I Got a Letter Demanding Money After Being Arrested for Petit Larceny?  What is This?

By: Don Murray, Criminal Defense Lawyer with Shalley and Murray

In New York, merchants who believe that someone has stolen property from them are allowed to sue those people in civil court for a $500 penalty (potentially more if the property was damaged).

Therefore, people accused of petit larceny often find a letter in the mail soon after the arrest demanding a payment of some amount of money (usually $500 or less).  This letter can be confusing to some people because, despite some level of explanation contained in the letter, it can seem like it is connected to the criminal case.

It isn't.

This demand for money from the store has absolutely nothing to do with the criminal case.  The demand is not being made from the Court.  The money doesn't go to the Court.  The money goes to the store.  The outcome of your criminal case is not dependent on your paying the money demanded by the store.

The letter typically comes from an entity that claims to be a law firm.  Perhaps it is a law firm in the sense that it is owned and run by a lawyer or lawyers.  But what it really is in this context is a collection agency.  Since the maximum amount the store can sue for is usually $500, it wouldn't make economic sense for the store to bother to go to the expense of suing a person, even in small claims court.  But the law firm/collection agency agrees to take on these "lawsuits" in bulk from lots of stores all over, and runs it as a business of its own.  Presumably, the store gives the law firm/collection agency a percentage of the recovered money.

This means  that the law firm/collection agency has a huge incentive to try to get you to pay the maximum amount of money in the least amount of time.  It makes just as little economic sense for them to go to court on a small claims case as it does for the store.

The law firm/collection agency has to hope that it can somehow convince most people, if not all the people, to pay them money without having to go to small claims court.  This is one reason why the collection agency needs to call itself a law firm.  It needs to be able to frighten people with ominous letters that talk about maximum penalties and lawyers' fees.

Here's what you need to understand about that letter that you get.  It is nothing.  It is no more official or spooky than someone calling you on the telephone and asking you for $500.  They can send you 100 letters.  Sending you a letter is not being sued.  You are only sued when you get served with a lawsuit and told to go to small claims court.  The law firm is desperate NOT to do that.  The law firm is desperate NOT to do that because if you force them to go to the trouble of actually creating and serving you with a lawsuit, they have lost money on you.  If you force them to the point that they actually have to send a lawyer to small claims court, then they really have lost money on you.

If nobody responded to these letters demanding money, and every one had to be filed in small claims court, there would be no sensible business model.  They make money because most people can't be bothered to deal with all the letters and then going to small claims court.  

How you respond to this situation is up to you.  It is possible to negotiate with these people if they realize that you understand the game.  They will talk big about not being afraid to take you to court because they will claim that they will be awarded attorney fees if they win.  I'm not so sure about the likelihood of them being awarded attorney fees if they win.  

We have prepared letters in the past on behalf of our clients to these collection firms advising them never to contact our clients again unless of course it is actually to sue them.  Clients have reported that the letters stopped and no further action was taken.  This of course is anecdotal evidence and does not necessarily mean that every time we send a letter all of these matters are dropped.

But on the theory that for $500 it isn't worth them fighting in court over, the economic odds may be in your favor at least.  The only incentive for these firms to actually take you to Court is an irrational non-economic incentive of keeping the threat alive, like loan sharks who need to hurt people who don't pay because it doesn't "look good".  Economically, there just can't be an upside to it.  For this reason, we will write letters to these people for our clients.  For those clients who end up not having to pay the oft demanded $500, it therefore represents a way to save $500.

You may decide that it is simpler just to give them some money just to leave you alone.  Some people make the private choice that they do not like to live with the possibility of having to deal with some sort of small claims suit down the road and they would rather just resolve it.  

It doesn't seem to make any sense to pay them the maximum of $500 however.  

Rest assured, however, that this civil penalty has NOTHING to do with the criminal case.  You aren't going to jail if you don't pay it, and in most cases the Court won't even be interested in whether you paid it or not.



Hi.  This is Don Murray, partner at Shalley and Murray.  If after reading the articles that interest you here, you would like to speak to me, please call the above number.  We can talk over the telephone, set up a free in person consultation, or even set up video conference over Skype, FaceTime, or our own internal video conference software.