In The Matter of the Petition by:

TERESSA E. JAMES,

815 E. 53rd Street,

Chicago, IL 60615-4945

P.S. Docket No. AO-2

Grant, Quentin E., Chief Administrative Law Judge, Hearing Official

APPEARANCE FOR RESPONDENT UNITED STATES POSTAL SERVICE: Andrew C. Jagusiak,
Esq., Inspector Attorney, United States Postal Service, Inspection Service,
Washington, DC 20260-2181

APPEARANCE FOR PETITIONER: Stephen S. Knorr, Esq., Federal Defender
Program,United States District Court, 219 South Dearborn Street, Suite
1142, Chicago, IL 60604-1765

INTIAL DECISION

By letter dated August 9, 1988, the Postal Service Inspection Service demanded of former Postal Service employee Teressa James payment in the amount of $10,968.28 covering losses to the Postal Service asserted to have resulted from her "embezzlement theft" of mail during her postal employment. Ms. James' request for recon- sideration of the demand resulted in a final determination by the Inspection Service reaffirming her responsibility for the loss. She took timely appeal from the final determination.

An oral hearing, requested by Petitioner and determined by the undersigned to be necessary, was held in Chicago, IL on March 8, 1990. Witnesses for the Postal Service were Hattie M. Landrum, supervisor of registry at the Chicago Main Post Office, and Postal Inspector James Brock. Teressa James was the sole witness for Petitioner.

The following findings of fact are based on the testimony adduced and stipulated at the hearing as well as the exhibits made part of the record and my observation of the demeanor of the witnesses.n1

n1 At the hearing each party introduced one exhibit. They were marked Hrg. RX-1 (for USPS) and PX-1 (for Petitioner). Documents filed by the Postal Service prior to the hearing were made part of the hearing record by stipulation (Tr. 3, 4) and are referred to herein as RX-A through F and 1 through 11.

FINDINGS OF FACT

1. From January 26, 1986 to May 21, 1988, when Petitioner Teressa E. James was arrested for theft of U. S. mail there occurred in the registry division of the Chicago Main Post Office approximately twelve losses of registered mail containing mutilated currency (RX-C). The Postal Inspection Service has determined that Petitioner is responsible for eleven of those losses totaling $10,968.28 paid by the Postal Service to the various banks which mailed the currency involved (RX-5).

2. On August 9, 1988, the Postal Inspection Service issued to Petitioner a letter stating that she was responsible for Postal Service losses totaling $10,968.28 by reason of her embezzlement theft of mail while employed by the Postal Service and demanding that she pay that amount (RX-5). Ms. James requested reconsideration of the demand (RX-4). On reconsideration the Postal Inspection Service reaffirmed its finding of Petitioner's responsibility and its demand for payment (RX-3). By letter dated September 20, 1988, to the Regional Inspector, Ms. James denied responsibility and requested an evidentiary hearing for review of the determination and demand (RX-2). On or about September 20, 1989, the Inspection Service forwarded this request along with its file on the matter to the Recorder who, on September 21, docketed the request as a petition for hearing under 39 CFR Part 966.

3. Hattie Landrum, supervisor of registry in the Chicago Main Post Office, described in her testimony the physical layout of the registry division area therein and the manner in which registered mail containing currency is handled.

4. According to Mrs. Landrum, and RX-F, the registry division is separate, and partitioned off, from the workroom area and other areas of the post office. Entrance to and exit from the registry area is through turnstiles equipped with a buzzer. Non-registry section employees must ring a bell for admittance and must sign in and out. Registry section employees are not required to sign in and out and are not checked when they leave the area.

5. According to Ms. Landrum, registered mail is kept separate and apart from all other mail. There is individual accountability for registered mail from the point of acceptance to point of delivery and all stops in between. Each registered item has a number which is listed on the signed record of dispatch (Form 3854) from the mailing post office. A copy of this record is enclosed in the locked or sealed dispatch container in which registered mail is sent. In the receiving office the contents of each incoming container is checked against the dispatch record and signed for by the supervisor and opening clerk.

