In the Matter of the Petition by

BARRY BENTE
16 Northwoods Lane

                 at

La Crescenta, CA 91214-4307

P.S. Docket No. DCA 01-147

APPEARANCE FOR PETITIONER:
Jean Clare Keister, Esq.
26501 Golden Bush Way
Canyon Country, CA 91351-2312

APPEARANCES FOR RESPONDENT:
Gina Morris
Teresa L. Fleming
Labor Relations Specialists
United States Postal Service
28201 Franklin Parkway
Santa Clarita, CA 91383-9401

Petitioner, Barry Bente, filed a timely Petition after receiving a Notice of Involuntary Administrative Salary Offsets dated April 20, 2001, from Ralph Tapia, Jr., Manager of Finance for the Van Nuys, California District. This Notice stated the Postal Service's intention to withhold $50,121.11 from Petitioner's salary to recover for a shortage in the unit reserve account at the Duarte, California Post Office for which Petitioner was responsible.

A hearing was held in Pasadena, California on June 19-20, 2001. The Postal Service presented testimony from Mr. Tapia, Sallie Mackie, who conducted an audit of Petitioner's unit reserve stock, George Morris, an accounting expert who examined records at the Duarte Post Office after the audit, Lynn Martin, an accounting manager, David Dillman, Manager of Post Office Operations and Petitioner's immediate supervisor, Sue Golbricht, who served as Officer-in-Charge of the Duarte Post Office from October 2000-January 2001, and three other employees in the Duarte Post Office. Petitioner testified in his own behalf, and also presented testimony from Robert Smith, the Los Banos, California Postmaster, and Robert Mysel, the Pasadena Postmaster. Both parties relied on documents that had been filed with the Petition and the Answer, and as supplements to the Petition and the Answer. Each party also submitted additional documents at the hearing, and each party filed a post-hearing brief. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

1. Petitioner has been the postmaster at Duarte, California since January 1989. During the time pertinent to this case, he was also the custodian of the unit reserve stock at Duarte. (Tr. 31, 187, 215, 403, 408).¹

2. During 1995 and 1996, several post offices in the Van Nuys, California District, of which Duarte is a part, experienced problems with the computer system, known as MOS/IRT, that was then used to manage stamp stock accountability.

Defective computer disks would occasionally produce inventory reports and other accountability forms that were inaccurate and unreliable. (Tr. 81, 220, 265, 281, 297, 318, 323-24).

3. One of the means used by postmasters and stamp stock custodians to monitor the amount of stamp stock in a unit reserve is to compare the unit's inventory list with the total unit reserve accountability on PS Form 3958. A Form 3958 records all transactions in the unit reserve and shows the total amount of stamp stock that should be in the unit reserve. The inventory list breaks that total down by all the various categories of stamps. These forms can be generated by the computer system any time there are withdrawals from or additions to the unit reserve, and the totals on the two should always match. (Tr. 64-68, 277-78, 296).

4. During the time when the offices in the Van Nuys District were experiencing IRT errors, the stamp stock totals shown on inventory lists and Forms 3958 sometimes did not match because of faulty computer disks. Postmasters were instructed to correct this by immediately doing a hand count of the unit reserve to determine what was actually present. It would be assumed that this amount was correct, the faulty disk would then be replaced, and the unit would be brought into balance from that point forward. Any supposed "shortage" shown on computer reports would be "written off" by the district finance office, on the basis that one could not be certain that there was a real shortage. Some such shortages were written off in other offices-i.e., no one was held liable for apparent losses. (Tr. 68, 221, 297-98, 304, 323-24, 334, 338).

5. Duarte records examined by Mr. Morris in March 2001 disclosed a mismatch between the two forms discussed above for December 16, 1996. There was an unexplained difference of $10,117.50 between the inventory list and the Form 3958. Petitioner was aware of this discrepancy at or near the time it occurred, but he did not do an audit of his unit reserve and did not take the action described above to remove any inaccurate data from his system so that he could balance his account and start afresh. (Tr. 64-66, 72, 222-23, 298, 317-18, 333-34, 410-11).

6. On May 9, 2000, the computer system at Duarte was converted from the IRT system to one called POS ONE. This was an ongoing process in all the Van Nuys District post offices. A team from the district office handled these conversions, one at a time. As part of the preparation for conversion, each office was advised to do an audit of the unit reserve. Petitioner did not do an audit at Duarte. Therefore, whatever data was in the IRT system was transferred to the POS system. (Tr. 143-52; PS Supp, p. 1).

