Vermont Legislature SmartTranscripts:

[Sen. Nader Hashim (Chair)]: We are live. Alright. Good morning. It is January 22 at the senate judiciary. We are taking off s one eighty three, and we have Tim McVanis from the state's attorneys and sheriff's office to provide their thoughts on the dose.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Thank you, chair. Again, for the record, can't find this department of state's attorneys and sheriffs. So our department does not have a position on this field, and that is because we have differing opinions within the department on whether the statute, as currently written, is unconstitutional. Some agree with the Superior Court entry order in the Martin case that was essentially replicated in the Eaton case. Some do not. And there is ongoing litigation right now. We have well, let me back up to you. Approximately 80 to 85 pending on prevent fraud cases. I know at the moment, we have a motion to dismiss pending in Orange County on four cases, and the state's attorney in that county has refuted the arguments presented in the lobby. And it's a very interesting argument. We don't have to go into the weeds here. You can take a look at it if you like, or we can discuss it with the community would like. But essentially, our position, again, we do not have a position on the how you move forward. If, because of the Two Spirit Court entry orders, we would like to clarify that your intent back in 2015 was to have this intent to defraud element, which again, the beginning of our state's attorneys and deputy state's attorneys believe that that Philippines is gonna need a blue patch. But if you'd wish to clarify it, no issue there. So the the language that has been presented does clarify that and continue and intend to defraud explicitly. We would just caution that as this body is discussing this and making changes, that it's not necessarily making the changes because it agrees that the current statute is unconstitutional. That is a question right now. Again, the sentry orders are only binding on those cases. They're very well likely will be potentially out of Orange County, a case that eventually backs its way up to the Supreme Court, and we will make decision yet. I'm happy to get into the weeds on trauma improvement front if you wish. But essentially, we we don't have any issue with reverting back to the 2015 language with that removal of the, pronunciated atrans. We would just highlight, again, one of the issues, and this has always been an issue, is that by adding the knowingly in the first part of the clause, it attaches the intent to defraud to when the contract is being entered into. And many times in these cases, the contractor may enter into the contract with no intent to defraud, but only as time has passed. Right? Then converts the person's money into their possession by not doing the work on a job. So that's always been a tricky part of the movement from. So, if you wanted to spend more time thinking about how to structure the language, so it could be knowingly at the time of contract or any time during the contract, Right? You then your intent is to defraud, and then the language has suggested that you've promised a performance, the questions about intent to perform. It's just something to consider. That would definitely give prosecutors a little more of an ability to meet that standard. Reading it at the time when they contracted that journey to can prove difficult.

[Sen. Tanya Vyhovsky (Member)]: I had some questions yesterday. I'm sorry. I had questions yesterday, and I don't know if you saw the testimony yesterday. I think it was I actually don't remember who it was.

[Sen. Robert Norris (Vice Chair)]: Yeah, I was watching the walkthrough. Think so.

[Sen. Tanya Vyhovsky (Member)]: Yeah, so I had some questions just about how these cases kind of play out, and my understanding is the attorney general sort of oversees contractor fraud. I also have some questions because I view this as a consumer protection. So I'm just trying to understand the sort of interplay.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Yes. So there can be two routes, and you're highlighting an issue that our department has struggled with for a bit in these cases, especially in this fee one. It's contract law, And usually, when a contract is not fulfilled, that is a civil Mhmm. And would be a civil action thought by the complainant or a government entity. And there are civil, I think you heard from your witness that came in before the walkthrough, that she tried to sue the contractor of civil aid. So there are actions that can be taken there. When you add the intent to defraud that you've entered into a contract and you're doing so, again, a lie, deception, that's when the in Levant, in other places, attach that as a criminal case. You can still have a civil case in the same acts and circumstances. So there are two paths

[Sen. Robert Norris (Vice Chair)]: that

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: A can struggle that many of our attorneys have is that we quickly become, none of this is in criminal court, are doing contract law, which, you know, we all had to take a year of contract law in law school, but generally, we did not go into contract law. So it often feels like an area that's outside of our our day to day. And there have been some in our department that these cases would be better suited for the attorney general's office who have the criminal division and the civil division and the piece, and that that would make more sense for the cases to go in, be assessed, and then filtered into the proper division depending on facts and circumstances of the case.

