INITIAL DECISION

Petitioner, Kenneth A. Carter, filed a petition, as provided in 39 C.F.R. §966, for review of the Postal Inspection Service's (Respondent) final determination, after Petitioner's request for reconsideration had been considered, that Petitioner is indebted to Respondent in the amount of $11,337.08. Respondent based its claim on Petitioner's alleged embezzlement of Postal Service funds and other unexplained shortages in his accountability while working as a clerk for Respondent.

A hearing was held in Las Vegas, Nevada.

FINDINGS OF FACT

1. In April 1992, the Money Order Coordinator for the Postal Inspection Service notified inspectors responsible for the Las Vegas, Nevada Post Office of substantial irregularities in money orders issued from that post office. In essence, a series of money orders were being issued and cashed in amounts substantially larger than the amount recorded on the money order voucher retained in Postal Service records. Initially, thirteen money orders were identified as containing the same discrepancies, and later, three more were discovered having been issued from the same post office with the same irregularity. (Respondent's Exhibit Nos. (RX) 17, 20; Transcript page (Tr.) 13).

2. The money order in use in 1992 was a three-part form, each separated by carbons. The customer receipt was on top, followed by a carbon, followed by the money order itself, another carbon, and then, finally, the money order voucher, which was to be retained by the Postal Service clerk issuing the money order. When issued, the entire set was run though an imprinter which imprinted on each of the parts (through the carbons) the date of issue, the identification number of the issuing office and the amount in which it was issued. The carbon separating the money order and the money order voucher was a double carbon. Thus, all the imprinted information should be imprinted on both the front and the back of the money order itself. (Tr. 7, 8, 15). However, the sixteen money orders being investigated all did not have any information on the back of them. The inspectors concluded, therefore, that the issuing clerk must have removed the carbon from between the money order and the money order voucher before running it through the imprinter. If the carbon was removed, then a money order could be imprinted with the amount requested by the customer, but leave a blank voucher to be later imprinted with a different amount. (Tr. 38, 39).

3. At the end of the day, a clerk issuing money orders, was to use the money order vouchers, which had been imprinted with the amount of issuance by the carbon, to record the amount and include in their daily receipts the funds collected when the money order was issued (Tr. 9, 10).

4. The money order identification numbers indicated that they had all been issued by Petitioner out of the Red Rock Vista Station in Las Vegas, Nevada. A comparison of the money orders in question and the vouchers retained by Petitioner disclosed the following:

(Respondent's Exhibit (RX) 21).

5. Petitioner knew the correct procedure for imprinting and issuing money orders and offered no explanation for the absence of imprinted information on the back of the sixteen money orders being investigated (Tr. 39, 40, 79).

6. An audit on April 8, 1992, of Petitioner's accountability at the Bonanza Station (where he also worked), disclosed a shortage of $864.98. Petitioner participated in the audit and signed the audit form. He does not dispute the accuracy of the shortage. (Tr. 34, 79; RX 20).

7. On April 14, 1992, Petitioner's accountability at the Red Rock Vista Station was also audited, disclosing a shortage of $3,408.35. Petitioner participated in the audit and signed the audit form. He does not dispute the accuracy of the shortage. (Tr. 35, 79; RX 20).

8. The April 14, 1992 audit of Petitioner's accountability at the Red Rock Vista Station also disclosed four C.O.D. tags and a Customs form in his drawer which he had failed to properly handle. C.O.D. tag #03943800, received on February 19, 1992, was for the amount of $60.88, plus a fee of $.75. C.O.D. tag #1474925, received on March 14, 1992, was for $44.85, plus a fee of $.75. C.O.D. tag #4502, received on March 19, 1992, was for $22.25, plus a fee of $.75. C.O.D. tag #OM3984226, received on March 20, 1992, was for $67.71, plus a fee of $.75. The Customs form (Mail Entry No. 47200505225), dated March 21, 1992, was in the amount of $7.24. (RX 20).

9. When a customer receives a C.O.D. parcel, he or she is charged the C.O.D. amount, plus the $.75 fee. The funds received, together with the C.O.D. tags, must then be accounted for by the Postal Service employees receiving them and turned in on the dates they were processed. (Tr. 28-30, 33; RX 20). Similarly, a clerk must turn in both the funds and the Customs form on the date the funds are collected from a customer. (Tr. 28-31).