6. After the contents of incoming registry sacks are checked and signed for they go to an open area where any registry employee has access to them to be sorted for further routing and delivery (Tr. 31, 32). High value items, including currency, are supposed to receive special handling. Prior to February 20, 1987, incoming registered mail containing currency amounting to over $1,000.00 was to be taken to the high value cage (Cage 32) for safekeeping. Effective Friday, February 20, 1987, registered mail containing currency of any amount addressed to one of the "six (6) major banks" and received between tour two's delivery on Friday (4:30 PM) and tour one's delivery on Monday (8:00 AM), was to be transferred to the high value cage (Hrg. RX-1).

7. Employees involved in sorting mail are taught how to identify by feel mail containing currency and to determine value by the amount of postage and weight. The employee assigned to the high value cage indicates receipt of high value items at the cage by entering the letter VP and his or her initials beside the appropriate article number on the incoming registered mail dispatch bill.

8. The records reflecting receipt in the registry division of many of the missing currency items involved in this proceeding which should have been taken to the high value cage do not show receipt at that cage. It is, therefore, assumed that they never reached the cage.

9. Registered items not treated as high value go to an open area for further sorting to be placed in sacks to go to stations or branches or in so-called city cases, bank cases or lock boxes for delivery to city addresses and to banks. Many banks do not pick up mail between Friday afternoon and Monday morning. All of the missing items were addressed to banks in Chicago (RX-C).

10. Because the missing items were not placed in the high value cage they were accessible to employees who worked the seven tours commencing Friday afternoon through 8:00 a.m., Monday, (Tr. 31, 46, 58, 104).

11. During the period the losses charged to her occurred Petitioner's weekend work in the registry division was limited to tour no. 2, from 8:00 a.m. to 4:00 p.m., on Saturdays. She worked that tour on each of the weekends, except one, during which the relevant losses occurred. The exception was the weekend of August 29 and 30, 1987, when she was on annual leave (Tr. 99-101). Her specific work assignment on tour no. 2 varied from week to week, usually starting on the floor even when she was assigned to the high value cage (Tr. 35).

12. Of the 97 employees in the registry division, 12 worked at least one tour during the weekends when losses occurred. Of these 12 postal inspector James Brock, who conducted the investigation, settled on 2 as prime suspects, Ms. James and Walter Lawson, because he considered that they had the greatest access to the mail and that the specific work assignments of the other 10 would have given them little reason to be in the area where sacks of incoming registered mail were opened, sorted, and taken to cases or boxes. These 10 employees did, however, have access to that area and presumably had access to the missing items (Tr. 102, 103).

13. Ms. James signed the incoming dispatch bill covering the contents of registry sacks in which two of the missing items were received (Tr. 104).

14. There were several losses of incoming currency in the registry division, during the relevant time period, with which Ms. James has not been charged because they did not fit the pattern of the losses charged to her (Tr. 91-2).

15. The registry items charged to Ms. James were all envelopes containing mutilated currency signed into the Registry Room after 9:00 p.m. on Friday and not delivered to the addressee banks on Monday morning as they should have been (Tr. 75-6).

16. As part of his investigation, postal inspector Brock, in cooperation with some of the banks involved, conducted test mailings of currency to be handled by Ms. James and Mr. Lawson (Tr. 82-3). They occurred between October 1987 and May 1988. Four were run on Ms. James, the last involving a test piece received in the registry division on the day she was arrested for theft of other registered mail. Ms. James handled all four test pieces properly (Tr. 96-7). Mr. Lawson handled properly the two pieces used to test him.

