Vermont Attorney General (AG) Charity Clark recently announced the resolution of an investigation into the withholding of security deposits across five motels that were participating in the state’s Transitional Housing Program, also referred to as the “Motel Program.” The settlement establishes a $310,000 restitution pool to provide payments to impacted Vermonters who stayed in motels owned by Anil Sachdev (or companies he controls), along with injunctive relief. Sachdev will also be required to pay $523,600 to the state, which will be suspended for cooperation with the resolution of the matter, including putting adequate funds toward the repair, maintenance, and improvement of the properties he owns.
In 2020, in response to the COVID-19 pandemic, Vermont initiated the Motel Program to increase access to temporary shelter at the state’s expense, while also expanding eligibility under the traditional General Assistance Emergency Housing Program. Under the terms of the program, the state’s Department for Children and Families (DCF) solicited motels to enter into occupancy agreements with residents in need of housing in exchange for direct monthly payments from DCF. In addition, DCF also provided participating motels with security deposits in the amount of $3,300 per occupied unit as a source for reimbursement in the event of damage or loss of furnishings. This deposit was refundable to DCF within 30 days after an occupancy agreement was terminated unless the motel owner could provide photographic evidence of damage or excessive wear, along with an estimate of the cost for repair or replacement. For occupants who resided in a unit for at least four months, the program provided a provision whereby they were eligible to receive the entire deposit, subject to the same terms and conditions as DCF.
Over the course of the program’s existence, motels owned by Sachdev entered into 429 agreements. When the occupants moved out, some of them received notices they were asked to sign stating that they “may have” caused damage to their rooms, which waived portions of their security deposits. The AG asserted that these notices were unfair or deceptive in violation of the state’s consumer protection laws. There were other instances where occupants had deposits withheld in full or in part, but the records could not expressly verify who caused the alleged damages, or they were submitted without adequate supporting photographic evidence. The settlement provides that occupants who received deficient notices are entitled to receive up to the full amount of the $3,300 security deposit. All other qualified occupants are eligible to receive $500, not to exceed $3,300 if they received a partial payment at time of their exit from the program.
Why It Matters
State AGs continue investigating and bringing enforcement actions over COVID-19-related fraud and predatory practices, especially as it relates to the housing industry. Regulatory activity related to deficient consumer notices across all sectors has also increased, with regulators stressing the particular importance of transparency and fairness for individuals who are experiencing economic distress. As homelessness and affordable housing crises persist across the U.S., we expect this to remain an area of heightened scrutiny and regulatory focus.
Troutman Pepper State Attorneys General Team
|Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
|Clay Friedman – Co-leader
Clayton is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice, multidisciplinary teams with decades of experience crafting effective strategies to help deter or mitigate the risk of enforcement actions and litigation.
Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on enforcement actions, investigations, and litigation. Stephen primarily represents clients engaging with, or being investigated by, state attorneys general and other state or local governmental enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, with a particular focus on heavily regulated industries.
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Michael is a partner in the firm’s State Attorneys General and Regulatory Investigations, Strategy + Enforcement (RISE) Practice Groups, nationwide teams that advise clients on consumer protection enforcement matters and other regulatory issues.
|Samuel E. “Gene” Fishel
Gene is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) practice, based in the Richmond office. He brings extensive regulatory experience, having most recently served as senior assistant attorney general and chief of the Computer Crime Section in the Office of the Attorney General of Virginia, and as special assistant U.S. attorney in the Eastern District of Virginia for 20 years.
Tim is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, where he represents corporations and individuals facing potential civil and criminal exposure. Tim’s experience in government investigations, enforcement actions, and white-collar litigation spans a number of industries, including financial services, pharmaceutical, health care, and government contracting, among others.
Chris Carlson represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia is an associate in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice. She focuses her practice on two primary areas: government contracting and state attorney general work.
Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising.
Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes.
John is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on a wide range of general and complex litigation matters, including shareholder disputes, fraud, products liability, breach of contract, and Biometric Information Privacy Act claims.
Whitney is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation.
Daniel is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and State Attorneys General team. He counsels clients in connection with navigating complex government investigations, regulatory compliance, and transactions, involving state and federal government contracting obligations. Drawing on his broad experience as a former assistant attorney general for the state of Illinois, Daniel is a problem solver both inside and outside the courtroom.
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.