[Sen. Tanya Vyhovsky (Member)]: That certainly makes sense to me, and I wonder if it would be helpful to clarify that that should be the process.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: I don't think you'd hear any argument from us if if home improvement fraud cases became, you know, the absolute purview of the attorney general's case. Right.

[Sen. Tanya Vyhovsky (Member)]: It just makes sense. Like, that's what I'm trying to understand. Obviously, I'm not an attorney. I don't practice in any of the courts. But as I was trying to understand it, it seemed confusing. Sort of like, where does it go? How does it go? And and when I think about it from sort of exactly the point you make, it just sort of makes sense, but that's where it would live. So that's great. I'm I'm glad we agree.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: You're happy to ever think.

[Sen. Tanya Vyhovsky (Member)]: I love it. It makes things so easy.

[Sen. Nader Hashim (Chair)]: Yeah. I think I'm I'm interested in the discussion around the menthria at the time of the formation of the contract versus whether it gets developed later on. And I'm trying to think of different analogies, These aren't perfect analogies, but I'm thinking of somebody who takes out a car loan, takes out a student loan with initially the intent to pay through the whole thing. Then they default on a loan, like a student loan, for example. You know, they still have their degree,

[Todd Daloz (Vermont Attorney General’s Office)]: but they're they're broke. They're not paying the loan anymore.

[Sen. Nader Hashim (Chair)]: You know, that type of circumstance, obviously, person isn't going to be prosecuted for a crime. However, on the other hand, if they're taking out loans to use them fraudulently, at the time that they're taking out the loan, you know, then it's it's a crime from the beginning. So I don't I don't know if that's best analogy, but that's kind of what I'm thinking about regarding the idea of potentially making it, adding the ability to have the mentholera developed later on after the contractor takes the money, has the intent, maybe they even start the job, but for whatever reasons, stop, you know, whether it's because they go bankrupt, warehouse catches fire, or they I don't know. For whatever reason, it might happen. So, yeah, any thoughts

[Todd Daloz (Vermont Attorney General’s Office)]: on that?

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Yeah. And it again, look, it's interesting there, right, is, say, warehouse catches on fire. Right? At at that moment, they're not intending you're still not doing it. Like, this horrible thing happened to that contractor. There's no one who can to harm those other individuals. So I I would say in that example, like, that wouldn't fit into that. But I think the scenario of, you know, initially, you tend to do the work. Three months go by. Hey. Where are you? The person is now sort of in that Ponzi scheme realm of, like, oh, no. Like, I needed my next job to pay for this job. Okay. That's what I wanted to do then. But now I'm I'm a mess and I'm behind, and I'm intentionally avoiding those folks. I think that it's interesting. But, again, this is where it falls quickly into contract law on whether you're just gets a little mind boggling. And was thinking, you know, one analogy, and it's not a public analogy, is I was thinking about embezzlement. Right? When that person initially is taking the money, like, there's always at least when you hear these stories after the fact, it's like, oh, I'm not I'm not taking it. Like, I'm gonna put it back. Right? And then it just the problem gets bigger and bigger, and then they can't put it back. You never say in those that's what my case is. Like, oh, we can't put it back now. You're not gonna get back. You knowingly took the money. Right? So, again, it's not a technique analogy, but I think if there was a way to practice that would cause let's say, that Ventura has shifted, it's either at the beginning or it occurs during the course of the contract. And again, it would still be the state's burden to show that shift occurred, that they are now intentionally defrauding that person. That burden would be on us. But that basically takes away that burden of having to show it all all the intent to be done at the start. Mhmm. Something to consider.

[Sen. Tanya Vyhovsky (Member)]: So we have a question that is sort loosely related to this. And, again, it comes from my not being an attorney, and I'm just but my understanding of intents and thoughts, and I I I'm curious how one proves what someone was thinking when they signed a contract or when they changed their mind.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Yes. So mantra intent is almost always circumstantial evidence. You know, the rare lucky case. You know, you find someone's diary who's like, I plan to defraud Southern University. Right? Like, that would be direct, wonderful evidence. We never get that. We'll never get that. Or the person admits it. Then we know their thoughts. We have to look at actions they've taken or not taken to build, try and see what someone was thinking at the time to see what mens rea would fit. So, someone must always start from San Antonio.

