In the Matter of the Petition by

MIKE GRIEMAN
1802 Nevada Avenue, East

        at

St. Paul, MN 55119-4225

P.S. Docket No. DCA 00-460

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

APPEARANCE FOR RESPONDENT:
Kevin A. Dicks
Labor Relations Specialist
United States Postal Service
100 S. First Street, Room 425
Minneapolis, MN 55401-9450

Petitioner, Mike Grieman, filed a Petition requesting a hearing under the Debt Collection Act after receiving a Notice of Involuntary Administrative Salary Offsets stating the Postal Service’s intention to deduct $2,500 from his salary to recover for shortages occurring in stamp accountabilities assigned to Petitioner.

At Petitioner’s request, an oral hearing was held. The parties, witnesses and court reporter were at the St. Paul, Minnesota Post Office, and the Hearing Official participated by telephone from the Judicial Officer Department in Arlington, Virginia. The parties presented documents and testimony of witnesses and made oral closing arguments after the presentation of evidence was concluded.

The following findings of fact are based on the documents submitted and the testimony of the witnesses at the hearing.

1. In 1995, Petitioner was appointed the acting manager of the West St. Paul Carrier Annex, under the St. Paul, Minnesota Post Office. He also became manager of the neighboring Signal Hills finance station, which provided retail services to the public. (Transcript of Hearing, Pages ("Tr.") 89-91, 103).

2. In 1996, Petitioner was assigned direct responsibility for and exclusive control over the unit reserve at the Signal Hills Station. The unit reserve is the stock of stamps and accountable paper held in the station before issuance to window clerks to sell to the public. It was Petitioner’s responsibility to receive and account for stamps shipped to Signal Hills and to issue stamps to the window clerks when needed. (Tr. 19-20, 54, 58-59, 90-91).

3. On June 24 and 25, 1997, a comprehensive financial audit conducted of the Signal Hills Station disclosed a large number of deficiencies in the station’s operations (Tr. 49; Respondent’s Exhibit ("RX") 21). Thereafter, a Postal Systems Coordinator ("PSC"), who was an experienced financial auditor, was assigned to work with Petitioner to straighten out the problems in his management of the station. Over the course of several months, the PSC assisted Petitioner in correcting the deficiencies, instructed him in the proper financial management of the station and helped him set up procedures to manage the station properly. All of the accounts of the station were balanced in this process. (Tr. 15-22, 42, 50-52, 55, 99; RX 1, 22).

4. At some point, two separate credits (drawers) of stamps were assigned to Petitioner. These spare drawers were used on an occasional basis by "pool" window clerks assigned to work at Signal Hills temporarily when the station was shorthanded. (Tr. 27, 62, 81-82, 103).

5. Before assigning one of the spare drawers to a pool window clerk, Petitioner was required to count the stock in the drawer, and he was required to count the drawer again at the close of the day before storing the drawer in the safe (Tr. 27, 45, 61-62, 77, 103; RX 16). However, because of his duties at the West St. Paul Carrier Annex, Petitioner was often unable to be present to conduct such counts (Tr. 91, 99-101). When Petitioner was not available to count the drawer with a pool clerk, he would send another supervisor to Signal Hills for that purpose or have the finance clerk at Signal Hills perform the counts. Petitioner left the key providing access to the spare drawers in the registry drawer at Signal Hills, and the key was thus available to all window clerks in the office as well as to the finance clerk. (Tr. 100, 113-114; RX 22).

6. Responsibility for the Signal Hills Station was to be transferred from Petitioner to another manager on March 16, 1999. As part of the transfer, all of the accounts and credits in the office were to be physically counted and the result compared to the amounts in each credit according to the records of the station. This included the unit reserve and all clerk drawers and the spare drawers. (Tr. 32-39; RX 16).

7. On March 15, the day before the transfer was to occur, Petitioner and his successor performed counts and made adjustments in the records of the station. They identified a $3,080 shortage in the unit reserve. As an adjustment they created a $3,080 suspense entry in the station’s accounts to reflect the shortage and reduced the unit reserve value in the station’s records by that amount. They identified shortages totaling $1,855.98 in the two pool drawers and made a similar adjustment. Accordingly, the official counts done on March 16 as part of the transfer of responsibility reflected that the unit reserve and spare drawers were in balance. However, the suspense entries made the day before in the station’s accounts reflected the shortages of $3,080 in the unit reserve and $1,855.98 in the spare drawers that had been discovered on March 15. (Tr. 30-33, 39, 97, 117-118; RX 10, 11, 16, 17).

8. Petitioner filed a Claim for Loss seeking relief for the total shortage of $4,935.98 (RX 3).¹  Petitioner stated as a basis for granting relief for the unit reserve shortage, that he had stored in a locked supply cabinet obsolete, out-of-date stamps valued at $3,080 that he intended to send to the appropriate office for destruction and that when the unit reserve was counted on March 15, 1999, that stamp stock was not in the cabinet and could not be found (Tr. 27-29, 68-69, 75, 95, 118). Storage of stamps in the supply cabinet, even if locked, was against Postal Service procedures, where, as here, there was room in the safe for the stamps (Tr. 29, 48, 56-57; Postal Service Handbook F-1, Post Office Accounting Procedures, November 1996, updated through September 7, 2000, Sections 151.1, 422.1). Petitioner also reported that there had been an incident in February of 1999 when he left the key in the cabinet’s lock over a long weekend (RX 3). However, Petitioner had been the last to leave the station on that occasion and had been the first to arrive the morning of the next workday. (Tr. 38-39, 95, 122; RX 3, 5, 16).