17. On Saturday, May 21, 1988, starting at 8:00 a.m., inspector Brock and two other inspectors, positioned in the lookout gallery, observed Ms. James handling an incoming test envelope properly. However, she took another incoming envelope and a sack, both containing mutilated currency, and instead of taking them to the high value cage, she concealed them in a folded newspaper and carried them out of the registry room to the dispatch room without placing them in a proper container and billing them out as required. Later she was seen stuffing the sack in her pants. Shortly thereafter she was apprehended by inspector Brock and two postal police officers. In the course of being questioned about the two mishandled registers she gave them a written statement in which she admitted knowing that they contained currency and that she was considering taking them out of the building but denying that she had decided to do so when she was approached by the inspectors. Ms. James was placed under arrest and, in a complaint filed with the U. S. District Court, Northern District of Illinois, was charged with theft of the sack register having a value of $15,000. She was tried by jury and, on July 10, 1989, was convicted of violation of 18 U.S.C. § 1709. She was placed on probation for two years (RX-A).

18. As of the date of the hearing in the instant matter, since the arrest of Ms. James there have been no further register losses in the Chicago Main Post Office (Tr. 92, 119).

19. Other employees in the registry division were aware of the arrest of Ms. James and the reason therefor (Tr. 64).

20. In addition to other factors causing the Inspection Service to regard Ms. James as a prime suspect were financial pinches she experienced during the relevant period including fire damage to her condominium in the fall of 1985 thought by inspector Brock to have amounted to about $17,000 (Tr. 83-4). He was not aware that the bulk of this loss, consisting of structural damage, was covered by condominium insurance and that the uninsured loss of personal property had been partially defrayed by a collection taken up in the post office (Tr. 106-7). Ms. James paid off the balance due on replacement furniture from her first lump sum retirement check in December 1988 (Tr. 126).

21. In her written statement following her arrest, Ms. James stated that she had recently borrowed $1,000 from the Credit Union for her mother's cataract operation and needed $800 more (RX-D).

22. Her elderly mother and two grandchildren were living with Petitioner during the relevant time period. She received about $187 per month in public assistance for the care of the grandchildren. Her mother received approximately $290 per month in social security benefits. During this period, Ms. James was always behind in her mortgage, second mortgage, and condominium payments (Tr. 123-127).

23. Based on the stipulated testimony of Robert Seeder, a staff attorney with the Federal Defender Program in Chicago, I find that he was co-counsel for Ms. James in her criminal trial for theft of U. S. mail. He was told by the Assistant United States Attorney who prosecuted the case that the prosecution had subpoenaed various financial records of Ms. James in an attempt to tie her to previous thefts of registered mail but had been unable to find any deposits or outlays of money by her which in any way related to such thefts or that reflected use of unexplained monies around the time of and after the unsolved thefts. These records were placed in evidence by Petitioner in the instant proceeding (Hrg. RX-1).

24. Petitioner James is 65 years of age. She was employed by the Postal Service for more than 25 years, 9 or 10 of them in the registry division in the Main Post Office (Tr. 130). She retired from the Postal Service in July 1988 (Tr. 127). She testified that between January 1986 and the date of her arrest, May 21, 1988, she did not take any money or registered mail during the course of her duties (Tr. 136). She also testified that at the time of her arrest she was considering taking the two items she had set aside in order to pay all her bills but had not arrived at a firm decision to do so because she was nervous and didn't know whether she had the guts (Tr. 136-38).

25. The Postal Service introduced no evidence showing that Petitioner's Postal Service employment record was blemished in any relevant respect except for her conviction for mail theft in 1988.

26. The Postal Service has paid the claims for all losses included in the $10,968.28 it has demanded from Petitioner.

DISCUSSION

Acknowledging that its case against Ms. James is solely circumstantial and inferential, the Postal Service argues that it is entitled to recover from her the claimed losses on the basis of the decision in Boerner v. United States, 117 F.2d 387 (Cir. 2, 1941) cert. den. 313 U.S. 585. In Boerner a mail carrier was held responsible for losses caused the government through his theft, or other mishandling, of 66 pieces of mail. On appeal by Boerner from judgment in the District Court, the Circuit Court affirmed, holding that the government had made a prima facie case against him largely on the basis of circumstantial or inferential evidence supporting the presumption that mail addressed to addresses on his route, but not delivered, had been received by him in the ordinary course of postal processes thereby placing on Boerner the burden to explain his failure to make delivery. Boerner offered no rebuttal to such evidence which consisted of the following as described by the court at page 390:

