In the Matter of the Petition by:

PAUL E. LOGAN,
216 Bemis Street,
Saraland, AL 36571-3815

P.S. Docket No. DCA-105

09/10/91

Grant, Quentin E., Chief Administrative Law Judge

APPEARANCE FOR PETITIONER: Paul E. Logan, Pro Se, 216 Bemis Street, Saraland, AL 36571-3815

APPEARANCE FOR RESPONDENT: Darrell G. Lewis, MSC Director, Finance, Mobile Management Sectional Center, United States Postal Service, Mobile, AL 36601-9995

FINAL DECISION UNDER DEBT COLLECTION ACT OF 1982

By petition docketed on July 15, 1991, Petitioner Paul E. Logan requested a hearing, based solely on written submissions, on a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act, dated July 1, 1991. Respondent does not oppose such a hearing. The record was closed on August 1, 1991, with the filing of Respondent's answer to the petition. This decision is based on review and consideration of all writings filed by the parties through that date.

FINDINGS OF FACT

1. At all times mentioned in these findings, Petitioner Paul E. Logan was the Postmaster at Saraland, AL 36571-9998. On July 2, 1991, Mr. Logan received a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act [the Act]. This notice advised Mr. Logan that his acceptance of a raised money order had resulted in a loss to the Postal Service of $697.00 which would be recovered by deductions of approximately $200.00 from each of his paychecks commencing on August 16, 1991. The notice was accompanied by advice concerning Mr. Logan's right to a hearing should he elect to dispute the alleged indebtedness. Mr. Logan filed a timely petition for a hearing, solely on written submissions, under the Act.

2. On or about December 19, 1989, a money order dated November 28, 1989, numbered 4193439799 in the amount of $700.00 was presented for payment by one Tina Chanault to a window clerk, Louise Evans, at the Saraland Post Office and cashed. The money order was initialed by Louise Evans and by Postmaster Paul E. Logan.

3. The money order had been purchased in the amount of $3.00 in San Antonio, TX 78201 and was thereafter altered to $700.00.

4. The identification offered by Tina Chenault and accepted by Mr. Logan was a birth certificate and a blood donor card.

5. With the aid of Postmaster Logan, the Postal Inspection Service (P.S.I.) located Tina Chenault in April 1991 in Wilmer, AL. Ms. Chenault admitted cashing the money order as a favor to a friend named Dianne Pickle who lacked identification needed to cash it.

6. Through Ms. Chenault, the P.S.I. located Dianne Pickle in Mobile, AL. Ms. Pickle, in an interview conducted on April 17 and 18, 1991, stated that she had received the money order from one Kenneth Henley, a prison inmate, denied knowing that the money order had been altered, admitted receiving the proceeds thereof, and agreed to make full restitution to the Postal Service. On April 18, 1991, Ms. Pickle was arrested on a warrant from Arkansas on an unrelated charge. The following day one Steve Mack, a friend of Ms. Pickle, agreed to reimburse the Postal Service the money owed by her. According to the P.S.I. investigative memorandum dated June 14, 1991, both Ms. Pickle and Mr. Mack have since moved, leaving no forwarding address, and their current location is unknown.

7. Mr. Logan admits that he reviewed the money order and approved payment when it was presented by Ms. Chenault. He claims that the identification she furnished met the requirements of Handbook F-1 (parag. 941.37) and was adequate as proved by the fact that P.S.I. was able to locate Ms. Chenault. He claims that before approving payment both he and the window clerk inspected the money order in accordance with directions on the back n1 and was unable to detect alteration.

n1 WARNING - CASHIER" REQUIRE POSITIVE IDENTIFICATION. PUT MONEY ORDER TO LIGHT AND EXAMINE DOLLAR AMOUNT PRINTED ON FRONT AND BACK.

Do not cash if numbers do not match or area is lighter than rest of form or there are signs of erasure or alteration.

8. In a letter dated July 19, 1989, to Associate Office Postmasters, the Acting MSC Director, Field Operations, Mobile, AL reminded them of the direction from U. S. Postal Service Headquarters in a letter dated April 23, 1987, that a stamp reading "Not Valid Over Seventy Dollars" must be placed on the face of each money order issued for $10.00 or less. The money order in question here did not contain this stamp.

