicable to indirect civil contempt proceedings.”[13]
Contrary to Husband’s strained interpretation of Betts, that ruling did not establish a time limit for contempt incarceration. Rather, it was commenting on the unique nature of civil contempt where “the contemnor holds the ‘keys to his cell.’”[14]
Husband further argued that the passage of time, alone, shifts a coercive incarceration to a punitive one, relying on Felzak v. Hruby, 226 Ill. 2d 382 (2007). The court however noted that that was not the lesson of Felzak. In Felzak, the contemnor violated a court order requiring him to arrange visitation between his daughter and her maternal grandparents. During the extended course of litigation, as litigation often does, the contemnor’s daughter reached the age of majority. The Illinois Supreme Court found that, since the daughter was no longer a minor, the contemnor and the stepmother could no longer purge the contempt order as they no longer had the ability to compel the daughter to visit her grandparents. Thus, while apparently the passage of time mooted the contempt order in Felzak, it was not simply the passage of time, but rather how the passage of time changed the contemnor’s ability to purge the contempt.
Impossibility
Husband continued to assert his claim, previously addressed in Harnack IV, that the civil contempt order would not coerce compliance as he could not pay the required amount. Again, the court faulted Husband for his continued reliance on self-serving testimony, which the trial court in its discretion had determined was not credible, rather than providing admissible evidence. By way of example, Husband called the trial counsel for his former business partners as a witness that the CBOE shares had been transferred out of the account. But his witness had no knowledge of where the shares were transferred to or what happened to them after they were removed from the business’ account.
Further, the correspondence that Husband claimed came from the Belize-based trustee was indisputably hearsay and therefore inadmissible. While Husband contended that it should be admissible based on the “business records” exemption, that was not the case.
The business records exception to the general rule prohibiting hearsay is based on the ‘recognition that businesses are motivated to keep routinely accurate records and that they are unlikely to falsify records kept in the ordinary course of business and upon which they depend.’ Accordingly, a party may seek admission of a writing or record under the business records exception, where ‘(1) that writing or record was made as a memorandum or record of the event; (2) it was made in the regular course of business; and (3) it was the regular course of the business to make such record at the time of such transaction or within a reasonable time thereafter.’ The proponent of such evidence must establish the above foundation ‘through testimony by someone familiar with the business and its mode of operation.’[15]
Typically, the business records exception will apply to forms and reports, and routine correspondence that exists within organizations, including bank statements, reports produced by accounting software, etc. The correspondence that Husband uses to support his position is not the sort of document typically accepted as a business record. Since Husband made no effort to call a representative of the trust as a witness to authenticate the document or the circumstances under the documents were prepared, he failed at a fundamental level to establish that the letters were properly authenticated business records.
Conclusion
Husband engineered his own inability to comply with the court’s orders beginning with his refusal to participate in the process in 2010 and continuing to his failure to produce proper evidence of what happened to the CBOE shares that existed at the time the Dissolution Order was entered. Courts do not treat kindly parties that repeatedly evade compliance with orders, relitigate issues that are indisputably the law of the case, or hide assets in order to claim helplessness. Courts will deal harshly with parties who intentionally make themselves judgment-proof and then cry impossibility.
[1] Neither this opinion, nor the several previous appellate rulings identified in it, provides an explanation for Wife’s decision to dissolve the marriage.
[2] At the time, CBOE shares were worth approximately $25, which would have resulted in an equitable distribution worth approximately $3,000,000.
[3] In re Marriage of Harnack, 2014 IL App (1st) 121424 (“Harnack I”) at ¶ 46.
[4] 2025 IL. App. (1st) Unpub. LEXIS 1094 at **7–8.
[5] Ibid. at **12, internal citations omitted.
[6] Ibid. at **14–15.
[7] In October 2017, as part of a rebranding, “CBOE Holdings, Inc.” became “Cboe Global Markets, Inc.” The move was purely a marketing move. There was no change in the company’s stock, other than the name, and it continued to trade under the symbol CBOE.
[8] It is unclear why the trial court set the cash alternative at $10 million. The share price on December 11, 2020 was $85.97 for a total value of $10,316,400, and the opening price on February 11, 2021, the date of the contempt order, was $92 for a total value of $11,040,000. Further, the $10 million cash alternative does not account for the dividends issued from the date of the Dissolution Order through February 2021, which totaled approximately $9.76 per share representing $1,171,200 in lost dividends on the 120,000 disputed shares.
[9] Ibid. at **21–21, quoting In re Marriage of Harnack, 2022 IL App (1st) 210143 (Harnack IV).
[10] Husband also claimed that the trial court had failed to comply with a procedural rule that requires the trial court to hold periodic conferences with the contemnor. The appeals court found that, through the numerous hearings on Husband’s varied petitions and complaints, the trial court had substantially complied with the rule and that any minor timing variances in the court’s proceedings were immaterial.
[11] Ibid. at **60 quoting Harnack IV and Sanders v. Shephard, 258 Ill. App. 3d 626, 632 (1994) (internal quotation marks omitted).
[12] Ibid. at **63 citing In re Marriage of Betts, 200 Ill. App. 3d 26, 49 (1990).
[13] Ibid. quoting Betts at 57–58 (emphasis added).
[14] Ibid. at **64.
[15] Ibid. at ** 71–72, quoting People v. Virgin, 302 Ill. App. 3d 438, 450–451 (1998).
Michael J. Molder, JD, CPA, CFE, CVA, MAFF, applies 30 years of experience as a Certified Public Accountant and litigator to help investigate and analyze cases with complex financial and economic implications. He has acted as both counsel and accounting expert in pending and threatened litigation as well as participating in internal investigations of financial misconduct. As a litigator, Mr. Molder helped co-counsel understand complex financial and accounting issues in dozens of cases. In 2006, Mr. Molder returned to public accounting applying his unique skills to forensic engagements. He has also performed valuations of business interests in a wide variety of industries.
Mr. Molder has served as a valuation expert for both plaintiffs and defendants in commercial litigation matters and owner and non-owner spouses in matrimonial dissolutions. He has participated in the valuations of businesses in a wide variety of industries, including: food service, wholesale and retail distribution, literary development and production, healthcare, manufacturing, and real estate development.
Mr. Molder has also investigated and valued damages in a wide variety of litigation contexts ranging from breach of contract claims to personal injury cases, and from employment disputes to civil fraud. He has consulted on many matters which have not involved the issuance of a report for litigation or resulted in deposition or trial testimony. Accordingly, the identity of these matters is protected by attorney client privilege.
Mr. Molder has also lectured widely on a variety of accounting and litigation related topics including business valuation, financial investigations in divorce proceedings, accountant ethics, financial statement manipulation and “earnings management.”
Mr. Molder can be contacted at (610) 208-3169 or by e-mail to Molder@lawandaccounting.com.