[Sen. Tanya Vyhovsky (Member)]: So, I would imagine Senator Norris gave an example the other day about someone who had multiple people that they had signed contracts with and never done any work, that that would go into that bank with evidence to say, you know, this is

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: a pattern of behavior. Exactly. Right? He did it once. Like, maybe you attended it, but then he couldn't follow through for some reason. Maybe took on another client, right, knowing you had no resources, knowing you owed someone else's work. Right? That exactly, like, that would build towards, like, what were you thinking at the time? What were you planning? Know, you purposely to probably know, you knowingly. And and we would put that to to to make it out of that.

[Todd Daloz (Vermont Attorney General’s Office)]: K. That's it.

[Sen. Robert Norris (Vice Chair)]: Yeah. I don't know where to start on this long term. First of all, I wasn't aware that there was I had heard rumors that there was there may be some constitutional issues involved in this. So in your testimony, you said there's you're holding on to, like, 80 or 85 home improvement fraud. Is that on the criminal side or is that on the you're not holding on to civil?

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Don't we don't hold civil cases, so these are all criminal.

[Sen. Robert Norris (Vice Chair)]: So those 80 to 85 also listed under the backlog within our court systems? They're current cases. Current cases that you're not gonna do anything with, right?

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Well, the cases that have been filed in the county, they're still going forward with that. There's no litigating them in certain counties.

[Sen. Robert Norris (Vice Chair)]: So you're indirectly suggesting that maybe we should just wait until we get to that decision from this Orange County court. Orange County

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: I think it would be interesting. It is scheduled for March the date it's scheduled for hearing near the March. The prosecutor in that case has actually submitted a motion asking to move the hearing up, knowing that there's pending legislation, and they would like to get a decision out of there. I don't know if that's going to happen. I don't necessarily think you need to wait, because then your your if the argument goes forward and Orange County decides, oh, we agree with you. Like, this statute's constitutional. This case can go forward. You're gonna have two different counties, two different entry orders. Again, neither of them are binding anything except for that specific case. So I don't know if you necessarily need to wait. I think it would be interesting and potentially informative. You could still clarify, being tend to default, which was one of the issue. So from clarifying that would help rightly as well as this constitutional issue. So there's no no harm in doing that.

[Sen. Robert Norris (Vice Chair)]: See, my intent in relooking at this bill was to offer some form of protection to alleged victims. And evidently, other than the silver road now, they don't have anywhere else to go. And that can be costly as we know. Went to civil court, and this particular case, we know someone was sitting down for costing $50,000, and they pretty much said, you know what? We're done throwing money into this. I don't feel that that's right, I'm sure you all don't feel that that's right either. You know, quite possibly, I guess we could entertain some dementia later on, Norris, versus one alleged victim right up front if that works better for us. But it feels slow, like we're just sitting out on a sailboat waiting for the wind to come up here so we can get a decision someplace, so to speak.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: Yeah, that's why our department doesn't have a position, because it is. There's differing opinions about that. Folks aren't interpreting the law differently. Again, the changes suggested to address the issues raised in the Martin and Hayden case. So if, say, all it trickled out and the county's all various judges adopted this thinking. These changes would help moving forward and and and take away that that issue so that the cases could move forward.

[Sen. Robert Norris (Vice Chair)]: And in reference to, like, you can't force someone to work for the servitude is write a canyon, but they took $15,000 We need a home. Just give us $15,000 but we need to find a way around this to help people within the state here in courts and different other opinions throughout the state.

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: And, again, the changes here would address that by taking out that essentially, the issue in the Martin case was that an element of the crime is not doing the work of attaching that to that being that servitude. So by removing that, again, you remove that economic against the statute. So this it is it would help lead the issue that's been raised by two courts of.

[Sen. Nader Hashim (Chair)]: Thank you. Any additional testimony or any other thoughts you wanted to share?

[Sen. Tanya Vyhovsky (Member)]: No. No. Great. Thank you.

[Todd Daloz (Vermont Attorney General’s Office)]: There we go.

