In the Matter of the Petition by

CLARENCE MARTIN
8452 Duskin Court

          at

Jacksonville, FL 32216-1554

P.S. Docket No. DCA 99-529

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

APPEARANCE FOR RESPONDENT:  Ron Midkiff
                                                         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, Clarence Martin, filed a Petition requesting a hearing under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514(a), after receiving a Notice of Involuntary Administrative Salary Offsets from Respondent, United States Postal Service. The Notice informed Petitioner that Respondent intended to deduct $37,024.19 from his salary to make up for shortages occurring in accounts for which Petitioner was responsible.

A hearing was held at which the parties presented evidence and made arguments in support of their positions.

1. In November 1997, Petitioner was appointed Supervisor, Customer Service, for the Arlington Station in Jacksonville, Florida (Transcript of Hearing ("Tr.") 9, 123).

2. Petitioner supervised the finances of the station, and, as part of his duties, he assumed financial responsibility for the station’s unit reserve stock. The reserve stock consists of the stamps and accountable paper consigned to the station but not yet issued to the window clerks. It was Petitioner’s responsibility to account for stock issued to the station and to issue stock from the unit reserve to the window clerks in the office. (Tr. 13, 23, 78; Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), Section 429.2, 429.21).

3. In 1995, the individual credits (stamps and cash) of two clerks, Enos and Foucht, who left the station were taken into the unit reserve by Petitioner’s predecessor. These credits were kept in separate drawers or containers within the vault where the reserve stock was stored. The financial records of the station carried those accounts under the clerks’ names. (Tr. 22, 24, 28, 42, 61, 89, 101-103; Respondent’s Exhibits ("RX") 31, 32, 52, 53, 54 p. 16).

4. When a clerk leaves a station, his stock must be counted by the unit reserve custodian accepting responsibility for it and, if not shortly to be assigned to another clerk, should be integrated into the reserve stock. If the stock is out of date, it should be sent to a stamp destruction office for disposal. (Tr. 28, 29, 34, 61, 88-89).

5. Incident to transferring the reserve stock to Petitioner in 1997, he and his predecessor counted the stock and found that the amount on hand agreed with what the records of the station said should be there. They did not count the individual credits of the two departed clerks, and Petitioner did not sign any forms accepting responsibility for those credits, although he received keys to the drawers. The record of all past counts of the unit reserve, PS Form 3368, Stamp Credit Examination Record, does not show an official count of the unit reserve when it was transferred to Petitioner. (Tr. 22-23, 29, 71, 126-129, 131; RX 24, 54 p. 1).

6. On December 18, 1997, Petitioner issued stamps totaling $20,243 to five clerks in the station. Although the clerks entered the stock as "received" in their financial records (PS Form 1412s), Petitioner failed to enter the amount in his records. Therefore, even though the clerks’ accountabilities were increased by a total of $20,243, Petitioner’s unit reserve accountability—i.e. the amount of stock reflected in the station’s records as being in the unit reserve—was not reduced by that amount as it should have been. (Tr. 25-27, 43, 48, 57, 83, 114, 134, 137; RX 57, 58).

7. On a number of occasions during the 1998 Christmas mailing rush, Petitioner issued stamps to clerk Baxter, and neither of them entered the transaction into his account. That is, Petitioner failed to reduce his accountability for the unit reserve by the amount of stock issued, and Mr. Baxter failed to increase his accountability by that amount. When Mr. Baxter’s credit was counted on January 9, 1999, he had stamps in excess of what the financial records indicated (an overage) amounting to $7,684.94, which both he and Petitioner believed was attributable to the stock issued without proper recording. (Tr. 18, 106-108, 110-111; RX 12, 23, 26, 35, 54 pp. 8, 21).

8. Some time after Petitioner accepted responsibility for the unit reserve, a window clerk, Fears, left the station, and her window credit was accepted by Petitioner back into the unit reserve (Tr. 42). There is no evidence in the record of a count being done at the time Petitioner accepted the accountability and the stock and cash of clerk Fears.

9. In early 1999, a new retail organization was to be introduced at Arlington Station, and someone else was to take over the financial responsibilities for the office. As part of the transition, every credit in the station had to be counted and reconciled. A supervisor from another office assisted in the counts at Arlington, which were done in January of 1999. (Tr. 20, 33, 88).

10. On January 12 and 13, 1999, the unit reserve was counted, and a shortage of $31,018.09 was discovered. Petitioner participated in the count and signed the PS Form 3294, Cash and Stamp Stock Count and Summary, indicating his agreement with the count. (RX 26, 34).

11. On January 22, 1999, the credits assigned to clerks Fears, Enos and Foucht were counted, and shortages were discovered in the amounts of $5,195.92, $6,479.63, and $3,265.76, respectively. Petitioner participated in the counts for Enos and Foucht and signed the PS Form 3294, Cash and Stamp Stock Count and Summary, indicating his agreement with those counts. (RX 26, 27, 31, 32, 33, 36, 37, 38, 52, 53).

12. In separate letters of demand dated February 17, 1999, Respondent demanded that Petitioner pay a total of $56,744.77, comprising the following individual claims (Tr. 13, 35):

     $31,018.09     Unit Reserve Shortage of January 12-13, 1999 (RX 16)

     6,522.22         Unit Reserve Shortage of February 3-4, 1999 (RX 17)⁽¹⁾

     5,195.92         Audit of Clerk Fears of January 22, 1999 (RX 18)

     4,263.15         Audit of Clerk Turner of January 22, 1999 (RX 19)⁽²⁾

     6,479.63         Audit of Clerk Enos of January 22, 1999 (RX 20)

     3,265.76         Audit of Clerk Foucht of January 22, 1999 (RX 21)

     $56,744.77     Total

13. After the letters of demand were issued, the parties addressed a number of possible offsets to the shortage. Eventually, Respondent allowed credits totaling $19,720.58, which included an overage of $7,186.23 discovered when Petitioner transferred the credit to his successor on February 6, 1999 (RX 23), and three stock transfers of the unit reserve that Petitioner had failed to record properly to reduce his accountability. These offsets reduced to $37,024.19 the loss Respondent alleged was due to Petitioner’s mismanagement of the unit reserve. Respondent did not allow a credit for the $20,243 of stock issued on December 18, 1997 (Finding 6) or

the stock issued to clerk Baxter (Finding 7), because neither transaction had been properly recorded in the station’s records. (Tr. 36-37, 39-41, 43, 45-49, 61, 64-67, 154-155; RX 6, 12, 13, 14, 22).

