In the Matter of the Petition by

DECKER FREEMAN
212 Hibiscus Avenue

          at

Gulf Breeze, FL 32561-4324

P.S Docket No. DCA 00-127

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

APPEARANCE FOR RESPONDENT: Glenn J. Reeves
                                                         Labor Relations Specialist
                                                         United States Postal Service
                                                         P.O. Box 40005
                                                         Jacksonville, FL 32203-0005

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Decker Freeman, filed a timely petition for hearing under the Debt Collection Act, 5 U.S.C. §5514(a), after receiving a Notice of Involuntary Administrative Salary Offsets from his postmaster on April 5, 2000. This Notice stated the Postal Service's intention to withhold $1,639.78 from Petitioner's salary to recover for a shortage in an account for which Petitioner was responsible.

A hearing was held in Pensacola, Florida on June 12, 2000. The Postal Service presented testimony from Stephen MacLeod, who audited Petitioner's account, Eugene Presley, the Gulf Breeze Postmaster, and Diane Arledge, another supervisor. Petitioner presented his own testimony and also called Edward Maischaider, a window clerk. Both sides relied on documents filed with the Petition and the Answer, and presented some additional documents 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 worked for the Postal Service for seventeen years. He is currently a Supervisor of Customer Services at the Gulf Breeze, Florida Post Office, and has been the custodian of the main stock at Gulf Breeze since June 10, 1999. (Tr. 31, 39, 96-97).(1)

2. When Petitioner took over the main stock from the previous custodian on June 10, 1999, he signed an inventory printout showing a total of $113,779.71. (Tr. 48; Answer, Tab 5).

3. The main stock is stored in two safes and a locked wooden cabinet in a small room at the Gulf Breeze Post Office. Stock assigned to the clerks is also stored in this room, in another safe. Compartments containing separate accountabilities are locked separately, and no clerks have access to Petitioner's main stock. At the time pertinent to this case, Petitioner kept some stamped envelopes that were part of his accountability in a locked cabinet in the postmaster's office. The postmaster and Ms. Arledge, another supervisor, also had access to this cabinet. (Tr. 22, 39, 50, 74-75, 83, 98-99).

4. On January 18, 2000, the Manager of Post Office Operations for the district of which Gulf Breeze is a part issued a memorandum to postmasters, directing them to do internal audits of their offices, including a count of the unit reserve stock.(2) (Tr. 30-31, 34; PS Ex. 4).

5. The Gulf Breeze postmaster, Mr. Presley, asked Mr. MacLeod to conduct the audit at Gulf Breeze. Mr. MacLeod did so on February 2, 2000, along with Petitioner. Prior to this, Petitioner had been aware of the Manager's memo and had done a spot check of his main stock sometime in January. He believed the stock was short by 50 coils of 33¢ stamps.(3) When Petitioner discovered this apparent shortage, he and Ms. Arledge reviewed pertinent records in an attempt to find an accounting error but found no such error. (Tr. 46, 73, 101, 111-14).

6. When Petitioner and Mr. MacLeod counted the main stock on February 2, 2000, and again on February 4, they found a shortage of $1,705.41. Their count showed stamp stock valued at $124,980.60 present, against an opening balance of $126,686.01, representing the total amount that should have been present. Petitioner signed a PS Form 3294, Cash and Stamp Stock Count and Summary, indicating that he agreed with the accuracy of the count. The bulk of this shortage was in the inventory of $33.00 coils. There were 50 fewer than there should have been, consistent with what Petitioner had discovered earlier. (Tr. 10-15; Answer, Tab 6).

7. On February 4, 2000, Mr. Presley issued Petitioner a letter of demand for $1,705.41. This was later reduced by the amount of some vending shortages for which Petitioner is not responsible. After a request for reconsideration was denied, the Notice of Involuntary Administrative Salary Offsets was issued on April 5, 2000, alleging a debt of $1,639.78. (Tr. 46-47; Answer, Tabs 1-3).

8. One of Petitioner's duties as main stock custodian is to issue stamp stock to window clerks. Prescribed procedure calls for a clerk to fill out a PS Form 17, listing the denominations and amounts of stamps needed. The custodian then removes the appropriate stamp stock from the main stock (or unit reserve), both the custodian and the clerk verify the amounts, and each signs and dates the form. It was Petitioner's practice to count out the amounts for each of his clerks and stack the portion for each clerk on a table in the room where the safes were located. On a few occasions, these piles of stamp stock were left unattended for short periods before the clerks came to pick them up. (Tr. 17-20, 38, 71-72, 103; Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), §425.1).

DECISION

Petitioner contends that he should be relieved of liability because it is a postmaster's responsibility to provide a secure environment for safeguarding stamp stock, and that the postmaster failed to do so in this case, as illustrated by the fact that some stock was kept in a cabinet to which three people had access, and that the combination to the clerks' safe was not changed when it should have been.

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 "are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties." 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. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. 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.

In this case, Petitioner does not challenge the accuracy of the audit, as the audit confirmed the shortage that he had already discovered. Therefore, the evidence establishes a loss, and the evidence and issues raised by Petitioner are not sufficient to relieve him of liability. The evidence showed that the only stock stored in the postmaster's office was stamped envelopes, but the loss was apparently of coils of 33¢ stamps. Other than these envelopes, there is no evidence that anyone other than Petitioner had access to the main stock. There was much testimony about clerks' shortages that had to be "written off" because inventories of keys had not been conducted properly. However, there is nothing to connect this in any way to Petitioner's shortage. Likewise, whether or not the combination to the clerks' safe was changed when required was not shown to have any effect on the security of Petitioner's stock.

As to the question of whether Petitioner followed established procedures, he submitted no evidence other than a general reference to his many years of apparently good service. On the other hand, the evidence that he occasionally left stamp stock unattended, contrary to established procedures, was uncontradicted. The record does not support a finding that Petitioner should be relieved of liability on the basis of the standard stated in Handbook F-1, §141, quoted above.

The Petition is denied. Respondent may collect $1,639.78 from Petitioner's salary.

                                                            Bruce R. Houston
                                                            Chief Administrative Law Judge

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1 References to the hearing transcript are "Tr._." References to tabbed attachments filed with the Postal Service's Answer to the Petition will be "Answer, Tab _." References to documents admitted at the hearing will be "PS Ex._," or "Pet. Ex._."

2 For purposes of this case, the terms "unit reserve" and "main stock" mean the same thing. It includes all stamp stock not yet consigned to window clerks.

3 A coil contains 100 stamps, thus the value of 50 coils is $1,650.00.