POTSDAM -- The attorney general fined a Potsdam landlord $5,000 for mishandling his tenants’ security deposits.

Attorney General Eric T. Schneiderman today announced a settlement agreement with Karl H. Schreyer, a St. Lawrence County residential landlord to reform his practices in handling tenants’ security deposits to comply with New York State law.

Schreyer, doing business as KHS Rentals, owns and operates 10 rental properties in Potsdam, renting largely to the student populations of Clarkson University and SUNY Potsdam.

The agreement settles an investigation by Schneiderman’s office probing whether Schreyer was improperly commingling tenants’ deposits in his personal bank accounts and failing to return the deposits to tenants after their leases ended.

Since at least 2012, Schreyer has failed to maintain rent security deposits in separate interest-bearing accounts, as required by New York state law, and co-mingled deposits with personal funds. In addition, the company failed to return or account for the deposits of over 60 tenants and misappropriated funds to the point where there was a deficit of $30,000 of deposit monies. That’s according to the Attorney General’s Office.

The investigation was started after the AG’s office received several complaints from former tenants who did not receive their deposits. Since the initiation of the investigation, Schreyer has taken several steps to correct his actions, including creating a separate interest bearing account for deposit monies and refunding or accounting for the remainder of outstanding deposits for a total of nearly $25,000, according to the AG’s office.

The settlement agreement requires that Schreyer fully comply with Article 7 of the General Obligations Law, pay $5,000 in penalties to the state, and execute a confession of judgment for $30,000 whereby the state can place a lien on the properties owned by Schreyer as security for the tenants’ deposits, Schneiderman said.

In consideration of Schreyer’s cooperation, the Attorney General has agreed to refrain from filing the property lien for a period of 120 days to give him additional time to ensure the company has the funds to properly account for all current deposits.