14. On November 9, 1999, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets stating Respondent’s intention to recover the amount of $37,024.19 from Petitioner’s salary (RX 1). Petitioner filed a timely petition challenging the collection.

15. Postal Service regulations establish liability for financial losses from accounts, including a unit reserve, as follows:

"The postmaster or responsible manager consigns postal funds and accountable paper to other career employees. Employees 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), Section 141).

16. If a shortage in the accountability of one employee is found to be related to an overage in the accountability of another employee, Respondent’s regulations provide that the shortage may be reduced by the amount of the overage. Respondent’s managers are expected to exercise judgment when determining the existence of a relationship that may warrant offsetting overages against shortages. (Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), Section 429.16).

In a Debt Collection Act proceeding, it is Respondent’s burden to demonstrate that it suffered a loss in the amount of the debt claimed against the employee. Normally, demonstrating a shortage in an accountability for which the employee is responsible is sufficient to meet this burden.

However, Respondent has not demonstrated that Petitioner was responsible for the credits assigned to clerks Enos and Foucht, credits that had been closed out more than two years before he accepted the reserve stock and which should have been properly disposed of long before the unit reserve was turned over to him (Findings 3, 4). He and his predecessor did not count those credits, and Petitioner did not sign or otherwise accept responsibility for the Enos and Foucht accountabilities (Finding 5). Respondent has not presented any evidence to rebut Petitioner’s testimony in this regard.⁽³⁾ Therefore, Respondent has not demonstrated that Petitioner was responsible for the shortages in those accountabilities.

Additionally, there is insufficient evidence to support Respondent’s claim based on clerk Turner’s account. The letter of demand asserts a count was done that resulted in a shortage, but that assertion is not supported by evidence in the record (Finding 12 n. 2). On this record, Respondent has not demonstrated that Petitioner was responsible for an account attributed to Turner or that there was a shortage in such account.

Eliminating the Enos, Foucht and Turner portions of Respondent’s claim against Petitioner leaves $42,736.23 in alleged losses from accounts for which Petitioner was responsible. Respondent’s allowance of credits totaling $19,720.58 against those alleged losses (Finding 13), brings the amount in issue to $23,015.65.

However, two transactions warrant further reduction of this amount. First, the evidence is uncontroverted that on December 18, 1997, Petitioner issued $20,243 in stamps to clerks and failed to reduce his accountability in the financial records of the unit reserve (Finding 6). The clerks added that amount to their accountabilities, so even though Petitioner failed to record the transaction in his records, the $20,243 accounting difference is not a loss to Respondent.⁽⁴⁾

Additionally, the evidence is uncontroverted that Petitioner issued stock to clerk Baxter, that neither entered the transaction(s) into his accountability records, and that clerk Baxter had an overage of $7,684.94 in his next count (Finding 7). This evidence is sufficient to demonstrate a relationship between clerk Baxter’s overage and Petitioner’s unit reserve shortages, and Petitioner would be entitled to a credit.

Combining clerk Baxter’s overage with the $20,243 credit discussed above offsets completely the $23,015.65 remaining of Respondent’s claims.⁽⁵⁾

Accordingly, Respondent has failed to show that it suffered a loss due to Petitioner’s management of the Arlington Station unit reserve.

The Petition is sustained.

Norman D. Menegat
Administrative Judge

¹ Other than the letter of demand itself and a February 12, 1999 memorandum listing suspense entries in the Arlington Station records (RX 22), there is no evidence in the record corroborating that another count was done on February 3 and 4, 1999, or that, if done, the count showed a shortage of $6,522.22. There was no PS Form 3294, Cash and Stamp Stock Count and Summary, in the record and no testimony regarding such a count.

² Other than the reference in the letter of demand and inclusion in the February 12, 1999 listing of suspense items at Arlington (RX 22), there is no evidence in the record regarding a January 22 count of a window clerk named Turner and no evidence establishing that Petitioner was responsible for such an account. In a spread sheet showing all of the accountabilities at the station and the results of the January 1999 counts of those credits (RX 26), none is listed for Turner, and in handwriting at the bottom of the list appears, "Turner No Credit."

³ The official record of past counts of the unit reserve does not reflect an official count of the unit reserve when it was transferred to Petitioner (Finding 5), but for purposes of this decision, Petitioner's testimony that there was such a count and that the unit reserve itself was in balance has been accepted.

⁴ Respondent has taken the position in this proceeding that overages may be used to offset shortages only if a paper trail of the appropriate, properly-completed Postal Service documents exists that demonstrates the relationship. Respondent's regulations on this issue (Finding 16) do not require such a high level of documentary proof before a relationship can be found.

⁵ Because there are sufficient offsets to cancel Respondent's claims, it is not necessary to address whether there is a basis for holding Petitioner responsible for the shortage found in clerk Fears' accountability. Likewise, it is not necessary to determine whether Respondent has proven that there was a count of the unit reserve on February 3-4, 1999, that resulted in a shortage of $6,522.22 (Finding 12, n. 1).