In the Matter of the Petition by                                )
                                                                               )
DAVID P. EBNER                                                    )
151 N. Liberty Street                                              )
                                                                               )
             at                                                               )
                                                                               )
Nazareth, PA 18064-1726                                     )  P.S. Docket No. DCA 99-169


APPEARANCE FOR PETITIONER:                           Charles Scialla
                                                                               453 Preakness Avenue, #5
                                                                               Paterson, NJ 07502-1121

APPEARANCE FOR RESPONDENT:                       Timothy C. Burke
                                                                               Labor Relations Specialist
                                                                               United States Postal Service
                                                                               1425 Crooked Hill Road
                                                                               Harrisburg, PA 17107-9402

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, David Ebner, filed this Petition after receiving a Notice of Involuntary Administrative Salary Offsets, dated April 14, 1999, from his supervisor. This Notice stated the Postal Service's intention to withhold $4,307.71 from Petitioner's salary to recover for a shortage in the unit reserve account at the Nazareth, Pennsylvania Post Office.

A hearing was held in Allentown, Pennsylvania on June 8, 1999. The Postal Service presented testimony from Paul Klassner, a postal systems coordinator, who audited the Nazareth office; William J. Blank, the Nazareth Postmaster, and Edward Barry, a postal inspector. Petitioner testified in his own behalf, and also presented testimony from William Wilson, a financial services coordinator at the Harrisburg, Pennsylvania District Office. Both parties also relied on documentary evidence that had been submitted with the Petition and the Answer, and Petitioner submitted one additional document. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

1.  Petitioner, David Ebner, is Supervisor of Customer Services at the Nazareth, Pennsylvania Post Office. He has worked for the Postal Service for 26 years, and has been a supervisor for 14 years. He has been a main stock or unit reserve stock custodian for 10 years, and was the custodian of the unit reserve at Nazareth during the time pertinent to this case. In the eight years that he has been a supervisor at Nazareth, there has not been a shortage in the unit reserve prior to the one at issue in this case. (Tr. 39, 53, 58, 90-91; PS Ex. 6).⁽¹⁾

2.  On August 20, 1998, the Nazareth Post Office, along with other post offices, was required to change account identifier codes (AIC) from 3-digit numbers to 4-digit numbers, as part of a conversion to a new accounting system (Tr. 27). The task of converting the AICs, which was accomplished by Petitioner, had to be done in one day, so that the new system would be in effect at the start of the next day (Tr. 66, 91).

3.  Petitioner performed this task by creating an inventory list of all stamp stock, transferring the inventory to a new computer disk, then re-transferring each inventory item back to the appropriate new AIC (Tr. 92; PS Ex. 6). When he completed the conversion, he ran what is called a "Unit 1412," a computer tape that shows the opening and closing balances and total office accountability for that day. On this tape, the figure designated as AIC 853 - "Stamps Close," is supposed to match another AIC 853 listing under the heading "Clerks Balances" (Tr. 38-39). Petitioner noticed that these figures did not match. The Stamps Close figure was $232,709.57, and the Clerks Balances figure was $226,961.86. (Tr. 14, 93; PS Ex. 6, PS Ex. 8). On the previous day, August 19, 1998, these two figures did match - both were $177,684.55 (Tr. 14, 91; PS Ex. 8). On August 20, 1998, in addition to doing the accounting conversion, Petitioner also received a shipment of stock and issued stock to clerks (Tr. 43-44, 102, 109; PS Ex. 8).

4.  Upon discovering this difference, Petitioner immediately reviewed all the data he had been using to perform the conversion, but could not find an error that caused the imbalance. The next day he reported the discrepancy to an accounting supervisor in Harrisburg, and continued to look for an error. (Tr. 93; PS Ex. 6). According to Mr. Klassner, the usual cause of a difference such as this is that stock was issued to clerks, but the clerks had not yet entered the stock into their accounts (Tr. 11, 15, 40). Within a week after discovering this apparent shortage, Petitioner and the postmaster counted all the clerks' stamp stock, and the main stock,⁽²⁾ in an attempt to find an overage that would account for the difference noted above. They found no such overage. (Tr. 47-49, 96; PS Ex. 6). In December 1998, on advice from various accounting officials at the Harrisburg District, they counted the clerk accounts and the main stock again, but still found nothing that would reconcile the discrepancy (Tr. 50-51, 65-66; PS Ex. 6). When Petitioner and the postmaster, Mr. Blank, counted the main stock, they did so by comparing amounts present to what was shown on a computer-generated "inventory tape," and initialing the tape. They did not record what they counted on a PS Form 3294, Cash and Stamp Stock Count and Summary, nor did they save the inventory tape. They agreed, however, that the physical count matched what was shown on the inventory tape. (Tr. 50, 65-66, 112; PS Ex. 6).

