AITA for refusing to let my stepson return home without punishment after he ruined my daughter's book collection?

My biological (12yo) daughter ~ Susan likes to collect and read old children's books. She's become incredible reader. She had problems with reading and learning before and we were advised to encourage her to read and eversince she started reading (which she does regularly) her skills improved. she also reads to her 2yo sister everynight.

I have a (16yo), stepson ~ Levi who can be a hothead sometimes. We don't have a son~dad relationship but I respect him and he respects me though he can act quite mean and selfish towards me and his sisters. He'd throw away stuff that belongs to us over small arguments and teases Susan for spending a lot of time to read calling her grandma.

My wife and I discussed his behavior and had conversations and agreed on punishments but Levi'd go to his dad's place whenever he causes troubles then have his dad yell at me for wanting to discuss a suitable punishment. Then Levi comes home days later expecting me to let go of what he did everytime, it's frustrating.

I got a call at work from Susan saying Levi took her entire book collection and threw them in the pool after she refused to lend him and his friends her camera for his trip. My wife helped get them out but they were wet and some were torn. It was horrific because some of those books are hard to get and meant a lot to Susan as a part of her life. I was so mad at Levi I came home to have a conversation with my wife to decide on a punishment but he already packed a small bag and went to his dad's, I asked my wife how could she let him basically run after doing this and she said he called his dad and he came to pick him up after Susan said that I was coming home to deal with the problem.

I went to his dad's house and he refused to let me see him. I told him how Levi was hiding from consequences and his dad tried to justify why Levi was acting out by blaming me for how me and Susan treat him. He even said he'd get CPS involved if I ever try to punish him because I'm not his dad, I have no right. Adding what Levi did was a reaction to my daughter being mean to him. He told me to leave because Levi won't come home til I promise not to do anything about what he did and put it in writing.

I told him Levi should stay there with him then. He's not to come back til ~he~ get proper punishment. His dad argued it's his mom's house too and called my wife and she asked to let this go and we'll figure out some way to resolve it but I don't think it's fair for Susan to have her books ruined and Levi getting away with it. They're asking me to let it go but this will only encourage Levi to do worse if I don't deal with it now. It's been 2 weeks and my in-laws say I was out of line for banning Levi from coming home and are telling me to step back but I refused.

EDIT ~ Levi's dad thinks that because I'm not his bio dad then I have no right to punish him for whatever he does in the house. In the past his dad caused issues when I used to take Levi's electronics (that his dad bought) as punishment. Then I got talked out of punishing him everytime he did something unacceptable wether to me or his sisters.

I've arranged for family therapy but Levi's dad refused to let him go.

EDIT ~ I'd like to mention that my inlaws said that Levi is willing to apologize to Susan and so this should be enough to get this over with but I kept saying no and for that I'm being considered at fault.

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