7. In October 2000, Petitioner was placed on a special assignment by his supervisor and Ms. Golbricht became the Officer-in-Charge of the Duarte office. She did not take over as custodian of the unit reserve, however, and Petitioner remained accountable for the unit reserve. During the time pertinent to this case, and while Petitioner was the custodian of the unit reserve, he kept some stamp stock in a locked safe, to which only he had access. Other stamp stock he kept in a locked storage closet. He permitted at least one supervisor and two clerks to have access to the storage closet so that they could get needed stamps if he was not available. The practice was for them to leave notes on Petitioner's desk telling him what types and quantities of stamps they took. This practice began nearly two years before Petitioner was detailed away from the office in October 2000. (Tr. 132-35, 160-70, 173-77, 186-90, 404, 413).

8. Postal Service Handbook F-1, Post Office Accounting Procedures (April 1991), §432.1 permits only a unit reserve custodian to have access to the unit reserve. (Attached to Answer).² 

9. On January 22, 2001, Sallie Mackie became the Officer-in-Charge of the Duarte office. On January 25, 2001, she and Petitioner did an audit of the unit reserve, in preparation for the account being turned over to Ms. Mackie. Before they began the count, Petitioner told Ms. Mackie that he expected the account to be short by seven or eight thousand dollars. They counted all the stamp stock, using a PS Form 3294, Cash and Stamp Stock Count and Summary, and found $132,374.16 to be present. On the next day, January 26, 2001, they counted the unit reserve again with a third person, Diane Moorhead, also present and reached the same result. This was determined by Ms. Mackie and Ms. Moorhead to show a shortage of $50,121.11, compared to what the computer showed should have been the opening balance in the unit reserve for that day. (Tr. 21-30, 48-51; PS Supp, pp. 2-10, 16).³ 

10. Prior to the January 25/26, 2001 audit, the last count of Petitioner's unit reserve of which there is any record was performed in February 1993. Since December 1999, Postal Service regulations have required that a unit reserve be counted at least once per year. Before that, there was no written rule requiring annual audits of a unit reserve. (Tr. 50, 249-51, 409; PS Form 3368, attached to Answer; Postal Bulletin 12-16-99, p. 24, attached to Answer).

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 that any specific dereliction or act of negligence by Petitioner caused the loss. 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.

Petitioner does not dispute that he was accountable for the unit reserve at Duarte, nor does he dispute the accuracy of the counts on January 25 and 26. He contends that the Postal Service has failed to prove an actual loss because it cannot be assumed that the opening balance used to compute the shortage was accurate. Because of the acknowledged computer disk errors that occurred in 1996 and earlier, which were never purged from the system at Duarte, he contends that there is no validity to the opening balance that Respondent used to compute the alleged shortage.

Respondent contends that any uncertainty over the accuracy of the opening balance on January 25/26 was the direct result of Petitioner's failures to follow proper procedures-i.e., to audit his unit reserve immediately when the possibility of an IRT malfunction occurred. Respondent's position is that because Petitioner did not do this and also did not perform the recommended audit before the POS ONE conversion in 2000, and because he violated postal regulations by giving others access to the unit reserve, he is not entitled to the benefit of doubt that others were given when IRT errors occurred. To the contrary, Respondent argues that because of Petitioner's failure to monitor the accuracy of his unit reserve records and his failure to safeguard the stock, the Postal Service is entitled to assume that the opening balance was correct on January 25/26, 2001. Respondent asserts that under these circumstances Petitioner must do more than raise a possibility that IRT errors affected the $50,121.11 shortage. Respondent argues that Petitioner has the burden of proving it and he has failed to do so.

Petitioner argues that he has met his burden by showing that IRT errors were a likely cause of the shortage. He points to the fact that unreliable information, caused by defective disks, was an ongoing problem in the Van Nuys District prior to 1997 and that supposed shortages in other offices were written off. He also points to the testimony of Ms. Martin and Mr. Tapia, Respondent's accounting managers, who conceded that they cannot be sure that the opening balance used on January 25/26, 2001 was correct (Tr. 306, 332). Petitioner contends that, even though he failed to count his stock after noting the apparent IRT error in December 1996, his failure to count did not cause the shortage and logic dictates that he should be treated the same as the offices who had shortages written off. If a shortage is based on corrupt data, Petitioner argues, no loss has been proved even if he was at fault in allowing the corrupt data to remain in the system.

