Yes, that is perfectly legal and it actually says so in the lease agreement. You can try asking your old roommates to pay you the deposit and when they move out, they can keep it all. How that fares might not be too swell, as most people are fucking idiots.

But if they never end the lease and keep swapping in people all the time, as long as one person stays and that apartment is never vacant, you will never get that deposit back.

https://www.google.com/search?q=landlord+tenant+laws&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a#hl=en&sugexp=les%3Bcesh&gs
_nf=1&pq=landlord%20tenant%20laws&cp=17&gs_id=40&xhr=t&q=landlord+tenant+act&pf=p&client=firefox-a&hs=2wF&rls=org.mozilla:en-US%3Aofficial&sclient=psy
-ab&oq=landlord+tenant+a&gs_l=&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.&fp=cacdae0a7374697e&biw=1095&bih=882

find the version of the landlord and tenant act for your state or the equivalent document for where ever you live. These laws define the obligations of, you guessed it, landlords and tenants.

http://www.ag.state.mn.us/Consumer/housing/lt/LT1.asp#EnterAgreement

I read it, but I can't compare it to this situation. Says nothing about what happens when the landlord agrees with you to cut you out of the lease. I am confused. I read and re-read the part about the lease, but it doesn't mention anything like that.