In the Matter of the Petition by:

HAROLD POOK, Postmaster
at
Ontario, OR 97914-9998

P.S. Docket No. DCA-60

Grant, Quentin E., Chief Administrative Law Judge

APPEARANCE FOR PETITIONER: Lanny L. Fredericks, National
Postmaster Representation Committee, 1345 SW Evergreen Avenue,
Redmond, OR 97756-2052

APPEARANCES FOR RESPONDENT: James A. Friedman, Esq., Robert P.
Sindermann, Jr., Esq., Office of Labor Law, United States Postal
Service, Washington, DC 20260-1133

FINAL DECISION UNDER DEBT COLLECTION ACT OF 1982

By petition filed November 8, 1989, following appropriately granted extensions of time, Petitioner Harold Pook requested a hearing on a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act, dated August 18, 1989. Petitioner has elected a hearing based solely on written submissions. Respondent has requested an oral hearing in Boise, Idaho asserting that the case presents predominate issues of credibility and veracity which cannot be properly resolved on the written record. This assertion lacks support sufficient to warrant denial of Petitioner's election. Therefore, the hearing is being conducted on the written record closed as of close of business January 11, 1990.

FINDINGS OF FACT

1. On August 21, 1989, Harold G. Pook, Postmaster at Ontario, OR 97914-9998 received a "Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act" dated August 18, 1989 (Resp. Ex. 13). The notice was based on Mr. Pook's failure to pay or make arrangements to pay the Postal Service the sum of $12,374.83 demanded of him in letters dated July 6 and August 1, 1989 (Resp. Exs. 8 & 11) as money owed for financial accountability shortages discovered in an investigation conducted by the Postal Inspection Service. This investigation resulted in a determination that the shortages were the result of Mr. Pook's failure to enforce conscientiously USPS policies and procedures in managing the Ontario, OR Post Office.

2. Mr. Pook's petition for a hearing opposes the notice and the underlying basis therefor on the grounds that he did not have direct control over the accounts in which the shortages were discovered and that according to Postal Service policy a postmaster is not to be held financially responsible for a shortage unless he has direct control of the account. Further, he denies responsibility on the grounds that he did not take the missing funds and that the Postal Inspection Service found that they were stolen by an unknown party.

3. On March 23, 1988, following receipt of an anonymous telephone call concerning missing postal funds at the Ontario, OR Post Office, the Postal Inspection Service (PSI) in Portland, OR advised Postmaster Pook of the call. Mr. Pook stated he had no problem with employee shortages but would conduct a complete audit within a week and advise the PSI of the results. A postal inspector visited Mr. Pook in Ontario on or about March 30, 1988, with regard to the matter. Mr. Pook stated that he had checked his records and found no financial discrepancies (Resp. Ex. 5).

4. In fact, Mr. Pook had audited employee stamp accountability in February 1988 and found shortages and overages which, combined, produced a net shortage of $4,782.07. He adjusted the accountabilities of the responsible clerks and inserted the "ghost" figure $4,782.07 on the Stamp Accountability Daily Recap Sheet to offset the shortage. Mr. Pook did not attempt to collect the shortages from the responsible clerks, did not retain the count sheets, and did not report the shortages to the PSI on Form 571 as required (Resp. Exs. 4 & 5).

5. Mr. Pook initiated another stamp accountability audit in June 1988, delegating the actual audit to a clerk. This audit also disclosed numerous shortages and overages among employees but Mr. Pook made no appropriate adjustment to employee accountabilities, did not attempt to collect the shortages from them, and did not retain the count sheets (Resp. Ex. 4).

6. No stamp stock counts were made in the Ontario Post Office between June 1988 and May 1989 (Resp. Ex. 4).

7. Following receipt by the Boise MSC of an anonymous letter dated May 2, 1989, claiming numerous discrepancies at the Ontario Post Office (Resp. Ex. 1) and at the instance of the MSC, Mr. Pook conducted stamp accountability and main stock counts. They disclosed a shortage of $7,592.81 reported by Mr. Pook to the MSC on or about May 12, 1989 (Resp. Ex. 2).

8. On May 17 and 18, 1989, a systems compliance analyst from the Salt Lake City Division, USPS, conducted inventory counts at the Ontario Post Office. He found and reported a stamp stock shortage totaling $12,347.88, verifying the $7,592.81 shortage found by Mr. Pook plus an additional shortage of $4,782.07, the "ghost" amount added by Mr. Pook to stamp stock accountability to offset the shortage found in his February 1988 audit (see FOF 4, supra) (Resp. Ex. 4).