5.  At some time after discovering the apparent shortage, and being unable to find the cause, Petitioner discussed this matter with Mr. Wilson, who suggested that, if Petitioner believed the larger AIC 853 figure was incorrect, he could balance his account by making an AIC 848 entry showing the difference, $4,307.71, as "stamps returned" (Tr. 88, 94; PS Ex. 6). Petitioner did this, believing that this was the District Office's method for "writing off" the apparent shortage (Tr. 110-11). When this was brought to the attention of Mr. Wilson's supervisor, however, the supervisor said this could not be done (Tr. 88, 94; PS Ex. 6). After further efforts to "find" the shortage proved futile, including an audit by Mr. Klassner in December 1998, Petitioner was eventually issued a Letter of Demand for $4,307.71.⁽³⁾

6.  The figure $4,307.71 is arrived at as follows. The difference between the two AIC 853 figures noted in Finding of Fact #3 is $5,747.71. Mr. Klassner determined that a vending machine credit of $1,440.00 should be subtracted from this difference, leaving a net shortage of $4,307.71. (Tr. 12-18). Mr. Klassner also arrived at this same number by another calculation. Form 3958 is a computer-generated form that recaps all the daily activity in the unit reserve stock. The Form 3958 for August 20, 1998 shows a difference of $21,017.31 between "Stock Issued," and "Clerk Stock Received." These two figures should be the same but, as stated above, the usual cause of such a difference is that stock was issued to clerks, but the clerks had not yet entered the stock into their accounts.⁽⁴⁾ Mr. Klassner found two PS Form 17s, dated August 20, 1998, showing additional stock that had been received by two clerks. Subtracting those amounts, plus the vending credit, from the $21,017.31 difference left $4,307.71. (Tr. 10-12; PS Ex. 2; Pet. Ex. 1).

7.  In March 1999, the Postal Inspection Service conducted a random audit of the Nazareth Post Office. This was done as one of many routine such audits that are done each year, not as a result of the shortage that is in issue in this case. (Tr. 71-72). Among the findings made by the inspectors were the following;

"Also, stamp stock is often given out from the main stock to window clerks without proper completion of an IRT Form 17. The clerks fill out a Form 17 to request stock. The custodian issues stock based on that form. The paperwork is completed whenever time allows, creating the potential for a shortage in the main stock."

"A witness does not independently verify stamp stock shipments received from the Stamp Distribution Office. A consolidated Form 17 is not used by the Reserve Stock Custodian to document consolidated stamp stock orders. Multiple orders are pulled separately and a consolidated Form 17 is made later." (PS Ex. 1; Tr. 74-75).

8.  Petitioner acknowledged that he sometimes issued stock to clerks without immediately entering the transaction into the system by creating an IRT (Integrated Retail Terminal) Form 17 (Tr. 100-01). He also acknowledged that there is nothing in the Handbook F-1, Post Office Accounting Procedures, that permits doing the Form 17 later, when the custodian has more time (Tr. 103-04).

Petitioner contends that there has been no actual monetary loss to the Postal Service, but that an error occurred somewhere in the conversion to the new accounting system that created a "phantom" shortage. He also contends that his long record of competent and conscientious service shows that he followed procedures and exercised reasonable care in managing the stamp stock for which he was accountable.

Respondent's position is that the records for August 19 and 20, 1998, plus the inability of anyone to find an error that would explain the apparent shortage, constitute sufficient evidence to prove a loss of $4,307.71. Respondent also argues that the findings of the Postal Inspection Service audit contradict Petitioner's claim that he followed proper procedures.

The standard for determining an employee’s liability in a case such as this provides that employees to whom postal funds and accountable paper are consigned (such as Petitioner) "are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties." Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), §141. Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. Respondent is not required to prove any specific dereliction, or act of negligence, by Petitioner. If Respondent proves a loss, the burden then shifts to the employee to show that he or she followed established procedures, or to present other evidence that would warrant relieving the employee of liability.

The evidence on proof of loss is in conflict. The computer generated Forms 1412 and 3958 do not balance, and Petitioner was unable to demonstrate what there was about the accounting conversion that could have caused a "phantom" shortage. Nor was Petitioner able to demonstrate why neither he, nor Mr. Klassner, was able to find any error that he might have made. On the other hand, an accounting discrepancy, in this case the failure of the two AIC 853 figures to match, does not necessarily equate to an actual loss. There is testimony from Petitioner, and a written statement from Petitioner, supported by the postmaster's testimony, that their physical counts of the main stock/unit reserve matched what the inventory tape showed was supposed to be present. That testimony was not contradicted, and there was no evidence of any physical count of stamp stock that showed a shortage. This, plus the coincidence of Petitioner's only apparent shortage in at least eight years occurring on the day of the accounting conversion, raises serious doubt that there was an actual loss. Respondent has not proved, by a preponderance of evidence, that the Postal Service has suffered a loss.

Based on Respondent's failure to prove a loss, the Petition is sustained. Respondent may not collect $4,307.71 from Petitioner's salary.

Bruce R. Houston
Chief Administrative Law Judge

1.  "Tr." references are to pages of the hearing transcript. "PS Ex. __" refers to documents attached to Respondent's Answer. PS Ex. 6 is Petitioner's typewritten statement, dated February 6, 1999.

2.  The terms "main stock" and "unit reserve" seemed to be used interchangeably by the witnesses. While these terms do not necessarily mean the same thing, it is clear in this case that all the witnesses, including Petitioner, were referring to the stock for which Petitioner was accountable.

3.  Mr. Klassner's audit was a review of records. It did not include any physical count of stamp stock (Tr. 20, 25).

4.  For this particular day, the amounts shown as "stock issued" and "clerk stock received" are artificially large because they include amounts transferred back-and-forth on paper as part of the conversion, as well as stock actually issued (Tr. 43-45).