In the Matter of the Petition by

MARIO J. FIGUEROA
706 Fairbluff Drive

at

Hope Mills, NC 28348-5672

P.S. Docket No. DCA 02-72

APPEARANCE FOR PETITIONER:
Albert E. Lum
52-40 72nd Place
Maspeth, NY 11378-1511

APPEARANCE FOR RESPONDENT:
Greta Hand
Labor Relations Specialist
United States Postal Service
301 Green Street
Fayetteville, NC 28302-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Mario Figueroa, filed a timely Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets from his supervisor on February 7, 2002.  This Notice stated the Postal Service's intention to withhold $17,921.76 from Petitioner's salary to recover a shortage in a unit reserve account for which Petitioner was responsible.

            A hearing was held in Fayetteville, North Carolina on April 4, 2002.  The Postal Service presented testimony from Sheila Hyde, a Postal Systems Coordinator, Sandra Hoover, an accounting technician, Barry Williams, another accounting technician, and Steve Mosier, Petitioner's predecessor as Station Manager at the Fort Bragg Post Office.  Petitioner testified in his own behalf and also presented testimony from Douglas Hughey, a Postal Systems Coordinator, Roger LeClair, the Fayetteville Postmaster, and Teresa Robinson, a supervisor at another post office who assisted Petitioner in examining records at the Fort Bragg Post Office.[1]   Both parties also relied on documents filed with the Petition and the Answer, and each side presented some additional documents at the hearing.  Both parties also filed written post-hearing briefs.  The following findings of fact are based on the entire record.  

FINDINGS OF FACT

            1.  On May 1, 2000, Steve Mosier was the acting station manager at the Fort Bragg Post Office and was the custodian of the unit reserve account.  On that date, Mr. Hughey, Mr. Mosier and others conducted a full audit of the Fort Bragg Post Office.  The unit reserve stock was found to have a $44.03 overage on a total accountability of more than $124,000.00.  (Tr. 17-19, 58-59, 62-63, 72-73; Answer, Tab 6; Pet. Ex. 12).[2]

            2.  In conducting the audit, Mr. Hughey and his team did not open or count a sealed package of redeemed stock that attached paperwork showed to contain $15,954.26.  Redeemed stock is obsolete or unusable stamp stock that is identified for destruction.  A computer generated unit reserve inventory list for May 1, 2000 includes $15,954.26 as the last item listed, labeled "Redeemed Stock."  (Tr. 77-78; Pet. Ex. 12).

            3.  Petitioner arrived at the Fort Bragg Post Office on approximately May 8, 2000 to take over the station from Mr. Mosier.  Within a few days, Petitioner and Mr. Mosier counted the stamp stock in the unit reserve.  They did not use a PS Form 3294, Stamp Stock Count and Summary, but used computer generated inventory tapes to verify that the unit reserve included all the items and amounts listed on the inventory.  They found the account to be in balance.  There is no documentary record that shows what amount of stock was present or the specific date that the account was turned over from Mr. Mosier to Petitioner.  When they were finished, Mr. Mosier gave Petitioner keys to the vault where the unit reserve was maintained and to the locked cabinet that contained the unit reserve.  (Tr. 55, 61-63, 67, 122-23).

            4.  On May 18, 2000, records in the District Accounting Office in Charlotte, North Carolina showed that the unit accountability of the Fort Bragg Post Office was out of balance with what the Accounting Office showed should be present in the unit.  The total unit accountability includes the unit reserve plus all the clerks' accounts.  The District Office tracks the unit accountability of an office daily, but does not track the unit reserve account separately.  The imbalance was caused by Petitioner taking back stock from clerks, to be turned in as redeemed stock.  Instead of making the correct accounting code entry to show that this was an internal transfer within the office, however, Petitioner made an entry that showed the stock to have been received into his unit reserve account from an outside source.  This inflated the total office accountability by $24,333.17.[3]  (Tr. 19-21, 26-28, 124-25, 140; Answer, Tab 6).

            5.  An inventory list, dated May 19, 2000, included the same $15,954.26 item labeled "Redeemed Stock," that was listed on the May 1, 2000 inventory (see Finding #2), and also included three entries labeled "Redeem 1," "Redeem 2," and "Redeem 4," each for $8,221.06, totaling $24,663.18.  (Pet. Ex. 11).