9. In an interview on May 19, 1989, Mr. Pook stated to postal inspectors that he created the "ghost" accountability in 1988 to give him time to "go back and check the error", believing that there was no shortage but only a "paper error." He conducted a superficial recheck of the shortage and then forgot about it thinking it would straighten itself out "as we went through the system" (Resp. Ex. 4(3)).

10. Mr. Pook acknowledged during the May 19 interview that he did not do his "paperwork right," that he knew that employee shortages were to be placed in a suspense account on PS Form 1412 and that overages were to be placed in trust but did not do so. He also admitted not keeping required financial records such as PS Form 3294 (Cash and Stamp Stock Count and Summary), Form 3360 (Stamp Credit Examination Record), and Form 3369 (Consigned Credit Receipts) and not completing PS Forms 571 (Discrepancy of $100 or More in Financial Responsibility) (Resp. Ex. 4(3)).

11. In an interview on June 28, 1989, with Gary Bradshaw, Director, Field Operations, Boise, ID, Mr. Pook confirmed the shortages totaling $12,374.88 and accepted responsibility for not following proper financial procedures relative to shortages dating back to February 1988 (Resp. Ex. 7).

12. On July 6, 1989, the MSC issued to Mr. Pook a notice of proposed suspension for 14 days or less because of his failure to follow proper procedures relative to financial accountability shortages dating back to February 1988 (Resp. Ex. 7) and a letter of demand for payment of $12,374.88 covering the shortages described above (Resp. Ex. 8).

13. On July 11, 1988, Mr. Pook wrote to William M. Kobus, the Boise MSC Manager/Postmaster, relative to the proposed suspension. He admitted using poor judgment and accepted full responsibility but, appealing from the proposed suspension, stated that he believed he had been a good manager (Resp. Ex. 9). Following consideration of Mr. Pook's appeal and a personal meeting with him on July 28, 1989, Mr. Kobus issued a letter of decision reducing the length of the suspension to five working days. Mr. Pook did not appeal this decision (Resp. Ex. 11).

14. On July 24, 1989, Mr. Pook wrote to Mr. Kobus requesting he be released from the demand that he pay $12,374.88 on the grounds that the PSI had found that he had not stolen the money and that the policy of USPS is not to hold postmasters accountable for clerk shortages (Resp. Ex. 10).

15. By letter dated August 1, 1989, Mr. Pook's July 24 request for release was denied by the MSC Manager/Postmaster on the grounds that the evidence of record established that Pook had not conscientiously enforced USPS policies and procedures in managing the Ontario, OR Post Office and that the losses comprising the shortage were the result of this failure. The letter reaffirmed Pook's indebtedness and advised him to make arrangements to repay the debt if he wished to foreclose the initiation of involuntary offset proceedings (Resp. Ex. 12).

16. Mr. Pook failed to make arrangements to repay the debt. Consequently, on August 18, 1989, the notice giving rise to this proceeding was issued to him (Resp. Ex. 13).

DISCUSSION

The following provisions of the Post Office Accounting Procedures (Handbook F-1, TL-15, 2-29-88) concerning postmaster liabilities are applicable in this proceeding:

130 Liability

131 Postmasters

When an accountable financial loss occurs and evidence shows the postmaster conscientiously enforced USPS policies and procedures in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show the postmaster met those conditions, the Postal Service charges the postmaster with the full amount of the loss.

* * *

414.2 Responsibility

.21 Postmasters. Postmasters are responsible for all accountable paper within the post office and for maintaining sufficient stock to meet customer demand. Postmaster liability may be adjusted for missing accountable paper, depending on the circumstances of the loss.

* * *

430 STAMP STOCK CONTROL

431 Main Stock

431.1 Postmaster. Postmasters are accountable for the face value of all postage stock consigned to their offices. Only the sale of stock, shipment of stock to another office, or authorized destruction of stamps reduces a postmaster's accountability. Transactions between stations or clerks and the Main Stock do not affect a postmaster's accountability.

* * *

431.3 Protection

.31 Accessibility. Only the Main Stock custodian shall have access to the Main Stock (see Section 433.24). Post offices with postmaster relief/ replacement (noncareer) employees are exempt from this policy when the postmaster elects to have the employee make sales from the Main Stock.