"These included the facts that the losses on plaintiff's parcel post route were ten times or more greater than the average of the other six routes emanating from the Long Island City Post Office until plaintiff was superseded, whereupon they dropped to normal; that when suspicion was thus cast upon plaintiff, a test package was made up for delivery on plaintiff's route, and its loss was traced to him; that upon search of his automobile certain missing parcels post and government property were discovered; that plaintiff had been guilty of various infractions of the rules, such as the delivery of parcels to other than the addressees, failure to take receipts, and improper collection of 'postage due' and other stamps; and that plaintiff admitted wrongdoing and pleaded guilty to the charge of embezzling property of the United States."

The Court also gave weight (a) to Boerner's written admission of mishandling of other mail on his route made three days after his arrest for embezzlement of the test package and (b) to his failure to reply to letters from postal inspectors charging him with responsibility for embezzlement of numerous undelivered parcels (including those later involved in the Court's decision). The Court said that this failure to respond justified the inference that Boerner had not found a way to clear himself of the charges.

The case of the Postal Service against Petitioner differs in many critical respects from the Boerner case. First, and most significant, the evidence furnishes insufficient basis to apply against Ms. James the presumption fundamental to Boerner that in the ordinary course of the mail process the missing item came into her possession. This is primarily because Ms. James was not a route carrier responsible for the route to which the missing items were addressed. Rather, she was only one of twelve employees working in the registry division during the weekends when the losses occurred, all of whom had access to the missing items. Although she signed the incoming dispatch bill showing receipt of two of the missing items in the registry division, they were not delivered to the high value cage and may well have been accessible to other employees working the weekend tours. The fact that she signed for these items, thus creating evidence of her handling thereof, works against the likelihood that she thereafter stole them.

The facts set forth in the quoted portion of Boerner, supra, are either absent here or present in less compelling form. There are no routes involved from which average losses may be derived. Although losses of mutilated currency registers in the registry division stopped following Ms. James arrest, this is as attributable to fear and circumspection throughout the division resulting from her arrest as to her removal from the scene. Boerner stole a test package. Ms. James did not, although four test mailings were run through her. Boerner admitted stealing several items. Ms. James did not. Although she was apprehended and arrested in the course of mishandling two registers containing mutilated currency, she had not removed them from the registry area and she denied having made up her mind to steal them. She denied stealing any of the missing registers and, unlike Boerner, none were found in her possession.

Little weight in favor of the Postal Service can be attached to the fact that Ms. James was experiencing financial difficulties during the period the losses charged to her occurred because there is no evidence that the missing currency was used to pay off or reduce any of her indebtedness. The office of the United States Attorney subpoenaed financial records of Ms. James in an effort to tie her to the losses claimed here and found no evidence to support that objective.

The demeanor of Ms. James during her testimony denying culpability gave no signals causing me to doubt her credibility. The Postal Service says her failure to demonstrate, on the witness stand, remorse and contrition as a convicted felon was such a signal. I cannot agree. The criminal case was over. She had suffered the punishment imposed following conviction. No showing of remorse was required to support her credibility in this proceeding.

The Postal Service has not cited and a search fails to disclose any reported case in which the Bpermer rationale has been applied to establish a prima facie case for recovery of postal, or other, losses. As discussed above, the facts here fall too short of those relied on by the Court in Boerner to justify its application in this proceeding.

CONCLUSIONS OF LAW

For the reasons stated in the discussion, above, the Postal Service has failed to establish a prima facie case against Petitioner on the basis of Boerner v. United States, supra. Therefore, it is concluded that the determination of her indebtedness to the Postal Service is incorrect and this administrative offset proceeding is dismissed.