9. In his October 30, 1990 request for reconsideration of the MSC's October 16 demand for repayment of $697.00, Mr. Logan stated as follows:

"1. The money order was raised in a professional manner and is not obvious on first glance even when held up to the light." [emphasis supplied]

10. In a letter dated October 31, 1990, to the MSC Director, Finance, Willis J. Bunn, MSC Director, Field Operations, said that on or about October 17, 1990, Mr. Logan told him that he had gone to the P.S.I. office at Mobile, AL to examine the raised money order and that when it was held to the light he could see it had been altered. This is not inconsistent with Mr. Logan's statement in Finding 9, above. I find that the alteration was difficult to detect.

11. By letter dated November 6, 1990, the MSC Manager, on reconsideration, affirmed the determination of Mr. Logan's indebtedness on the grounds that (a) he had failed to detect the fact, ascertainable on holding the money order to light, that the amount had been raised and (b) that the identification he obtained from Tina Chenault was not acceptable.

12. The P.S.I. does not normally handle collection matters for the Postal Service. The record does not reflect efforts by the appropriate postal management office to collect the loss from the culpable parties, Henley, Pickle and Chenault, prior to the initiation of this offset proceeding against Petitioner.

DISCUSSION

Petitioner contends that he should be relieved of indebtedness on account of the cashing of the raised money order because:

(a) since the P.S.I. was able to identify and locate Tina Chenault from the ID information recorded on the money order, there should be no question about the adequacy of the identification accepted by Mr. Logan.

(b) no attempt has been made to collect the proceeds of the money order from Tina Chenault or Kenneth Henley, the prison inmate identified by Dianne Pickle as the person who gave her the money order.

(c) Petitioner inspected the money order prior to cashing it in accordance with instructions printed on it.

(d) the required limitation stamp (described in finding no. 8, above) had not been placed on the money order.

The Postal Service argues that Mr. Logan, as postmaster, should be liable for the loss because he did not require and obtain suitable identification of the payee and did not properly examine the money order for possible alteration.

CONCLUSIONS OF LAW

Handbook F-1, Post Office Accounting Procedures, paragraph 131, provides as follows concerning liability of postmasters for accountable financial loss:

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.

The Domestic Mail Manual (DMM) imposes the following requirements on postal employees for examining money orders and obtaining identification when they are presented for payment:

941.36 Examination of the Order by Postal Employee.

Ensure that

* * * * *

c. It does not bear any alterations or erasures. Require positive identification. Hold money order to light and examine.

Ensure that in direct light there are no areas (especially check the dollar amount) where more light passes through the form, since this could mean that the money order has been altered.

* * * * *

941.37 Identification of Payee. When presenting a money order for payment, the payee must sign in the presence of a postal employee. If the payee is not personally known to the postal employee, the payee is required to provide identification. Normally acceptable forms of identification are driver's permits, military identifi- cation cards, or other credentials showing signature of bearer and having serial numbers or other indicia which can be traced to the holder. Social Security cards are not acceptable. The Postal Service may refuse payment on any money order when the identity of the payee is not proven to the satisfaction of the postal employee.

The evidence presented by the Postal Service does not refute Petitioner's claim that both he and the window clerk followed the requirements of DMM § 941.36 c. and the instructions on the money order in examining it when presented for payment by Ms. Chenault and that they did not detect the alteration. Also the Postal Service's evidence does not attempt to refute Mr. Logan's assertion that the alteration was done so professionally that it was not detectable on first inspection when held in direct light.

It does not appear that Petitioner failed to obtain acceptable identification from Ms. Chenault. The purpose of requiring identification is to assure that the person presenting the money order is the person named as payee. DMM Section 941.37 specifies normally acceptable forms of identification but it does not exclude others such as the birth certificate and blood donor card presented by Ms. Chenault. They satisfied Mr. Logan of Ms. Chenault's identity and it is agreed that she was the payee and the person who presented the money order for payment. Section 311.3 of Handbook F-1 which the Postal Service has placed in the record specifies identification items required when a person presents a personal check in payment for postal products and services. It is not applicable to money orders.

Also bearing on Mr. Logan's liability is the fact that the issuing office failed to stamp on the money order the words "NOT VALID OVER SEVENTY DOLLARS" which was required on money orders for $10.00 or less by the Headquarters letter described in Finding 8, above. The absence of such stamp, no fault of Mr. Logan, was the prime factor contributing to the loss involved.

Finally, it does not appear that Postal Service management adequately attempted collection from the parties responsible for presentation of the altered money order before proceeding against Mr. Logan. They are the primary culpable parties.

There was no proper basis for issuing the July 1, 1991 Notice of Involuntary Administrative Offsets to Petitioner. Petitioner is not indebted to the Postal Service in the mount of $697.00 demanded therein.