[Sen. Robert Norris (Vice Chair)]: And he's an IT expert. Do so. I just that would

[Todd Daloz (Vermont Attorney General’s Office)]: be my IT expert. Good morning. Todd Daylis, the attorney general's office. Thanks for having me here today. As senator North, this is a small but really important issue for a lot of homeowners. These cases cost tens of thousands of dollars and often leave homes in a fair degree to surrender and folks just waiting and waiting for something to happen. I think the legislature's push in initially passing this bill and this law and then subsequently amending it was to provide something beyond the civil remedies, the kind of contract dispute remedies that exist in other areas of the law to to really address the concerns that victims were facing. Broadly, the attorney general's office agrees with with the testimony that Kim provided in terms of the options for addressing this issue. We're not engaged in the appeal, but we're supportive of the state's attorneys are looking at this and remains sort of waiting to see what happens with the court. I think to the to the point Tim raised, which is a really important one, what do we do if an individual enters the contract and there's no evidence of front of intent to time, but over time, they begin the work, there may be an amendment, a change of order, something like that,

[Sen. Tanya Vyhovsky (Member)]: and maybe at that moment,

[Todd Daloz (Vermont Attorney General’s Office)]: it's easier or more possible to prove knowing intent. One small amendment that we would recommend in that is is just a very slight change. To add the concept of a change order, any kind of written agreement email that suggests additional work, additional payment so that as opposed to having to demonstrate the first day there was fraudulent intent or even a formal amendment to the contract, something that and again, a change order may capture it, but we can certainly talk more with bench counsel about language to capture the evolution of these cases. Because I think the the example or the analogy Kim gave about contractors stepping into a case into a excuse me, into a a job without fraudulent intent and then running out of money for that job, needing assessment jobs to pay for the previous job, and then at that point, kind of falling into this get it behind. It's not quite the same as student loan debt. But I think it becomes a little bit lower of a burden for the prosecutors to demonstrate that fraudulent intent if there are checkpoints along the way. So there's a way and I I don't have language on this to kinda make it a smooth spectrum for the prosecutor to demonstrate at any point along that timeline that there's fraudulent intent, that would certainly work as well. But one simple recommendation for 2029 D would be to add change order there in a couple of different spots. Beyond that, Senator Bahos, your question about sort

[Sen. Robert Norris (Vice Chair)]: of where is the world of home improvement funds?

[Todd Daloz (Vermont Attorney General’s Office)]: So I I do think it's important, and I'm gonna make a little budget pitch. We do have a big consumer unit at the AGO, and we do handle a lot of consumer complaints in the civil realm around it's it's sort of an earlier stage usually than any kind of criminal prosecution might be. And we have an individual at the consumer assistance program who is a home improvement specialist and works with both homeowners and contractors kind of as a mediator to help solve or work through a lot of these disputes at an earlier stage when possible. And he, happens to be both former contractor and paralegal, so he brings incredible degree of skill to it. The budget pitch is he's not in the budget. He has been a limited term service physician with a year over year. It's a very low value, think around $85,000 cost for his position. And I believe at last check, was about six months ago, he helped recover either for contractors or for homeowners, something in the neighborhood of $1,800,000. And so that is we have seen since the, Washington County case came down last March, more home improvement work shifting to that civil consumer fraud arena. And in response to that, this position seems even more important. I'll make that pitch for f y twenty seven. It's for the appropriate channel, but I wanted this committee because it's not really criminal, which is what the judiciary generally deals with. But it is definitely a layer on this. I I'm happy to speak about sort of where the criminal prosecution lies for home improvement fraud. I would suggest a couple of things there. The only area where the AG has sort of specific and exclusive jurisdiction, there's I think this committee knows it's overlapping jurisdiction, concurrent jurisdiction across the state and the state's attorney's office. Homicide is the only area that the legislature has said and she has some jurisdiction on homicides. That's not something they exercise. We usually work in collaboration with state's attorneys around how to respond to homicides. Home improvement fraud generally is a misdemeanor case. And just, I don't I'm happy to respond to that. That's a proposal for the committee since to wanna move forward. We're just handing all of the that work for the AGO just on a pure logistics note. So we have a criminal division that's roughly the size of the Washington County State's Attorneys Office, about six attorneys. It would require those folks to travel just on a simple level all over the state to respond to business to get faces and would really pull those resources from the ICAC work we did, which is the Internet Child Internet Access Children's Lung, and the homicide work we do. But, again, I'm happy to have

[Sen. Tanya Vyhovsky (Member)]: the government be able talk about that data.

[Todd Daloz (Vermont Attorney General’s Office)]: For the homicide cases, how many well,

[Sen. Nader Hashim (Chair)]: I know you may not have the numbers in front of you, but what are the numbers of the cases that are in the criminal division in your office right now?