9. The station’s financial records and data are maintained in a computerized system with data stored on disks. However, there are paper copies of many of the documents reflecting the transactions of the day as well as back-up disks maintained at the station. There were occasional disk "crashes" and power outages at the Signal Hills Station, but when a disk crashes the data can be reconstructed from the backup disks and paper copies of documents, and a disk crash would have little or no bearing on the pool drawer or unit reserve shortages. (Tr. 23-25, 36-38, 48, 94).

10. Eventually, the postmaster agreed to reduce the amount Respondent intended to collect from Petitioner to $2,500 (Tr. 67, 74, 98-99), and a Letter of Debt Determination was issued to Petitioner on February 24, 2000, demanding payment of that amount (RX 6). A Notice of Involuntary Administrative Salary Offsets claiming $2,500 was issued on March 9, 2000 (RX 7).

11. Petitioner again sought relief from the Postal Service’s claim (June 8, 2000 Letter attached to Petitioner’s January 29, 2001 Declaration), but the postmaster denied the request on September 18, 2000 (RX 9). Petitioner then filed a Petition seeking a hearing under the Debt Collection Act.²

12. The regulations governing liability of Postal Service employees for losses to their accountabilities appear at Section 14 of the F-1 Handbook:

"14 Liability for Financial Losses

When an accountable financial loss occurs and evidence shows that the postmaster or responsible manager enforced U.S. Postal Service (USPS) policies and procedures in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show that the postmaster or responsible manager met those conditions, the Postal Service charges the postmaster or responsible manager with the full amount of the loss.

141 Other Employees’ Liability

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, updated through September 7, 2000, Section 14).

13. Postal regulations bar employees from sharing access to their stamp credits: "Do not allow any employee, supervisor, or postmaster to have access to the stamp credit of another employee." (Postal Service Handbook F-1, Post Office Accounting Procedures, November 1996, updated through September 7, 2000, Section 426.2 (2)).

Respondent’s burden of proof in this case is to show that a loss occurred from accounts for which Petitioner was responsible. Here, properly conducted counts of the unit reserve and the two spare drawers, incident to the transfer of the station, demonstrated a loss totaling $4,935.98. Petitioner participated in the counts and has not challenged their accuracy. (Findings 6, 7).

Petitioner argues that disk crashes and power outages experienced in the office might have affected the shortages. However, the records of the station could have been restored by use of back-up information, and Petitioner did not demonstrate that such occurrences had any bearing on the shortages at issue. (Finding 9).

Regarding the unit reserve shortage, Petitioner suggested that he might have sent the stock for destruction without completing the proper paperwork and without following standard procedures for transmitting such stock by registered mail. If that happened, according to Petitioner, there would have been no loss because the stamps would have been destroyed as intended. However, Petitioner’s testimony in this regard was speculative, and there is no other evidence that the stock was sent for destruction. Petitioner has not overcome Respondent’s evidence that the disappearance of the $3,080 in stock Petitioner intended to ship for destruction caused Respondent a loss in that amount (Findings 7, 8). Therefore, Respondent has demonstrated that it suffered a loss in the amount of $3,080.

Respondent having established that it suffered a loss in the total amount of $4,935.98, the burden shifts to Petitioner to show that he followed established procedures in managing his credits (Finding 12) or that there exist other grounds for relieving him of liability for the loss.

Petitioner’s management of the two spare drawers was not consistent with established practice. Aside from whether the pool clerks were properly counted at the beginning and end of their use of the spare drawers, leaving the key to those drawers available to all employees at Signal Hills (Finding 5) violated requirements that only the person assigned responsibility for the stamp accountability may have access to it (Finding 13). Petitioner argues that management bears at least some responsibility for his failure to count the pool drawers at the beginning and end of each use and the need to leave the key available to others, because management’s assignment of duties at the West St. Paul Carrier Annex prevented him from being present at Signal Hills Station when necessary. However, if he believed his duties at the carrier annex prevented him from adequately securing the spare drawers, it was his responsibility to take action to provide adequate coverage to secure the drawers. There is no evidence that Petitioner raised this issue with management or that he could not have arranged his schedule to provide the necessary security for the pool drawers. Accordingly, Petitioner is responsible for the losses to the spare drawers.

Additionally, Petitioner has not shown that he followed established procedures regarding management of the unit reserve. Although Petitioner disagreed, Respondent demonstrated that there was room in the safe for the $3,080 of stock (Finding 8). Therefore, storage of stamps from the unit reserve that were intended for destruction in a supply cabinet, even though the cabinet was locked, contravenes Respondent’s established security procedures (Finding 8). Also, leaving the key in the lock over a weekend (Finding 8) is not consistent with established procedures, even though Petitioner was the first one back in the office on the next work day (Finding 8).

Petitioner has not demonstrated that he followed established procedures. Accordingly, the Petition is denied. Respondent may collect $2,500 from Petitioner’s salary.³

Norman D. Menegat
Administrative Judge

¹ By filing a Claim for Loss, a station manager asks his superiors to relieve his station of responsibility for ("write off") identified accounting deficiencies or shortages. If the Claim for Loss is granted, the accounts of the station are adjusted, and in this case, the shortages would no longer have appeared in the station's suspense records. (Tr. 24).

² Although the Petition was not filed within the fifteen days allowed by applicable rules, the Hearing Official determined that there was good cause for the delay and that the Petition would be considered (See Order dated March 14, 2001).

³ The postmaster relieved Petitioner of all but $2,500 of the debt resulting from the shortages discovered March 15 and 16, 1999, and Respondent seeks to collect by offset from Petitioner's salary only that amount. (Finding 10).