In the Matter of the Complaint Against:

MICHAEL D. CYR,
32 Greenwood Street
at
Peabody, MA 01960-6316

P.S. Docket No. PF-17

02/07/92

Grant, Quentin E., Chief Administrative Law Judge

APPEARANCE FOR RESPONDENT: Cornelius J. Sullivan, Esq., 51 Ellison Avenue,
Mattapan, MA 02126-2803

APPEARANCE FOR COMPLAINANT: Janet E. Noble, Esq., Office of Labor Law,
United States Postal Service, Washington, DC 20260-1131

INITIAL DECISION

Respondent Michael D. Cyr filed a timely petition for a hearing on a complaint dated April 26, 1991, issued by the General Counsel of the United States Postal Service under the Program Fraud Civil Remedies Act of 1986, Pub.L. 99-509, 39 U.S.C. § 3801-3812, and 39 CFR Parts 273 and 962. The complaint, in eight counts, one of which was withdrawn at the hearing, alleges that Respondent violated 31 U.S.C. § 3802(a)(1) by making eight false claims for pay covering hours that he had not worked in his employment by the Postal Service. Count VIII was withdrawn at the hearing. Complainant asks for an assessment of $383.04 (twice the amount paid by the Postal Service on the alleged false claims) and a civil penalty of $7,000.00 ($1,000.00 on each false claim).

A hearing was held before the undersigned on September 12, 1991, in Boston, MA. Complainant presented the testimony of Joseph J. Leccese, Postmaster at Salem, MA, and Postal Inspector Nancy D. Unger. Respondent presented no witnesses or exhibits. Following the hearing, both parties filed briefs which have been fully considered. To the extent indicated below, proposed findings and conclusions have been adopted; otherwise they have been rejected as irrelevant or contrary to the evidence. This decision is based on the entire record and the observation by the undersigned of the witnesses and their demeanor.

FINDINGS OF FACT

1. Respondent Michael D. Cyr became employed as a custodian at the Salem, MA Post Office in 1988. He was placed on the 3:00 a.m. to 11:30 a.m. shift which he wanted because he had a salvage fishing business and desired a schedule which would allow him to operate his business (Tr. 19).

2. Early in the morning of July 26, 1989, the Postmaster of the Salem Post Office, Joseph J. Leccese, went into the facility and reviewed some of the timecards in the rack, as was his custom (Tr. 20). He examined respondent's timecard and noticed that it had no clock ring on it for that day, although it was past respondent's reporting time of 3:00 a.m. (Id.). After ascertaining that respondent was not on sick or annual leave, he asked a supervisor to let him know when respondent reported for work (Tr. 21).

3. At around 5:00 a.m., Mr. Leccese heard a vacuum cleaner in the lobby of the Post Office, indicating that respondent was at work. Mr. Leccese then discovered that respondent's timecard was missing from the rack. At around 7:00 a.m., respondent's timecard reappeared in the rack with a clock ring of approximately 2:45 a.m. (Tr. 21).

4. Mr. Leccese contacted the Postal Inspection Service and asked that an investigation be conducted. A few days later, postal inspectors conducted a search of the facility, and found an out-of-service time clock concealed in a locker in a vacant room in the basement (Tr. 22). The Inspection Service then set up video monitors for surveillance of the vacant room (Tr. 21-22).

5. During this period, Mr. Leccese examined timecards of respondent and other employees going back four or five months from the date of his discovery, and noticed that the timecards for respondent and one other employee, Mr. Pare, exhibited signs such as smudges, differences in the ink, and differences in the clock rings themselves indicating falsification (Tr. 32-33). Mr. Leccese compared the timecards of respondent and Mr. Pare to those of other employees reporting to the same pay location and found that the clock rings were different, leading him to conclude that the falsifications by respondent had been going on for some time (Tr. 33).

6. The Inspection Service conducted video surveillance between August 3, 1989 and August 21, 1989, (Tr. 24, 64). Every day during which surveillance was conducted, respondent was observed using the out-of-service timeclock (Tr. 65).

7. Postal inspectors videotaped respondent using the out-of-service timeclock on eight occasions: August 3, 9, 10, 14, 15, 17, 18 and 21, 1989 which fell in pay periods 17 and 18 of that year (Tr. 27-28). On each of those occasions, respondent was observed reporting to work at approximately 5:00 a.m. (Tr. 34). His timecards for those days show that he clocked in, using the concealed timeclock, just before 3:00 a.m. (Exhibits 3A, 3B, and 3C).

8. On each of the occasions respondent used the out-of-service timeclock to falsify his timecard, respondent returned the card to the rack (Tr. 34). In the Salem Post Office, the timecards were collected on a weekly basis and totalled by the timekeeper. They were then transmitted to the Postal Data Center for the issuance of paychecks (Tr. 28-29). The Postal Data Center also processed payroll registers, which reported the employees' pay, and sent them to the Post Office with the paychecks (Tr. 29). Exhibits 4A and 4B are copies of the Salem Post Office's payroll registers for pay periods 17 and 18, 1989.