.32 Stamps. Give postage stamps and non-postal stamps the best possible protection (see Subchapter 140). Keep high denominations (Express Mail books, coils, etc.) in the safest place if storage facilities offer different levels of security. Keep stamps in places inaccessible to the public and concealed from public view during business hours. If a post office is considered unsafe, move stamps of more than a week's supply to a more secure place. However, the postmaster must have sole control over the stock.

For relief from the debt asserted by the Postal Service, Petitioner relies primarily on certain documents setting forth Postal Service policy which he says should be applied. The first such document is a memorandum dated December 4, 1985, from then Senior Assistant Postmaster General Michael S. Coughlin to regional postmasters general. The memorandum reads in pertinent part as follows:

"Normally, it is the policy of the Postal Service not to hold supervisors and postmasters personally accountable for employee shortages, if they do not have direct responsibility for the shortage. While this does not relieve management's responsibility for auditing and supervising credits assigned to employees, other action should be taken based on the circumstances of each case, bearing in mind our basic principle that, in the administration of discipline, our actions should be corrective in nature rather than punitive."

The second document relied on by Mr. Pook is a memorandum dated September 16, 1987, for regional directors finance and human resources and field division general managers/postmasters from Assistant Postmaster General Joel S. Trosch and Assistant Postmaster General M. Richard Porras. This memorandum reads in pertinent part as follows:

SUBJECT: Letters of Demand

It has been brought to our attention that there is some confusion in regard to the policy of the Postal Service concerning the personal accountability of postmasters and supervisors in situations involving employee credit shortages where contractual or other reasons preclude collection of the shortage from the employee.

The Postal Service will not normally hold postmasters and supervisors personally accountable for such employee shortages if they do not have direct access to the credit or are not involved in collusion with the employee. That policy was enunciated in a December 4, 1985, memorandum from former Senior Assistant Postmaster General for the Employee and Labor Relations Group, Michael S. Coughlin, and it has not been withdrawn or modified. The policy is not intended to absolve a postmaster, supervisor or others who have financial accountability for postal funds and accountable paper from conscientiously enforcing Postal Service policies and procedures. However, rather than issuing a letter of demand to these individuals, it is more appropriate to consider counseling or discipline for failure to properly carry out the duties of their position. The action warranted should be determined on a case-by-case basis depending upon the particular circumstances.

DECISION

Petitioner does not deny in any serious respect the conclusions of the MSC General Manager/Postmaster, based on the PSI investigation and the Western Region Audit Report (Resp. Ex. 6), that the losses comprising the shortage involved were the result of Mr. Pook's failure to enforce conscientiously USPS policies and procedures in managing the Ontario, OR Post Office. I find these conclusions amply supported by the record before me. Therefore, I find that he has been properly charged with the full amount of the loss, $12,374.88, pursuant to § 131 of Handbook F-1, above.

Petitioner's opposition to the proposed offset rests solely on his assertion that he did not steal the property and on the Postal Service policy enunciated in the documents described in the discussion above.

There is no finding or suggestion in the investigative reports that Mr. Pook stole the property. But proof of theft or collusion is not required for imposition of liability on a postmaster under § 131 or § 414.21 and 431.1 (above).

For the following reasons, I believe it would not be appropriate to apply in this case the Postal Service policy relied on by Petitioner. As expressed in the pertinent documents, the policy is "normally," not invariably, for application. Treating the word "normally" as meaningful and limiting, without attempting general definition in its context, there is nothing to persuade me that the policy is intended to be applied in a fact situation such as presented here. Petitioner's failures to comply with policy and regulations were flagrant. They not only made possible the commission of acts which could account for the shortages, but permitted the continuation of such acts after he discovered the first shortages in February 1988. Had they been properly reported instead of concealed and denied by Petitioner, prompt corrective action could have been taken to recover them and to prevent additional shortages. In being derelict in handling the shortages after discovery thereof, Petitioner effectively removed himself from the protection of the policy he seeks to have applied and rendered himself personally accountable therefor under § 131 of Handbook F-1.

The Postal Service properly issued to Harold Pook the notice of involuntary salary offsets under the Debt Collection Act. The petition is denied.

Mr. Pook has stated that the salary offsets as proposed will create a serious financial hardship but has not furnished an alternative offset schedule to support the claim as required by § 961.4(b)(8) of the Rules of Practice. Nevertheless, in view of the disciplinary action already imposed on Mr. Pook by the MSC General Manager/Postmaster, it is appropriate to ease the repayment schedule by reducing to 10% of disposable pay the amount to be deducted each pay period. The repayment schedule is to be adjusted accordingly.