[Todd Daloz (Vermont Attorney General’s Office)]: Like, how many homicides? Yeah.

[Sen. Nader Hashim (Chair)]: Do you know how many homicides by any chance? I can

[Todd Daloz (Vermont Attorney General’s Office)]: I can get that breakdown? I think the homicides, there a number that are specifically where the prosecuting office, there are a number where we're assisting, there are a number where we're providing support in other ways, whether it's deposition support or of the background work. I will give you a breakdown of this. One other question going back a couple of minutes here regarding the change order. I wasn't sure

[Sen. Nader Hashim (Chair)]: I fully understood. So is it the suggestion that evidence from the contractor as to whether or not they made changes to the contract, like making an addendum that says this work is actually going to take the next six months and we're not gonna finish on time to fit those orders can be used as evidence?

[Todd Daloz (Vermont Attorney General’s Office)]: Yeah. Essentially, that any any written evidence that demonstrated a change to the contract. Right? So, hey. We prefer it if you add some training to the kitchen or whatever it is, and the counteract was this great, that would be an additional $3,200. If at that moment, this demonstration that there's that there was no intent to ever carry through on that change, or that would be that would be an additional checkpoint as opposed to just saying the original kitchen remodel once they sign that contract. It would just give more opportunity to demonstrate the role. So

[Sen. Robert Norris (Vice Chair)]: One of the examples that previous testimony would just be able to launch that they said they needed a certain amount of money to order this special window. Weeks later, they go check with the and this individual never showed up, never ordered a window, but held the one, so that also falls to that same category that you're talking about. So let me give you a heck of a situation to see if you feel comfortable with an answer. So say someone, say I bring my car into a garage, this is, or she says, well, it's gonna cost a thousand dollar, I need $500 up front in parts. Parrot says it for three months. Nothing's done. They get my $500. I

[Todd Daloz (Vermont Attorney General’s Office)]: mean, I've it would be a very challenging criminal case.

[Sen. Robert Norris (Vice Chair)]: I'm just wondering if we should explain the scope of what we're talking about here.

[Todd Daloz (Vermont Attorney General’s Office)]: I I think the challenge will be and and I think Kent spoke to this eloquently, to demonstrate the mens rea, to demonstrate the criminal intent with, generally speaking, have the benefit of the person's thoughts as the fifth event was gonna protect them. It's always gonna be really challenging with that circumstantial evidence. And there there are civil avenues, but I absolutely understand that they are I think they do not meet the needs of many of the victims. I mean, I think if you read the the case that Franklin found that that followed up on the case side in its meeting, that individual had saw had gone to small pledge work, right, had looked for civil rights, said they were lacking for them, and that's when I became a criminal justice. So I don't have an opinion on other areas to to both.

[Sen. Tanya Vyhovsky (Member)]: I I mean, I think the sad reality is is unfortunately the criminal justice system often doesn't meet the needs of the victims that approves to. My question though is in the instance of the case where the person said, yep, sure, and then, know, but Slater had never actually ordered that special thing, would that play into that ability to prove, well, you said you'd do it. He was never even ordered part.

[Todd Daloz (Vermont Attorney General’s Office)]: I mean, I think the prosecutor reduced all available, as Ken said, circumstantial evidence, not the direct evidence I saw at, but evidence that tends to prove that the person is never gonna have carried through even the the contract, the amendment, the change order of the pandemic. I mean, I understand it. It's a very challenging area. I think, you know, that's part of the reason that the government decision has has had success in other areas of the state is because there's a viewpoint that the inability to pay requires servitude without not warrant will force criminal servitude. I mean, I think as Tim said, there's there's a hearing coming up and a decision that's very appropriate in lightning, but it doesn't have status.

[Sen. Nader Hashim (Chair)]: Kim, I saw you.

[Todd Daloz (Vermont Attorney General’s Office)]: I

[Timothy Lueders-Dumont (Department of State’s Attorneys and Sheriffs)]: just wanted to clarify that for the record, there's a hearing in Orange County. Oh, sorry. Not, but it is potentially something that could be a key piece. But we don't have the initial decision yet. Thank you. Anything else?

[Sen. Tanya Vyhovsky (Member)]: Great. Thank you.

[Sen. Robert Norris (Vice Chair)]: Thank you. You're too clear. Thanks. Alright.

[Sen. Nader Hashim (Chair)]: We can go off