9. During pay periods 17 and 18, 1989, respondent's annual salary rate was $28,463 (Tr. 30; Ex. 4A and 4B).

10. Respondent was paid for all of the hours reported on his timecards for pay periods 17 and 18, 1989, including fourteen hours falsely claimed (Tr. 28; Ex. 4A and 4B). Respondent was paid a total of $191.52 for those hours falsely submitted to the Postal Service during that period (two hours each day on August 3, 9, 10, 14, 15, 17 and 18, 1989, times the hourly rate of $13.68 equals $191.52).

11. On August 21, 1989, respondent was confronted by postal inspectors as he was clocking in on the out-of-service timeclock in the basement of the Salem Post Office (Tr. 69). Following this confrontation, respondent confessed to Inspector Nancy Unger that he had falsified his timecards (Tr. 71). Later that morning, respondent had a conversation with Mr. Leccese, during which he admitted falsifying timecards (Tr. 35).

CONCLUSIONS OF LAW

1. Complainant's evidence, unrebutted by Respondent, proves that respondent knowingly submitted to the Postal Service false claims for the payment of salary on August 3, 9, 10, 14, 15, 17 and 18, 1989, and received payment in the amount of $191.52 for fourteen hours falsely claimed.

2. Citing provisions of the False Claims Act, 31 U.S.C. $Z3729(a)(7)(A, B, C), respondent argues that the civil penalty sought by complainant is not appropriate. The PFCRA does not contain the same or similar provisions. Therefore, this argument is rejected.

3. Respondent, citing United States v. Halper, 490 U.S. 435 (1989), argues that imposition of a penalty would constitute a form of double jeopardy because as a result of the false claims here he has lost his job and is still under suspicion of drug dealing, a failed investigation of which resulted in the bringing of the instant proceeding.

The Double Jeopardy Clause of the Fifth Amendment protects a person from being punished a second time for the same conduct for which he has been previously convicted in a criminal action. United States v. Halper, supra. Since respondent has not been proceeded against criminally and convicted for making the false claims found here, the Double Jeopardy Clause does not apply.

4. Respondent also argues that the penalty sought is entirely disproportionate to the harm caused the Postal Service and, therefore, should not be imposed. Each of the seven false clock rings on the three timecards submitted as Ex. 3A, 3B and 3C constitutes a false claim under the PFCRA. Respondent, is therefore liable for an equal number of penalties under the Act. See United States v. Bornstein, 423 U.S. 303 (1976); United State v. Ehrlich, 643 F.2d 634 (9th Cir. 1981). The complainant seeks a penalty of $1,000.00 for each of the seven false claims, plus an assessment of twice the amount falsely claimed, or $383.04.

(a) The amount of the penalty must be determined by examining all of the circumstances surrounding the false claims, including all aggravating and mitigating factors. See Neldie E. Nelson, P.S. Docket No. PF-3 (Nov. 16, 1990); S. Rep. No. 212 at 18. Many government agencies have adopted a set of model regulations proposed by the President's Council on Integrity and Efficiency which contains a list of factors which may be considered as guidance. E.g., 45 C.F.R. § 79.31 (1988); 52 Fed. Reg. 27423, 27432. The Presiding Officer is not bound by the regulations of other agencies, but may rely upon them for guidance in making his decision. The factors considered here are as follows:

(1) The record shows a considerable degree of culpability on respondent's part. His actions were repeated and deliberate, and he clearly knew that he was submitting false claims to the Postal Service. Moreover, there is evidence that respondent had been submitting false claims for some time before he was caught. It appears to have been respondent's regular routine to report to work two hours late and use the concealed timeclock to falsify his timecard so that he would be paid for those hours. Respondent's culpability is an aggravating factor.

(2) The amount of money falsely claimed is an important factor to consider. Here, the amount of money was small. For that reason, the Complainant says he has not asked for the maximum penalty of $5,000.00 for each claim, but requests an award of $1,000.00 for each false claim.

(3) Also to be considered is the actual loss to the Postal Service as a result of the false claims, including foreseeable consequential damages and the costs of investigation. The actual loss was $191.52. There is no evidence as to foreseeable consequential damages or costs of investigation but it is estimated they are relatively small.

(4) The need to deter others from engaging in the same or similar misconduct is an important factor to be considered.

(5) I also consider the fact that the Postal Service waited several days before putting a stop to Respondent's wrongful use of the out-of-service clock when it was discovered.

(b) After considering all of the circumstances of this case, it is concluded that the respondent is liable for civil penalties in the amount of $5,250.00 ($750.00 for each false claim).

5. The next issue is the amount of the assessment to be imposed upon respondent under 31 U.S.C. § 3802(a)(1). The statute provides, in pertinent part, that a person making a false claim shall be subject to an assessment, in lieu of damages sustained by the United States because of such claim, of not more than twice the amount thereof. Since respondent was paid $191.52 as the result of his false claims, he is liable for an assessment of not more than $383.04. Employing the factors considered above, it is concluded that Respondent is liable for the maximum assessment.

6. The findings and conclusions herein are based upon a preponderance of the evidence. 31 U.S.C. § 3803(f). In summary, respondent is liable to the Postal Service under 31 U.S.C. $S3802(a)(1) for a civil penalty of $5,250.00, plus an assessment of $383.04, for a total liability of $5,633.04.