10. Petitioner had not accounted for the funds collected for the four C.O.D. tags and the Customs form, nor had he turned in the C.O.D. tags or Customs form. By not turning in the tags and Customs form, Petitioner's accountability did not reflect a need to have in it cash equal to the amount of funds received from the Postal customers. Therefore, the audit of his account understated the amount of shortage by the total amount received. The total loss to the Postal Service from Petitioner's mishandling of the C.O.D. tags and Customs form was $205.93. (Tr. 28-34).

11. On May 10, 1994, Respondent notified Petitioner that he was responsible for losses to the Postal Service totaling $11,337.08. This sum represented the $6,857.90 loss resulting from the money orders issued by Petitioner in amounts substantially larger than that which he had recorded; the $864.98 shortage in his accountability at the Bonanza Station; the $3,408.35 shortage in his accountability at the Red Rock Vista Station; and the $205.93 loss resulting from his mishandling of four C.O.D. tags and a Customs form. (RX 9, 20).

12. By letter dated June 2, 1994, Petitioner requested reconsideration of the demand and, by letter dated June 8, 1994, Respondent advised Petitioner that after reconsideration its position had not changed and that it continued to demand payment of $11,337.08 (RX 7, 8).

POSITIONS OF THE PARTIES

Respondent contends that Petitioner, as the issuer of the sixteen money orders in question, was responsible for properly accounting for, and reimbursing the Postal Service for the full amount of issuance of each money order and is, therefore, liable for the resultant losses when the Postal Service redeemed the money orders for their issuance amount. Respondent further contends that Petitioner is responsible for the full amount of the shortages which were disclosed by audits of his accountability at both the Bonanza and Red Rock Vista Stations. Finally, Respondent argues that Petitioner is liable to the Postal Service for the losses resulting from Petitioner's mishandling of four C.O.D. tags and one Customs form.

Petitioner strongly denied that he had embezzled or stole from the Postal Service while an employee. However, he offered no rebuttal evidence or explanation regarding the discrepancies in the sixteen money orders he had issued. He did not dispute the disclosed shortages in his accountability at the Bonanza and Red Rock Vista Station and acknowledged failing to properly process the C.O.D. tags and Customs form.

CONCLUSIONS OF LAW

1. Respondent has established a prima facie case that it suffered a loss as a result of redeeming sixteen money orders in an amount $6,857.90 greater than the amount recorded by Petitioner when issuing the money orders (Finding of Fact Nos. (FOF) 3, 4, 5). Respondent does not have to prove that Petitioner embezzled postal funds. Correctly issuing the money orders and accounting for the full amount of funds received for each money order was Petitioner's responsibility, and he may properly be held liable for any resultant shortages.

2. Respondent's burden in cases of unexplained shortages in the accountability of Petitioner is to establish that a loss occurred and that Petitioner was responsible for the accountability from which the loss occurred. Respondent does not have to prove any dereliction or specific act of negligence on the part of Petitioner. Respondent has established that it suffered a loss as a result of the $864.98 shortage in Petitioner's accountability at the Bonanza Station and the $3,408.35 shortage in his accountability at the Red Rock Vista Station. Petitioner does not dispute these shortages and even acknowledges that he "never did keep a straight drawer." (FOF 6, 7). Thus, Petitioner may be held liable for the losses in his accountability at both the Bonanza and Red Rock Vista Stations.

3. Finally, Petitioner may be held liable for the $205.93 loss to the Postal Service resulting from his improper processing of four C.O.D. tags and a Customs form. Here again, Petitioner conceded that he had mishandled these items but denies that his actions were intentional. Nevertheless, proper handling of these items would have required Petitioner to report the receipt of $205.93 from the customers redeeming the C.O.D. packages and Customs package, thereby commensurately increasing the amount of the shortage disclosed by the audit. (FOF 8, 9, 10).

4. Accordingly, Petitioner is liable to repay Respondent the entire $11,337.08 being sought in this action. This Petition is denied.

William K. Mahn
Administrative Judge