How does seeing C.O. Chinn on a chain gang impact Ann? What events led to his downfall?

Anne's reaction to seeing C.O. Chinn working on a chain gang is, understandably, one of great sadness. She's also incredibly disheartened to see such a widely respected man brought low by racial prejudice and bigotry. C.O. tries hard to make the best of a bad situation, waving at Anne and forcing a smile, but it's a pitiful situation to behold.
C.O. Chinn was previously the richest African American in Canton, owning a number of businesses in town including a successful restaurant. He was also heavily involved in the civil rights movement, encouraging other African Americans to participate in the struggle.
As well as making him respected in the African American community, Mr. Chinn's active role in CORE makes him an object of fear and hatred among the town's whites. Inevitably, Chinn falls victim to the prevailing system of racial injustice. He loses all his businesses and ends up toiling away on a chain gang. This is his punishment for getting involved in the civil rights movement.