Petitioner's argument has some merit, but the facts do not support relieving him of the full liability. The only known error that may be attributable to IRT problems, and that may have affected the unit reserve at Duarte is the one found by Mr. Morris, that being the $10,117.50 "mismatch" in the records for December 16, 1996 (Finding of Fact #5). No one, however, offered any explanation for how that error might have grown to over $50,000, and Petitioner presented nothing else to cast doubt on the validity of the opening balance. It is too speculative to assume that the opening balance on January 25/26, 2001 was completely unreliable based on an error that occurred more than four years before, especially when Petitioner had control over the records and had the means to correct that error. It is reasonable to assume, however, that the $10,117.50 error was a part of the shortage. The loss should be reduced by that amount.

The Postal Service has proved a loss of $40,003.61 and because the evidence shows that Petitioner violated postal regulations by allowing others to have access to the unit reserve, and that he neglected to take any steps to assure the accuracy of the records under his control, he has not met his burden of showing that he followed established procedures in managing the account.

Petitioner also argues that his superiors were at fault for not transferring the unit reserve from him to Ms. Golbricht when she became the Officer-in-Charge in October 2000. This is essentially a non-issue. One can debate whether it might have been better to transfer the account, but the fact is the account was not transferred, Petitioner remained responsible for it and he knew that. In addition, the record shows that he had permitted others to have access to the account long before he was detailed away from the office. Further, there is no showing that requiring him to keep the account had any effect on the shortage.

Petitioner's arguments regarding disparate treatment are unpersuasive. He argues that it is unfair to charge him with a debt when the Postal Service took no action against Mr. Dillman, who failed to insure that the unit reserve accountability was transferred to Ms. Golbricht, and failed to assist Petitioner in auditing the unit reserve. Similarly, he notes that the Postal Service did not take action against Ms. Golbricht, even though she had access to the unit reserve during the time she was Officer-in-Charge and did nothing to safeguard the security of the unit reserve. Even if one were to assume that either of these people failed to do something they should have done, neither situation is comparable because neither of them had accountability for the unit reserve and there is no evidence that the action, or inaction, of either had any effect on the shortage in issue.

Likewise, Petitioner's comparison to other offices where shortages possibly attributable to IRT errors were written off is inaccurate. Ms. Martin and Mr. Tapia testified that this was done only when a unit reserve audit was conducted immediately upon discovery of an IRT error. There is no record of any shortage being written off years after a possible IRT error. Petitioner may disagree with Respondent's rationale for treating this case differently, but Respondent's position does not amount to disparate treatment.

Petitioner also argues that it was improper for Mr. Tapia to have acted on Petitioner's request for reconsideration because the Debt Collection Act requires that a hearing "not be conducted by an individual under the supervision or control of the head of the agency."⁴  That argument is without merit. That section of the Debt Collection Act applies to the hearing that was held on June 19-20, 2001. It does not apply to action on a request for reconsideration that took place before the Notice of Involuntary Administrative Salary Offsets was issued.

Finally, Petitioner's argument that Respondent's action should be barred by a statute of limitations or the doctrine of laches is without merit. There is no statute of limitations applicable here, and the doctrine of laches requires a showing of undue delay by the Postal Service in initiating the action and harm to Petitioner as a result of that delay. There is no showing of either in this case.

The Petition is granted in part and denied in part. Respondent has proved a loss of $40,003.61 for which Petitioner is accountable. Respondent may collect that amount from Petitioner's salary.

Bruce R. Houston
Chief Administrative Law Judge

¹ References to pages in the hearing transcript are "Tr._." Documents attached to Petitioner's supplement are tabbed and will be referred to as "Pet. Supp, Ex._." Documents filed as a supplement to Respondent's Answer are numbered consecutively as pages 1-45 and will be referred to as "PS Supp, p._."

² A comparable rule is found in the November 1996 version of the F-1 Handbook at §§422.1, 426.2, and 429.22. Respondent apparently cited the earlier version of the F-1 Handbook because some pertinent events may have occurred before November 1996.

³ It is not clear precisely how the figure $50,121.11 was arrived at. Ms. Mackie testified that the shortage is based on comparison to the previous day's ending balance shown by the computer (Tr. 48-49). There is a document (PS Supp, p.16) that shows the unit reserve accountability on January 26, 2001 to be $384,538.26, and there are references to this including $200,544.67 of redeemed stock, but some of the entries on the Form 3294 are illegible and there is no number in the record from which one can subtract $132,374.16 to arrive at $50,121.11. However, because Petitioner has not challenged the calculation, and because any arithmetical error, if that's what it is, appears to favor him, the figure $50,121.11 is accepted. (Redeemed stock is that which is obsolete and no longer salable. It is eventually sent to a Stamp Destruction Committee, as was done in this case.)

⁴ 5 U.S.C. §5514(a)(2).