Police, district attorney disagree on Home Depot retail theft case against landlord
JANESVILLE—Police believe a Janesville landlord participated in a shoplifting scheme involving thefts of more than $30,000, but the district attorney won't prosecute their case.
District Attorney David O'Leary said police don't have proof to support their allegations, and he won't take the case to court.
Police recently released voluminous records of the two-year investigation after The Gazette requested them under the state open records law.
Police are convinced the landlord is guilty of bankrolling the scheme.
But after “countless” meetings with the investigators, O'Leary said he was not convinced police have definitive proof of the potential charge—conspiracy to commit retail theft.
Police interviewed dozens of people they believe stole items from Home Depot or returned items others had stolen for in-store credit.
The credit was loaded onto plastic cards, which the shoplifters sold through an intermediary to the landlord for 50 cents or 60 cents on the dollar.
Police believe Richard D. “Rick” Donahue, 3735 Skyview Drive, who owns numerous rental properties in the city, bought the Home Depot cards, knowing they were the result of shoplifting.
The Gazette contacted Donahue, who declined to comment.
Police have Home Depot records showing Donahue used the cards to buy building materials, but only one witness can testify Donahue knew the cards were the result of thefts.
That person is Tyler J. Groeller, 30, of 3704 Stuart St., No. 8, Janesville, an admitted heroin user and organizer of the thefts. He told police several different stories before telling them he organized the thefts to sell the cards to Donahue.
SCHEMER AND SCHEME
Groeller's case is pending in Rock County Court, where he is charged with conspiracy to commit felony retail theft, receiving stolen property, delivery of less than three grams of heroin and possession with intent to deliver counterfeit narcotics.
Groeller told police he has been a shoplifter since his teens, and he perfected a technique that allowed him to shoplift numerous items from Home Depot.
But Groeller had a problem. Home Depot allows only three returns without a receipt each year, so Groeller had to recruit others to make the returns for him, sometimes finding his helpers through Facebook, police said.
Groeller also recruited others to shoplift, with thefts at Home Depot stores across southern Wisconsin and northern Illinois, police believe.
Groeller told police he paid his “returners” and sold the cards to Donahue.
Home Depot requires identification when getting the cards and when using them, and company records show Donahue used cards that originated with 55 different Rock County residents, said officer Jennifer Reed, the primary investigator on the case.
Reed is a member of Janesville Police Department Street Crimes Unit and a nine-year veteran of the force.
Home Depot gave police pages of records listing items returned for in-store credit. Many were cabinet knobs, handles and plumbing fixtures, items that are often pocket sized but carry a relatively high value, Reed said.
Donahue owns more than 80 properties around the city, with many clustered in the Fourth Ward. Some of his tenants are rent-subsidized with federal Section 8 dollars.
Last month, 23 households who rented from Donahue received the federal housing subsidy, according to the city. That's less than 5 percent of the 477 total for the month.
Donahue had the most tenants in the program last spring, but in March, Director Jennifer Petruzzello of Janesville Neighborhood & Community Services decided not to allow subsidies for any new Donahue tenant.
Petruzzello wrote in a memo to the city Community Development Authority that she took the action because Donahue had charged excessive fees for late rents, committed “fraud, bribery or other corrupt or criminal act” by failing to report evictions and continuing to accept payments and having a “history or practice of noncompliance with federal quality standards for rental units “and a history or practice of renting units that fail to meet state or local housing codes.”
Donahue had 29 Section 8 tenants in March, when he was the landlord receiving the most subsidy payments of any in the city, according to the memo.
Records show Donahue used Home Depot cards to buy roof shingles, paint, tools and other items that could be used for renovating a building, Reed said.
Most of the people who returned items for credit to get the cards had previous contact with police and/or drug problems.
“That's how these people got cash” for drugs, Reed said.
“It feeds the underground market we have around here,” said Sgt. Chad Pearson, who supervises Reed.
Police believe Donahue was taking advantage of disadvantaged and drug-addicted people and remodeling entire residences with the cards.
Because of the shoplifting, residents are paying higher prices at stores, said Deputy Chief Jimmy Holford Jr., who supervised the street crimes unit when the investigation began.
“This affects our entire city, and we would like it to stop,” Holford said.
But the crux of the matter for O'Leary is proving Donahue knew he was part of a criminal enterprise.
“There is circumstantial information that would lead one to believe there's no way he didn't know,” Pearson said.
But O'Leary said it's just a suspicion: “We don't charge on suspicion. We charge on proof,” O'Leary said.
