In the Matter of the Petition by

PATRICIA TODD
3865 Bethany Road

at

Cleveland, OH 44118-3742

P.S. Docket No. DCA 02-82

APPEARANCE FOR PETITIONER:
William Brown
Scialla Associates, Inc.
12 Mount Run
Tinton Falls, NJ 07753-7674

APPEARANCE FOR RESPONDENT:
Kennoa M. Dixon
Labor Relations Specialist
United States Postal Service
2200 Orange Avenue, Room 106
Cleveland, OH 44101-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Patricia Todd, filed a timely Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets on February 19, 2002.  This Notice stated the Postal Service's intention to withhold $10,746.92 from Petitioner's salary to recover a shortage in a unit reserve account for which Petitioner was responsible.

            A hearing was held in Cleveland, Ohio on April 23, 2002.[1]  The Postal Service presented testimony from Renee Bursley and Tim Jankow, two Postal Systems Coordinators, Gary Strenk, Manager of Accounting Operations, Tina Patton, who succeeded Petitioner as unit reserve custodian, and Rosalyn Sullivan, who assisted Ms. Patton in reviewing financial records.  Petitioner testified in her own behalf, and also presented testimony from Russell Clark, District Finance Manager, and Barbara Strickland, a former clerk at Cranwood Post Office.  The parties stipulated orally to the expected testimony of Lisa Long, a former clerk at Cranwood Post Office.  Both parties also relied on documents filed with Respondent's Answer and on some additional documents submitted at the hearing.  The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  Petitioner became the custodian of the unit reserve stock at Cranwood Post Office sometime in 1997.  On August 27, 1999, Petitioner conducted a closeout audit of clerk Barbara Strickland's account.  Ms. Strickland had already left Cranwood for another job and returned to do the audit.  The audit showed $10,747.32 in stamp stock and $181.48 in cash, compared to an opening balance of $9,636.13 - an overage of $1,192.67.  On conclusion of the audit, Ms. Strickland returned the stock and cash to her drawer and locked it.  (Tr. 12, 43, 58, 98, 101, 113-14, 118; PS Ex. 8, p. 7).

            2.  Computer generated records for Cranwood for September 14, 1999, show an opening balance of zero and a closing balance of $11,816.92 in the category "pending transfers."  This means that on September 14, 1999, this amount was put in transit from one account to another.  Records for September 14, 1999 also show that Ms. Strickland's account opened at $9,636.13 and closed at zero.  (Tr. 11-12, 29, 33; PS Ex. 8, pp. 1, 2 and 4).[2]

            3.  On approximately September 9, 1999, Petitioner left Cranwood and moved to Briggs Post Office.  She returned to Cranwood on November 2, 1999 to participate with Tina Patton in an audit of the unit reserve for the purpose of turning the unit reserve over to Ms. Patton.  Their count of the stock in the unit reserve showed $75,595.75 present, an overage of $2,416.40 compared to an opening balance of $73,179.35.  (Tr. 13, 70-71, 112-13; PS Ex. 7, pp.1-4).

            4.  The stamp stock from Ms. Strickland's account was not included in what Petitioner and Ms. Patton counted, nor was it included as part of the opening balance for the unit reserve.  Computer generated records for Cranwood for November 2, 1999 show an opening balance and a closing balance of $10,746.92 in the category "pending transfers," indicating that this amount was still in transit.  (Tr. 34, 38, 66, 71, 117; PS Ex. 8, p. 6).

            5.  Computer generated records for Cranwood for November 16, 1999, show that the unit reserve accountability was increased by $10,746.92 on that date.  This amount is listed on a Form 3958, Unit Reserve Stock Transaction Record, as "Stock Received From Stations/Clerks."  Normally, this is an entry that would be made by the unit reserve custodian.  Both Petitioner and Ms. Patton testified that they did not make the entry and do not know who did, although Ms. Patton stated in a November 26, 2001 letter to the Finance Manager, "the day after receiving the Unit Reserve, I was instructed to pick-up outstanding pending transfers in the amount of $10,746.92."  There is no evidence that actual stamp stock in this amount was moved into the unit reserve on November 16, 1999.  (Tr. 15, 22, 59, 71, 74, 79-80, 94-95, 106; PS Ex. 7, p. 5).

            6.  The next audit of the Cranwood unit reserve was done on August 7, 2000, when Ms. Patton was to turn over the account to someone else.  That audit revealed a shortage of $11,582.07 and Ms. Patton was issued a letter of indebtedness in that amount.  (Tr. 10, 28, 32, 78; PS Ex. 1 and PS Ex. 8, p. 1; PS Ex. 16).

