In the Matter of the Petition by

LYDIA CATANZARO
P.O. Box 2078

           at

Palm Beach, FL 33480-2078

P.S. Docket No. DCA 00-90

APPEARANCE FOR PETITIONER:     Charlie Robbins
                                                         P.O. Box 17749
                                                         West Palm Beach, FL 33416-7749

APPEARANCE FOR RESPONDENT:  Paula S. Couch
                                                         Labor Relations Specialist
                                                         United States Postal Service
                                                         3200 Summit Boulevard, Room 144
                                                         West Palm Beach, FL 33416-3564

Petitioner, Lydia Catanzaro, filed a timely Petition after receiving a Notice of Involuntary Administrative Salary Offsets dated February 24, 2000, from her supervisor. This Notice stated the Postal Service's intention to withhold $411.82 from her salary to recover for a shortage in her account disclosed by an audit on February 27, 1999.

A hearing was held in West Palm Beach, Florida on April 19, 2000.⁽¹⁾ The Postal Service presented testimony from Victoria Murray, who conducted the audit on February 27, 1999, Richard Armour, Petitioner's postmaster at the time of the audit, and Peggy Young, another supervisor. Petitioner testified in her own behalf, and another clerk, Kelli Maxson, was called by the hearing official. Both sides also relied on documents that were filed with the Petition and Respondent's Answer. The following findings of fact are based on the entire record.

1. Petitioner has been a window clerk at the West Palm Beach Post Office for several years. On February 25, 1999, her flexible credit account was audited by Ms. Murray and was found to be $411.82 short. Both Ms. Murray and Petitioner counted the stamp stock. They did a recount on February 27, 1999, and found the same amount of shortage. (Tr. 7-9; PS Ex. 3, pp. 20-32).⁽²⁾

2. Ms. Murray issued Petitioner a letter of demand for $411.82 on February 27, 1999. Petitioner told Ms. Murray that she believed her shortage was related to a transfer of stock to another clerk in December 1998. Petitioner submitted two written memos to her postmaster, one dated March 1, 1999 and the other a few days later, describing how this transfer caused an error in her account. (Tr. 9-10; PS Exs. 1 and 2).

3. On or about December 1, 1998, a customer ordered 2000 20¢ stamps ($400.00) from Petitioner. Ms. Murray, custodian of the unit reserve stock, issued those stamps, along with other stamp stock, to Petitioner on December 2, 1998. (Tr. 43; PS Ex. 3, pp. 17, 18, 34). A book of 20¢ stamps contains 10 stamps, and a $400.00 quantity would come in two packages of 100 books each (Tr. 57). Petitioner called the customer and told him he could pick up the stamps.

4. On Friday, December 4, 1998, the customer had not arrived by the time Petitioner was scheduled to go off duty, so Petitioner gave some quantity of 20¢ stamps to Ms. Maxson to give to the customer. Petitioner did not record this transfer on a PS Form 17 until Monday, December 7, 1998, and neither she nor Ms. Maxson made the required entries into their IRT⁽³⁾ until December 7. That Form 17, signed by Petitioner and Ms. Maxson, lists the quantity transferred as 100 books, with a total value of $200.00, and they both entered that amount into the IRT. (Tr. 36-37, 43, 58, 63; PS Ex. 3, p. 16).

5. On or about December 4, 1998, the customer did come in and purchase $400.00 of 20¢ stamps from Ms. Maxson.⁽⁴⁾

6. When Ms. Maxson's account was audited on December 11, 1998, she had an overage of $151.33 (Tr. 21; PS Ex. 8, p.4).

7. When Petitioner's account was audited on February 25 and 27, 1999, it included only 78 20¢ stamps (PS Ex. 3, pp. 21 and 30).

8. Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), §429.16, contains the following provision regarding offsetting overages and shortages:

Handling Overages

4> If the overage is related to a shortage in another accountability of the same employee or to a current shortage in another employee's accountability, withdraw funds from trust to clear related shortages. Managers should exercise judgment when determining the existence of a relationship that may warrant offsetting overages.

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." 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. 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. Petitioner argues that her shortage should be reduced by the additional $200.00 of 20¢ stamps that she gave to Ms. Maxson on December 4. She maintains that, because of confusion over the amount of stamps in a package and being in a hurry, she mistakenly made an incorrect IRT entry and only reduced her account by $200.00 instead of $400.00.⁽⁵⁾ She argues that Ms. Maxson's overage on December 11 was close enough in time and amount to show a relationship to the second package of 20¢ stamps.

Respondent's position is that the amount of Ms. Maxson's overage, $151.33, is not close enough to suggest a relationship, and that it is unrealistic to believe that neither Petitioner nor Ms. Maxson would not have realized they made a $200.00 error in recording the transfer of stamps until Petitioner was found to be short more than two months later.

There is circumstantial evidence pointing in both directions in this case, but I conclude that Petitioner should be given the benefit of the doubt. There is no dispute that Petitioner received $400.00 of 20¢ stamps on Dec 2, specifically for a particular customer, or that the customer bought $400.00 worth from Ms. Maxson days later. Therefore, Ms. Maxson must have had $400.00 worth to sell, and the most likely source of those stamps was Petitioner. Petitioner's claim that she actually did transfer the full $400.00, rather than only $200.00, is also supported by the fact that Petitioner had only a small quantity of 20¢ stamps in her account when she was audited in February, and by the fact that Ms. Maxson had an overage on December 11.

The Petition is granted in part and denied in part. Petitioner is credited with $200.00 for additional stamps transferred to Ms. Maxson on December 4, 1998. Her actual shortage, therefore, was only $211.82. As there is no evidence to provide a basis for relieving her of accountability for that shortage, Respondent may collect $211.82 from her salary.

Bruce R. Houston
Chief Administrative Law Judge

¹ The hearing was conducted by the undersigned Administrative Law Judge via speaker-telephone from Arlington, Virginia. All other participants, including the court reporter, were present in a conference room at the hearing site.
² References are to the hearing transcript ("Tr.") and to numbered documents attached to Respondent's Answer ("PS Ex.").
³ Integrated Retail Terminal - the computer system used by window clerks at that time.
⁴ Although there is no doubt that the customer paid $400.00 (his canceled check is in the file, PS Ex. 3, p. 36-37) and eventually received that amount of stamps, Petitioner recalls that he first got only half what he paid for from Ms. Maxson and had to return a few days later to claim the rest. Ms. Maxson's testimony on this matter was not helpful because, although she vaguely remembers this incident, she was unable to recall any details (Tr. 63-67).
⁵ In a written statement on March 4, 1999 (PS. Ex. 2, p. 5), and in her testimony, Ms. Maxson said "anything is possible," but she could not remember whether she got two packages or one.