In the Matter of the Petition by                                 )
                                                                                )
CHARLES REIN                                                        )
207 Summit Drive                                                    )
                                                                                )
at                                                                             )
                                                                                )
New Windsor, NY 12553-6441                               )    P.S. Docket No. DCA 98-238

APPEARANCE FOR PETITIONER:                             David W. Deakin
                                                                                 National Postmaster Representative
                                                                                 P.O. Box 681
                                                                                 Southbury, CT 06488-0681

APPEARANCE FOR RESPONDENT:                          Karl P. Seidel
                                                                                 Labor Relations Specialist
                                                                                 P.O. Box 9401
                                                                                 White Plains, NY 10610-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Charles Rein, filed this Petition after receiving a Notice of Involuntary Administrative Salary Offsets dated May 13, 1998. This Notice stated the Postal Service's intention to withhold $9,088.00 from Petitioner's salary to recover losses sustained as a result of stolen U. S. Treasury checks being cashed at the Montgomery, New York Post Office, where Mr. Rein is the postmaster.

A hearing was held in Newburgh, New York on August 4, 1998. The Postal Service presented testimony from Peter Morrissey, Manager of Post Office Operations, who is Mr. Rein's supervisor, and from Robert Schultzel, a clerk at the Montgomery Post Office. In addition to testifying in his own behalf, Petitioner presented testimony from Kenneth Bissell, who succeeded Petitioner as Officer-in-Charge at the Montgomery Post Office, and Martin Dubinski, a postal inspector. Both parties also relied on documentary evidence attached to the Petition and Respondent's Answer, and Respondent presented one additional document at the hearing. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

FINDINGS OF FACT

1. Petitioner has been a Postal Service employee since 1960. He became the postmaster at Montgomery, New York in 1979. (Tr. 128-30).⁽¹⁾

2. In the spring of 1997, several U. S. Treasury checks for income tax refunds, intended for residents of New York City, were stolen. Some of these checks were presented at the Montgomery, New York Post Office to be cashed. Montgomery is a village approximately sixty miles north of New York City. (Tr. 16-17).

3. It is uncertain how many of these stolen checks were cashed at the Montgomery Post Office, but the record contains photocopies of five, in various amounts that total $9,088.00.⁽²⁾ These checks were cashed on March 14, 24 and 26 (or 27), and April 9 and 21, 1997.

4. At some time, the named payees on these checks reported that they never received the checks. Thereafter, the Treasury Department issued new checks to those payees and either stopped payment on the stolen checks, or took back money that it had paid to the Postal Service, thereby causing a loss to the United States Postal Service. (Tr. 49-50; Respondent's Answer Tab D).

5. Robert Schultzel has been a window clerk at the Montgomery Post Office for twelve years (Tr. 58). During the time pertinent to this case, he was the primary window clerk at Montgomery and cashed most, if not all, of the stolen checks (Tr. 56, 115). The persons who presented the checks presented identification which contained a photograph, a social security number, and a signature. The photo identifications that he recalls were from the New York City Parks Department, and the photographs, signatures and social security numbers matched the customers who were presenting the checks. (Tr. 55-56, 65-66, 109-10). All the checks were presented by different persons (Tr. 63, 78).

6. When Mr. Schultzel did not have sufficient cash to cash the checks, the customers asked that they be given money orders in lieu of cash. Mr. Rein gave approval to do so (Tr. 55, 59-60, 109). Of the five checks that are the basis for this case, Respondent presented evidence on the dollar amount of money orders issued for only two of them. On March 26 (or 27), money orders for $1,100.00 were issued to cash a $1,836.00 check, and on April 21 money orders for $2,100.00 were issued to cash a $2,558.00 check. (Respondent's Answer, Tab B).

7. The Montgomery Post Office is small, and although Petitioner did not personally cash any of the stolen checks, he was in the immediate area when the checks were presented and saw the identification that was presented. He recalls seeing photo identifications and, in some cases, more than one form of identification (Tr. 109-10). Mr. Schultzel did not ask for Petitioner's advice or approval as to whether the identifications were acceptable, and Petitioner did not direct Mr. Shultzel to accept any particular identification (Tr. 67).

8. After some number of these checks had been cashed, Mr. Schultzel and Mr. Rein became concerned that something might be amiss because none of the payees were local people (Tr. 59, 62-63, 104, 112). Mr. Rein discussed this on the telephone with a postal inspector, who asked only if they were getting proper identification from the customers. The inspector did not instruct Mr. Rein to stop cashing these checks. (Tr. 63, 105).

