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I don't see how the Chief of Police was at all within his rights to ask you to resign.
However, if you resigned voluntarily it would be extremely hard to make a case against them. If you hadn't resigned and they had escorted you out of the meeting you would have had a much stronger claim.
There is no case against the FBI based on the facts as you've presented them since they were just questioning you and your facts don't indicate that at any time you asked to leave and they refused to allow you to do so.
You might still have a case against the police department for something along the lines of "official oppression" which is essentially when they misuse their power.
The real problem you have is that most attorneys will not be willing to take the case on a % basis and so you will have to pay them up front and the damages you can recover are speculative.
Would it change the situation if the police chief was acting under the direction of either the mayor or city attorney when did what I have described?
It would extend the official oppression out to them. You would have an argument that you were "forced to resign" but the problem is your facts as you've given them here really don't support the "force".
I'm not saying it is an impossible case, just a difficult one.
Since this is a small community (approx. 5000) and I being a 77 year old did not want to make a scene at what is always a very short and non-confrontational meeting. If it were possible to determine the origin of the actions of the police chief and who typed the one page resignation letter her present. Could the mayor, police chief, and city attorney be disposed and asked questions under oath regarding this action?
You would have to file a lawsuit but if you did then they could be deposed.
The questions you could ask the City Attorney would be limited.
What would be a reasonable estimate of the legal fees involved in such a proceeding? Are there qualified attorneys for such a case in central Illinois?
You probably want to start out looking for an attorney who does civil rights law. We're not allowed to give specific referrals but you can go to www.lawyers.com and likely find one in your area. If they advertise as doing civil rights law it is likely they are qualified because it is such a rare case that it doesn't pay to advertise for it unless you do a reasonable amount of it.
A guess as to initial retainer would be $7500-$10k.
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