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Defense win! Landlord’s conviction for failure to return security deposits reversed

State v. Troy R. Lasecki, 2020 WI App 36; case activity (including briefs)

Wonders never cease. The State charged Lasecki with 2 counts of failure to return security deposits to tenants in violation of Wis. Admin Code. §ATCP 134.06(2) and §§100.20(2) and 100.26(3)(2013-3104). Lasecki proceeded pro se at trial, and a jury convicted  on both counts. His appeal drew amicus briefs from the Apartment Ass’n for Southeastern Wisconsin, the Univ. of Wis. Law School and from the Attorney General  about whether the statute and code criminalized the failure to return rent. Answer: “yes.” but Lasecki won anyway because the jury instructions were erroneous and the court erred in ordering restitution above the victim’s pecuniary losses.

Statutes/code. The first two issues overlapped. Did the circuit court lack subject matter jurisdiction because the crimes at issue are not known at law? If the court had jurisdiction, then were the statutes and code at issue void for vagueness? The court’s analysis of the relevant provisions and legislative history consumes 34 paragraphs of its opinion, so we won’t even try to summarize it. Opinion, ¶¶9-43.

The bottom line is that Wisconsin law makes the failure to return or mail a security deposit withholding statement an unfair trade practice subject to criminal penalties. Opinion, ¶23. And the statutes and code provide ordinary landords with sufficient notice of this fact. Opinion, ¶39.

Jury instructions. Lasecki (represented by counsel on appeal) nevertheless won a reversal of his conviction because the jury instructions incorrectly stated the law of his charged crimes. Here’s how they defined the crime:

  1. The defendant was a landlord.
  2. The defendant rented an apartment to the tenant.
  3. The defendant collected a security deposit from the tenant.
  4. The defendant did not return the security deposit and/or a statement of withholdings within 21 days after the termination of the rental agreement.
  5. The defendant intentionally failed to return the security deposit to the tenant.¶

The court of appeals held that numbers 4 and 5 could reasonable be interpreted to mean the landlord is criminally liable for failing to return a security deposit, without more.

¶49 . . . However, the failure to return a security deposit, in and of itself, is not necessarily a crime. A landlord is permitted to withhold any amount of a tenant’s security deposit as long as any withholdings are prescribed by statute or the administrative code. See WIS. STAT. § 704.28(1); WIS. ADMIN. CODE § ATCP 134.06(3). Accordingly, a landlord may be criminally liable only if he or she withholds security deposit money when not authorized to do so.

When jury instructions are wrong the defendant gets a new trial only if the error was prejudicial. Dakter v. Cavallino, 2015 WI 67, ¶33, 363 Wis. 2d 738, 866 N.W.2d 656 . The court of appeals held that the jury combined 2 separate crime into one element, and that error probably prejudiced Lasecki. It reversed and remanded  the case, saying:

¶53 . . . In this case, as well as in similar cases in the future, the trier of fact is to determine whether the landlord committed an unfair trade practice by either: (1) violating WIS. STAT. § 704.28— including by failing to timely return any portion of a security deposit without having a lawful basis to do so under the statute; (2) violating WIS. ADMIN. CODE § ATCP 134.06(4) by failing to provide a required withholdings statement; or (3) violating both requirements.

Restitution. The circuit court ordered Lasecki to pay his two tenants twice the amount of their security deposits as restitution based on §100.20(5), which says a tenant may sue for damages and recover twice the amount of his pecuniary loss. The court of appeals held that the goal of §973.20 is to make the victim whole, not punish the defendant, which is what the circuit court appeared to be doing in this case. Under that statute, the circuit court erred in awarding restitution in an amount above the tenants’ pecuniary losses. Opinion, ¶¶54-62.

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