security deposit

Yup

Mostly, you are screwed, see Hansen vs. Lorenzo. http://law.justia.com/cases/new-york/other-courts/2009/2009-52231.html which addressed this issue. Bottom line was the minute the landlord commingled the funds, the tenant was entitled to the return of the security deposit and it could not be used to offset any claims.

However, New York law only requires that landlords with 6 or more units put the deposit in an interest bearing account in a New York bank. It doesn't appear to detail how a landlord with less than 6 units must segregate funds. In theory you could argue the money was segregated in cash, which you always held, although a judge would probably be skeptical of that answer. Nonetheless, I would never admit the funds were commingled, I don't believe the tenant can demand proof for a landlord with less than 6 units. But a judge might demand proof.

What kind of dispute concerning the security deposit? That said. I believe housing court is tilted towards favoring the tenant.