6.  On May 23, 2000, Ms. Hyde, a Postal Systems Coordinator from the District Accounting Office, made an accounting entry to reduce the Fort Bragg unit accountability by $24,333.17, to correct the error discussed above.  No one conducted an audit of the unit reserve account at that time to determine that the account contained the amount of stock that office records showed should be present.  (Tr. 21, 25-26, 133; Answer, Tab 6).

            7.  In September 2000, Petitioner did a self-audit of his unit reserve stock and discovered an apparent shortage of some $17,000.00.  At his request, Ms. Robinson, a supervisor at another Fayetteville Post Office, came to Fort Bragg to assist Petitioner in reviewing records to determine the nature and cause of the shortage.  On September 28, 2000, Petitioner and Ms. Robinson counted the unit reserve, using a computer generated inventory list that showed that the account should contain $125,933.07.  (Tr. 90, 94, 98-99; PS Ex. B).

            8.  The inventory list, dated September 28, 2000, included the same $15,954.26 item labeled "Redeemed Stock," that was listed on the May 1 and May 19, 2000 inventories (see Findings #2 and #5), and also included three entries labeled "Redeem 2," "Redeem 3," and "Redeem 4," that totaled $18,513.66.  (Pet. Ex. 8).

9.  The total amount of stock actually present that Petitioner and Ms. Robinson were able to account for was $107,719.94.  This included $90,513.67 in stamps on hand, $15,288.44 in redeemed stock that was physically present, and $1,917.83 in redeemed stock that was in transit to the stamp destruction committee.  This left a shortage of $18,213.13, compared to the $125,933.07 on the inventory list.  (Tr. 92-94; PS Ex. B; Pet. Ex. 7A).

            10.  On November 2, 2000, Petitioner made an accounting entry to reduce the accountability of the unit reserve, and thus the total unit accountability, by $17,261.65 more than he had documentation to demonstrate.[4]  He used AIC (Accounting Inventory Code) 848, which indicates stock being returned.  The figure shown on the unit Form 1412, a form that summarizes daily activity for the unit, in AIC 848 was $19,491.00, but Petitioner had documentation to support only $2,229.35 of stock actually returned.  This put the unit out of balance by $17,261.65 with what the Charlotte Accounting Office showed should be present in the Fort Bragg Post Office.  (Tr. 10, 29-30, 34-35, 39-44; PS Ex. 6; Pet. Ex. 13).

            11.  On November 8, 2000, the District Accounting Office sent Petitioner a memorandum noting that the closing balance shown on the unit Form 1412 disagreed with the Accounting Office's balance.  The memorandum did not state the amount of the discrepancy but referred to an "attached IRT Closing Balance Report," and instructed Petitioner to "make the necessary adjustments."  On November 30, 2000, the Accounting Office issued a Form 1908 showing a shortage of $17,921.76 in Petitioner's account.  (Tr. 31, 34-35; Answer, Tabs 3 and 4).

            12.  On November 20, 2001, Ms. Hyde wrote a letter to Fayetteville Postmaster LeClair summarizing the May 1-November 30, 2000 events described above, concluding that she could not "explain why Fort Bragg had a shortage during the September 2000 audit."  (PS Ex. 6).  On January 28, 2002, an invoice for $17,921.76 was issued to Petitioner by the Minneapolis Accounting Service Center, and on February 5, 2002, Mr. LeClair issued the Notice of Involuntary Administrative Salary Offsets.   (Attached to Petition).

DECISION

            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 contends that the alleged loss of $17,261.65 is established by the September 28, 2000 count of the unit reserve performed by Petitioner and Ms. Robinson, and by Petitioner's subsequent action on November 2, 2000 that caused the Fort Bragg unit accountability to be out of balance with Charlotte by that same amount.  Respondent argues that there is no documentation to support Petitioner's contention that the loss is only a "paper shortage" caused by double counting of redeemed stock.