The Gazette examined police reports of interviews with a number of people who believe Donahue knew exactly what he was doing, including the following:
—A woman identified in reports as a former Groeller girlfriend told police she drove Groeller to Home Depot stores about 50 times.
Groeller would shoplift at the stores and have others return the stolen items for credit, the woman told police.
“Tyler joked several times that Home Depot should have his picture up so that employees would recognize him,” the report paraphrases the woman as saying.
The woman told police Groeller would sell the cards to Donahue, his former landlord to whom he owed money.
Groeller also used the cash to buy heroin, she said.
The woman said she also sold cards directly to Donahue.
“I asked (her) if Donahue knew the card came from items that were being stolen,” the report reads. “(The woman) responded, 'It does not take a brain scientist to figure out they were stolen.'”
—Another Groeller girlfriend told police she tried to pay her rent with Home Depot cards, but Donahue would only deal with Groeller, so the three met in the parking lot of a Court Street ice cream shop, where the woman gave cards to Groeller.
Groeller exchanged the cards for cash from Donahue, and the woman remembers Donahue saying something like: “Hand her the money because I want this to look legitimate,” the report states.
The woman said she then gave the cash to Donahue for rent.
The woman has an ax to grind with Donahue: She complained to police she lost all her possessions because Donahue threw them out of her apartment while she was absent.
The woman later lived with Groeller in a Donahue-owned apartment on Linn Street, and they fell behind on rent. She recalled Donahue coming to collect rent and saying, “You either give me rent money or Home Depot cards," according to police reports.
The woman told police she also drove Groeller to Home Depot stores around southern Wisconsin. She said Groeller would pay his “returners” $10 to $20 each time they returned merchandise.
The woman told police she witnessed Donahue giving Groeller cash for the cards 60 to 100 times, and Groeller typically received $200 to $350 during each exchange.
Groeller at one point was injecting $100 worth of heroin a day, the woman told police.
Another Groeller acquaintance involved in the scheme was asked if Donahue knew the cards were the result of shoplifting, according to police reports.
“How else is somebody going to get that many gift cards? My 5-year-old could figure that out,” the man said, according to the report.
Police also sent an undercover officer to sell cards to Donahue.
“We will be doing roofs in January, so I will need more of these,” Donahue told the officer, police said.
O'Leary, however, said the officer was not able to get Donahue to indicate he knew how people got the cards he was buying.
O'Leary said he has told police repeatedly that if new evidence surfaces, he would consider charging Donahue, but not before.
O'Leary told The Gazette that Groeller gave police different versions of his story and told police he was drugged when he gave them the version implicating Donahue.
Reed said Groeller did give varying versions, but they were consistent, changing mostly in the depth of information.
Groeller did give varying dollar amounts, but the time line and method of operation were consistent, Reed said.
“He implicated Donahue from the very beginning,” Reed said.
Groeller told police he was a heroin user and was taking medications, but Reed would not have questioned him if he was on heroin because heroin users typically fall asleep when they are under the influence, Reed said.
O'Leary said Groeller is trying to exchange his testimony against Donahue for consideration on sentencing, and O'Leary is unwilling to do that.
“It is my job to oversee what police do and only issue charges when they can be proved beyond a reasonable doubt,” O'Leary said.
O'Leary noted police have expressed displeasure with the way Donahue manages some of his rental properties.
The city in 2012 issued Donahue violation orders for 20 properties under the city's chronic nuisance ordinance, and Donahue vowed to comply.
O'Leary said police want him to solve their landlord problem.
“I would be concerned about anybody sitting in my chair who would bow to pressure to charge individuals who the police are mad at,” O'Leary said.
Police Chief Dave Moore rejected that suggestion.
“Absent Mr. Donahue's past rental problems and history, we still would have investigated and presented to the district attorney evidence regarding this criminal enterprise,” Moore said.
“We think there's adequate proof here for a conviction,” Moore said. “…We think a jury would understand this matter.”
TAKE A CHANCE?
But O'Leary said police are asking him to “take a flier” without proper evidence in hopes of convincing a jury.
The Home Depot investigator who brought the case to police attention said prosecutions elsewhere, with similar circumstances, have been prosecuted successfully.
Home Depot's Jeremy Greenleaf would not discuss those cases or this case, however, saying that is against company policy.
Police tried to talk to Donahue and to set up a meeting through Donahue's attorney and then another attorney, but ultimately “they decided they were not interested in giving a statement,” Reed said.
Reed said there doesn't appear to be any other leads for police to follow to prove Donahue knew the origin of those cards.
“We've turned over every single leaf that we could to look for that,” she said.