In the Matter of the Petition by

HUMBERT GIUMETTI
P.O. Box 163540

            at

West Palm Beach, FL 33416-3540

P.S. Docket No. DCA 01-199

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

APPEARANCE FOR RESPONDENT:
William Miranda
Labor Relations Specialist
United States Postal Service
P.O. Box 163564
West Palm Beach, FL 33416-3564

Petitioner, Humbert Giumetti, filed a timely Petition after receiving a Notice of Involuntary Administrative Salary Offsets, dated May 30, 2001, from the Officer-in-Charge of the Jupiter, Florida Post Office. This Notice stated the Postal Service's intention to withhold $710.04 from Petitioner's salary to recover for a shortage in a stamp stock account for which Petitioner was responsible.

A hearing was held in West Palm Beach, Florida on July 18, 2001.¹  The Postal Service presented testimony from Patricia Wiedman, the Jupiter Postmaster at the time pertinent to this case, David Kolp, who issued the Notice of Involuntary Administrative Salary Offsets, Peggy Young, who conducted an audit of Petitioner's unit reserve stock, and Richard Millette, a clerk in charge of vending machine stamp stock. Petitioner testified in his own behalf, and both sides relied on documents that had been filed by Respondent with the Answer and in a supplement to the Answer. The following findings of fact are based on the entire record.

1. At the time pertinent to this case, Petitioner was a retail supervisor at the Jupiter, Florida Post Office and was the custodian of the unit reserve stock. (Tr. 8-9, 70).² 

2. In August 2000, in preparation for the unit reserve being turned over to Peggy Young, Petitioner and Ms. Young conducted an audit. On August 11, 2000, they counted the "floor stock" and found a $2,275.70 overage. Office records showed the opening balance to be $24,806.90, but $27,082.60 was actually present. Floor stock is stock that has been issued from the unit reserve to the vending clerk, and also placed in cabinets on the "floor" for sale by window clerks to customers. (Tr. 10, 26, 54, 73-74; PS Supp, p. 4).

3. On August 14, 2000, Petitioner and Ms. Young counted the unit reserve and found it to be $1,545.74 short. The opening balance was shown to be $218,153.41, but only $216,607.67 was present. Petitioner signed a PS Form 3294, Cash and Stamp Stock Count and Summary, indicating his agreement with the accuracy of the count. (Tr. 49-50, 53-54, 73; Answer, Ex. 1).

4. Sometime thereafter Postal Service accounting officials and Ms. Wiedman determined that the opening balance used when the floor stock was audited was incorrect, due to an error made in refunding money to a customer who had returned a large purchase of stamps. They determined that the overage in the floor stock was actually only $295.70. This amount was offset against the $1,545.74 unit reserve shortage and, on September 12, 2000, Ms. Wiedman issued Petitioner a letter of demand for $1,250.04. (Tr. 12, 63; PS Supp, pp. 5, 23).

5. On October 17, 2000, a new letter of demand was issued to Petitioner, further reducing the alleged debt to $710.04, based on a finding that $540.00 of stamp stock that Petitioner had sent to the Stamp Distribution Office for destruction should have been subtracted from the unit reserve account. (Tr. 11-13, 49-50; PS Supp, pp. 2, 19).

6. The error in the floor stock count (see Findings #2 and #4) was caused by a customer bringing back $990.00 of stamps purchased earlier. A clerk took back the stamps, which were returned to the floor stock, and returned the customer's $990.00 check. Because of difficulties in making the appropriate entries into the POS computer system, the clerk was unable to simply void the sale. Therefore, the floor stock then had $990.00 in stamps that had been removed from the computer inventory at the time of the sale. The clerk somehow attempted to make the account balance by entering the issuance of a $990.00 no-fee money order into the computer. Later, the District Accounting Office informed the Jupiter Post Office that the $990.00 floor stock overage had somehow doubled to $1,980.00. The accounting office made a "correction" by reducing the total $2,275.70 overage found by Petitioner and Ms. Young on August 11 to $295.70. Ms. Young wrote a memo on August 15, 2000, based on a phone call from the accounting office. This memo states, "Sales overstated $990.00; refund incorrect $990.00," and also, "Overage of 2275.70 includes $1980.00 amount. Corrected by Acctg Ofc by reducing net overage to $295.70." (Tr. 14-19, 54-61, 63, 66; PS Supp, p. 5).

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. 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 does not dispute that he was accountable for the unit reserve, nor does he dispute that there was a shortage in that account. He argues that Respondent has not proved a loss because there has been no satisfactory explanation for why the $2,275.70 overage in the floor stock was reduced to a $295.70 overage. He contends that the entire shortage in the unit reserve should have been offset by the overage in the floor stock.

The parties agree that the amount of floor stock counted by Petitioner and Ms. Young on August 11 was correct. The error in the size of the overage comes from the POS computer system showing the opening balance to be lower than it should have been. It is readily apparent why the opening balance was $990.00 too low. The system still showed that that amount of stamps had been sold, even though those stamps had been returned and were again present in the floor stock. It is not readily apparent, however, why the accounting office determined that the opening balance was a second $990.00 too low. Respondent's witnesses testified, based on what they had been told by the accounting office, that this was caused by the clerk's attempt to issue a no-fee money order, but no one explained how this would have reduced the amount of floor stock shown in the POS system by another $990.00.

It is Respondent's burden to present sufficient evidence to support its theory of liability. In this case, no one from the accounting office was called to explain how they had determined the extent of the error in the floor stock balance, and no documents or records were presented that could be used by either Ms. Wiedman or Ms. Young to explain how the $990.00 entries could be tracked through the system. The end result is that Respondent has not demonstrated why the overage in the floor stock should have been reduced by $1,980.00, rather than only $990.00. Therefore, because the Postal Service used the floor stock overage to offset the unit reserve shortage, Petitioner is entitled to another $990.00 as part of that offset. This erases the entire shortage in the unit reserve.

Because Respondent has not proved a loss of $710.04, the Petition is sustained. Respondent may not collect $710.04 from Petitioner's 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 to pages in the hearing transcript are "Tr._." Documents attached to Respondent's Answer are "Answer, Ex._." Documents filed as Respondent's supplement are numbered consecutively as pages 1-25 and are cited as "PS Supp., p._."