Criminalizing civil collections
A few weeks ago I argued to the Virginia Supreme Court a case that, in the greater scheme of things, seems pretty trivial. The case is McDowell v. Commonwealth, on appeal from the Circuit Court of Charlottesville. The Virginia Court of Appeals had affirmed his conviction in 2010. 57 Va.App. 308, 701 S.E.2d 820 (2010).
My client had entered into a “rent-to-own” contract with a local company. He got a fancy large-screen television for $99 a month. Well, it was really $123.27 a month, when you add in the processing fees, insurance waiver, etc. He had committed to pay them what amounted to $4,500 to buy a $1,500 television. If this had been a transaction subject to federal consumer protection statutes, we would have figured his APR to have been 91.74%. In the lease, he said that he was living at 1800 Jefferson Park Avenue, Charlottesville. Anyone familiar with 1800 Jefferson Park Avenue knows that it is a very large apartment complex, with probably hundreds of apartments in it.
My client made his payments for about 5 months, and then — under circumstances that are not quite clear — he and his girlfriend moved out, and the television disappeared. Soon after that, my client got arrested on other charges; by that time he definitely didn’t have the television.
When he hadn’t paid in a month, the rent-to-own company sent its manager by his residence, and they noted that the apartment — 1800 Jefferson Park Avenue, Apartment B37 — seemed to be empty. So they sent him a letter, certified, to 1800 Jefferson Park Avenue, Apartment B37 — the address where they knew he no longer lived. Not surprisingly, it was never picked up. The rent-to-own company then got a warrant for his arrest for grand larceny under Virginia Code section 18.2-118. That section provides that if someone is sent such a letter to the address in the lease, and doesn’t respond, it is presumed that they intended to defraud the owner of the property, and therefore that they would be guilty of larceny. Now here is the really subtle point — the address that they sent the letter to was not EXACTLY the same address as the address on the lease. It was pretty close, but it wasn’t exact. We have argued that for the rent-to-own people to rely on the presumption of fraud coming out of the sending of this letter, they have to do EXACTLY what the statute says. If they think that the person would actually get the letter if it was sent to Apartment B37, they can spend another 44 cents on a second letter if they want to, but if they want to get the benefit of this provision, they have to do EXACTLY what it says. “Close” counts for horseshoes and hand grenades, but not rent-to-own televisions.
So — where the government has no other proof of what happened to the television, can they rely on this statutory presumption of fraud arising from his failure to respond to a letter that everyone agrees he didn’t get and couldn’t possibly have gotten?
And why do we care?
There are three basic problems here.
1. The rent-to-own company really should have been proceeding under a different statute that fits the situation more clearly — Virginia Code 18.2-115, which makes it a crime to move a leased piece of property from the place where the lease says the property is supposed to remain. In other words, if the lease says, “This television shall stay at 123 Main Street,” and it is moved from 123 Main Street without notifying the lessor, that is a crime. The rent-to-own company didn’t bring charges under that section, because that section doesn’t have this “if you don’t respond promptly to our letter, you’re guilty” language. They proceeded under a statute that doesn’t fit the situation as well, because it was easier to do. The trial lawyer (not our firm) who had this case at trial did not make an objection based on this, so we can’t use this as a basis for reversal, but the Virginia courts have never cared much about this problem — if you do something illegal, and it violates three different statutes, the Commonwealth can pick which one they want to prosecute under.
2. Every one agrees that he wouldn’t have gotten the letter if they had sent it to the address on the lease, and everyone agrees that he didn’t get the letter that was actually sent. So we are engaged in what is sometimes called a “legal fiction.” Sending a letter that we know is never received is treated the same way as sending a letter that we know was received, but was ignored. There are various Constitutional objections that might have been made to the application of this. For example, in Tot v. United States, 319 U.S. 463 (1943) the U.S. Supreme Court held unconstitutional a presumption that wasn’t logical. In that case, the Court was considering an early version of the federal statute that banned felons from possessing firearms. Because Congress was concerned about trying to establish an effect on interstate commerce, the statute contained a presumption that the Court held made no logical sense — if someone who had been convicted of a crime of violence later possessed a firearm or ammunition, it was to be presumed that the article was received by him in interstate or foreign commerce, and that he received it after July 30, 1938, the effective date of the statute. The Supreme Court held:
Under our decisions, a statutory presumption cannot be sustained if there be no rational connection between the fact proved and the ultimate fact presumed, if the inference of the one from proof of the other is arbitrary because of lack of connection between the two in common experience.
319 U.S. at 467-68. Such a statutory presumption violates the Due Process Clause of the Fifth Amendment to the U.S. Constitution. The fact that the presumption is “more convenient” for the government is irrelevant. The fact that the defendant would know the missing answer better than anyone is also irrelevant.
Here, it would have been nice if someone at trial had made an objection like this so that we could ask the Virginia Supreme Court to rule in our favor on this basis, but no objection was made, so we are left with this extremely picky issue under the statutes. Frankly, judging by the questions, it seems very unlikely that the Court will agree with me on my purist argument — that any address used other than the address shown on the lease would not qualify for the presumption.
3. Which gets us to our third problem — the extent to which the legislature is passing laws that turn ordinary civil disputes into crimes. What actually happens in these cases is that when the defendant gets sent a letter threatening criminal prosecution, many of them will hurry in and pay up. If they don’t, they may get served with a criminal warrant. Then many more of them will hurry in and pay up, and the case will likely be dismissed, or else plea-bargained away so that the person gets no jail time. The only people who get charged and convicted are the people who don’t pay this civil debt.
In almost any other setting, if I write a letter to someone and say, “Either you pay me $1,500 or I’ll get a criminal warrant against you charging you with a felony,” I’d be guilty of the serious crime of extortion. But not so here. The rent-to-own center is permitted to enter into this contract with rates of interest up to 91.74% a year — which would itself be illegal in most settings. Then they are allowed to collect on the debt by threatening criminal prosecution — which would itself be illegal in most settings. And they are allowed to do so by relying on the mailing of a letter that everyone knows the other person will never get — which may not be illegal but is certainly stupid.
The larceny statutes of Virginia have other provisions that have the effect of turning civil disputes over money into criminal charges. For example, we represented a woman who was being charged with the crime of moving a vehicle that was subject to a security interest (see section 18.2-115, referred to earlier). She had bought a car from a car dealer who was pretty shady. Then in the first 30 days, the car — which the dealer had warranted for 30 days — had broken down, and it had no value. The dealer then died, his heirs argued that the warranty didn’t mean what my client thought it meant, and the estate tried to collect on the debt. Not surprisingly, she refused to pay, and the Estate tried to repossess her car. In the meantime she had moved (not anything fraudulent — just from one part of the County to another), and the Estate didn’t know where the car was, so they charged her with a violation of section 18.2-115 — a felony. Before we got into the case, the Commonwealth’s Attorney had seen all of the paperwork, and had authorized prosecution. When we got into the case, we could show the Commonwealth’s Attorney the many ways in which the dealer had violated the consumer protection laws, and they agreed to dismiss the criminal charges and to leave the dealer’s Estate to its civil remedies.
Every defense lawyer who represents people of limited means, and every Legal Aid lawyer, knows that the laws of Virginia have been written to help creditors collect debts. My point when I argue my case to the Virginia Supreme Court tomorrow will be that the court system should not be trying to make it easier to do so.