9. On April 22, 1997, after learning that some stolen Treasury checks had been cashed at the Montgomery Post Office, Postal Inspector Dubinski discussed the matter with Petitioner. He instructed Petitioner that the next time one of these similar checks was presented the clerk should take the check and whatever identification was presented to the back of the building and call the Montgomery village police, who were located across the street. Petitioner passed this instruction along to his clerks. On April 25, 1997, these instructions were carried out, and two individuals were apprehended. One of them was eventually convicted of forgery.⁽³⁾ (Tr. 88, 93, 99-101).

10. Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), contains the following pertinent provisions:

314.4 Cashing Treasury Checks

Cash Treasury checks, including USPS salary checks, provided sufficient funds are on hand. Do not retain cash for the sole purpose of cashing USPS salary checks on payday.

Identification

Require two forms of identification described in section 312.3 if the payee(s) is not known. Do not cash the check if the signatures do not match.

Note: Do not cash Treasury checks for anyone other than the payee(s) named on the face of the check. The payee, or payees if more than one name appears on the check, must endorse the check in the presence of the accepting employee.

312.3 Identifying Maker of Personal Checks

* * *

Unknown Customer

If a customer is unknown by name, record the name and identifying number from one of the following photograph-bearing documents on the check in location A on exhibit 312.1:

Driver's license.

State-issued nondriver identification.

Passport (foreign or domestic).

Military identification card.

If none of the above is presented, enter the issuer's name from two of the following documents on the check in location A in exhibit 312.1:

Credit card. (Do not record the credit card numbers.)

Other credential showing a signature.

11. Handbook F-1 contains no specific provision that says it is, or is not, permissible to cash a Treasury check by issuing money orders if cash is not available. Section S020.1.3 of the Domestic Mail Manual states that money orders may be purchased only with cash or traveler's checks.

Contentions of the Parties

Respondent argues that the identification presented by the persons who presented the checks, and accepted by the Montgomery Post Office, was "specious" and did not meet the requirements set forth in the F-1 Handbook. In addition, Respondent argues that the F-1 Handbook prohibits issuance of money orders in lieu of cash when cashing a Treasury check, and that Petitioner's actions in accepting these checks and issuing money orders constituted negligent failure to protect postal funds.

Petitioner argues that the identification presented was properly accepted and that there is no regulation that prohibits issuing money orders for the purpose of cashing a Treasury check. He contends that he was simply carrying out his mission of providing service to customers, not knowing that these customers were thieves.

DECISION

On the matter of whether the "customers" presented proper identification when these checks were cashed, Respondent's evidence does not support Respondent's argument. The testimony of Mr. Schultzel and Petitioner, that photo identifications were presented, that the photographs and signatures on the identification documents matched the individuals presenting the checks and their endorsing signatures, and that at least some of them presented more than one form of identification, is not contradicted by any other evidence. Furthermore, it was Mr. Schultzel, not Petitioner, who cashed the checks, and he testified that, based on his training and experience, he did not find it necessary to ask Mr. Rein to approve the identifications that were offered. Therefore, even if Mr. Schultzel could be faulted for not always requiring a second form of identification, in accordance with §314.4, or perhaps not recording all of the identification information on the checks, as required by §312.3, this is not a basis for holding Mr. Rein liable.

The matter of the money orders is more troublesome. Despite the fact that the regulations do not spell out that money orders must not be used to cash Treasury checks, the language of DMM §S020.1.3 that money orders may be purchased only with cash or traveler's checks, and the language of F-1 §314.4 that Treasury checks may be cashed "provided sufficient funds are available," should have made it clear to Petitioner that he was not authorized to give money orders to these persons. His failure to follow these rules, therefore, caused that portion of the Postal Service's loss that is equal to the amount of money orders issued in cashing the five checks in question - $3,200.00 (see FOF #6).

CONCLUSION

Respondent may collect $3,200.00 from Petitioner's salary.

Bruce R. Houston
Chief Administrative Law Judge

______________________________

1. "Tr." indicates a reference to pages in the hearing transcript

2. Copies of three checks are attached to Respondent’s Answer at Tab D. The other two are attached to the Petition. A list of checks, by dates and amounts, was prepared by Mr. Morrissey and was admitted as Respondent’s Exhibit 1. This list includes four additional checks, but copies of them were not offered as evidence, and there was no testimony about them. This Final Decision deals only with the five checks that are part of the record, and which total the amount of the debt alleged to be owed by Mr. Rein.

3. Between April 22 and April 25, 1997, Petitioner was reassigned and Mr. Bissell was placed in charge of the Montgomery Post Office.