            7.  With the assistance of Ms. Sullivan, Ms. Patton gathered and reviewed records and discussed them with finance experts Bursley and Jankow.  Their conclusion, eventually endorsed by Mr. Strenk, was that Ms. Patton should be held responsible for only $835.15 and that the remainder, $10,746.92, was the responsibility of Petitioner.  Petitioner was issued a Letter of Debt Determination for that amount on December 17, 2001.  (Tr. 11, 38, 80-82, 84, 87; PS Ex. 2, PS Ex. 8, p. 1; PS Exs. 11, 20 and 21).

DECISION

            Respondent's theory of liability is that the documents that were retrieved by Ms. Patton and Ms. Sullivan and presented to the finance officials clearly show that the stamp stock formerly assigned to Ms. Strickland was the basis for the shortage in the unit reserve account.  Those records show that $10,746.92 was "in transit" at the time the unit reserve was turned over from Petitioner to Ms. Patton in November 1999, and that this amount should have been included as part of the unit reserve on November 2, 1999, when Petitioner and Ms. Patton counted the unit reserve.  Had that been done, it would have been apparent then that they needed to physically locate the stock before the account was turned over to Ms. Patton.  Further, Respondent contends that, as custodian of the unit reserve, Petitioner became accountable for Ms. Strickland's stamp stock as soon as she completed the closeout audit of Ms. Strickland.  Because it is not known what became of that stamp stock, and because it was never physically secured as part of the unit reserve, Respondent argues that this constitutes a loss to the Postal Service for which Petitioner is accountable.

            Petitioner contends that there are too many uncertainties over what happened in this case and too much time has passed for Petitioner to be fairly charged with the debt alleged here.  Petitioner also argues that neither Petitioner nor Ms. Patton was adequately trained in the procedures for managing a unit reserve account.

            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 (1) that a loss occurred, and (2) that the loss is from an account for which the employee was responsible.  Respondent's evidence falls short on both counts. 

            Normally, a loss is proved by an audit that shows a shortage relative to a previously established balance.  The August 2000 audit showed such a shortage.  In this case, however, other evidence casts doubt on the existence of an actual loss.  The audit that showed a shortage occurred many months after Petitioner gave up accountability for the unit reserve.  The records gathered by Ms. Patton explain what caused that shortage on paper, but there are two significant gaps in Respondent's evidence.  First, it clearly was not a proper action to add $10,746.92 to the unit reserve accountability without ascertaining where the actual stamp stock was.  There is no evidence in the record to show that anyone attempted to locate that stock on November 16, 1999 when it was added to the unit reserve account, or that anyone ever attempted to locate it.  The evidence from Petitioner and Ms. Strickland that it was returned to Ms. Strickland's locked drawer is uncontradicted.  Respondent's evidence proves that it was not part of the unit reserve when the unit reserve audit was done in August 2000, but the evidence does not prove that it was lost.  What is missing is testimony from someone about what happened to the stock in Ms. Strickland's drawer and that someone actually looked for the missing $10,746.92 and could not find it.

            Second, even if we assume that the $10,746.92 is lost, it cannot be determined when this occurred.  It may well be that Petitioner became responsible for the stock when she completed the closeout audit of Ms. Strickland, and that she should have promptly made the system entry to transfer the stock into the unit reserve, but it has not been shown that she violated any rules by leaving the actual stock locked in Ms. Strickland's drawer.  There are many unanswered questions in this case, but one thing is clear.  The $10,746.92 was added to the unit reserve on paper without a contemporaneous addition of the actual stock and this happened after Petitioner had turned over the account.  Petitioner's failure to make the accounting entry to transfer the stock prior to her departure may have contributed to the confusion, but if the stock was secure when Petitioner turned the account over, and the only evidence of record is that it was secure, Petitioner is not responsible for a loss that occurred thereafter.

            Because Respondent has failed to prove a loss from an account for which Petitioner was accountable, the Petition is granted.  Respondent may not collect $10,746.92 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 except Mr. Strenk, whose testimony was taken via a three-way speakerphone connection.

     [2] It does not appear that there was activity in Ms. Strickland's account between August 27 and September 14, as the same opening balance is shown.  Apparently at some later time the stock portion of her overage was added to $9,636.13 to reach the figure $10,746.92.  There is no explanation for the 60 cent difference between this figure and the amount shown on the August 27, 1999 count.  (Tr. 11-13; PS Ex. 8, p.1).