            Petitioner, supported by Ms. Robinson, contends that their September 28, 2000 count does not prove a real loss because the balance they used to count against, $125,933.07, was not accurate.  They contend that this figure was inflated by Petitioner's double entry of redeemed stock, i.e., that he added redeemed stock to his unit reserve inventory when that same redeemed stock was already on the inventory.  Further, they contend that the alleged loss was directly caused by Petitioner simply subtracting an amount from his accountability per instructions from Mr. Williams, as a method of bringing his account back into balance to correct the duplicated redeemed stock entries.[5]  Petitioner also argues that the corrective action taken by Ms. Hyde in May 2000 did not reduce the inflated unit reserve accountability, but only reduced the total unit accountability to bring it in balance with the Charlotte Accounting Office.  He contends that the unit reserve accountability remained inflated, as shown by the duplicated redeemed stock entries on the September 28, 2000 inventory list (see Finding #8).  Petitioner also argues that he cannot be held liable because the unit reserve account was never properly transferred to him.  Specifically, he argues that because he and Mr. Mosier did not use a PS Form 3294 to record their count and because there is no signed document recording the transfer from Mr. Mosier to him, he was not the official custodian of the unit reserve.

            There is no merit to Petitioner's argument that he was not the official custodian of the unit reserve, but this very confusing record does not provide an adequate basis for holding Petitioner liable for an alleged loss of $17,261.65.  Respondent's burden is to prove that the Postal Service has lost the amount alleged.  I cannot conclude that Respondent has met this burden.

            The explanation offered by Petitioner and Ms. Robinson as to how the unit reserve became, or remained, inflated after Ms. Hyde's supposed correction in May 2000 certainly does not answer all the questions, but neither has Respondent's evidence satisfactorily rebutted Petitioner's claims.  According to Ms.Hyde's testimony, the May 2000 error did not inflate the unit reserve, it only inflated the total office accountability.  Neither she, nor any other evidence presented by Respondent, however, replied to Petitioner's testimony and argument that he also inflated the unit reserve account by adding to it redeemed stock that was already listed on the unit reserve inventory.  The September 28, 2000 inventory list includes the three redeemed stock entries that Petitioner says are artificial and do not represent actual stock.  If this is a carry-over from his erroneous entries in May 2000 as he seems to be saying, one wonders why the amounts are different.  On the other hand, if they represent actual stock taken back from clerks, Respondent should have been able to present a record of such transactions to show that the September 28 inventory was indeed accurate.

            The evidence in this record is simply not clear enough to hold Petitioner liable for the alleged loss.  The Petition is granted.

                                                                                    Bruce R. Houston
                                                                                    Chief Administrative Law Judge

     [1]  Ms. Hoover, Mr. Williams and Mr. Hughey testified by speakerphone from another location.

     [2]  References to the hearing transcript are "Tr._."  References to documents attached to Respondent's Answer are "Answer, Tab_."  References to documents submitted by Petitioner, both prior to and during the hearing are "Pet. Ex._."  References to documents submitted by Respondent at the hearing will be "PS Ex._."

     [3] It appears that a large part of this overage was caused by Petitioner counting and adding to his unit reserve account the $15,954.26 package of redeemed stock left by Mr. Mosier, even though that stock was already included in the unit reserve inventory.  Petitioner's testimony that he did this was credible and not contradicted, but the record is not clear as to what made up the rest of the $24,000.00+ imbalance.  (Tr. 126-28).

     [4] From the evidence presented by Respondent at the hearing, and argued in Respondent's post-hearing brief, this is the amount Respondent is charging to Petitioner.  At some point the figure $17,261.65 changed to $17,261.76.  There is no explanation for this, but it is insignificant.  There is reference in one of the documents to another $660.00, based on a shipment of stock to another station. That makes up the remainder of the $17,921.76 charged in the Notice of Involuntary Administrative Salary Offsets, but Respondent presented no evidence to prove this portion of the alleged loss.  (Answer, Tab 6).

     [5]  Both Petitioner and Ms. Robinson testified that Mr. Williams told them over the telephone to do this after they explained the matter of the duplicated redeemed stock entries.  (Tr. 96-97, 114-16, 119, 153-55).  Mr. Williams was unable to recall anything pertinent to this case.  (Tr. 48, 53).