In the Matter of the Petition by

ROBERT CAPONE
265 Argyle Road

at

Orange, CT 06477-2915

P.S. Docket No. DCA 02-500

APPEARANCE FOR PETITIONER:
Albert E. Lum
5240 72nd Place
Maspepth, NY  11378-1516

APPEARANCE FOR RESPONDENT:
James W. Carr
Labor Relations Specialist
United States Postal Service
24 Research Parkway
Wallingford, CT  06492-9011

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Robert Capone, 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 make deductions from his salary to recover for a shortage occurring in his accountability.

            At Petitioner’s request, an oral hearing was held.  The parties, witnesses and court reporter were at Respondent’s New Haven, Connecticut facility, and the Hearing Official presided by telephone from the Judicial Officer Department in Arlington, Virginia.  The parties presented documents and testimony of witnesses and made oral closing arguments at the conclusion of the hearing.  The following findings of fact are based on the documents and the testimony of the witnesses at the hearing.

FINDINGS OF FACT

            1.  From September 1996 until December 1999, Petitioner managed the Whitneyville Branch in Hamden, Connecticut and was the custodian of the unit reserve.  The unit reserve consisted of the stamps and other accountable paper that had been received by the branch but not issued to the retail clerks for sale to customers.  (Transcript of Hearing, Pages (“Tr.”) 36, 57-58; Handbook F-1, Post Office Accounting Procedures (November 1996), Section 413, Glossary).

            2.  Petitioner was detailed to other duties effective January 2000, and Reggie Jackson took over management of the branch.  In December 1999, Petitioner transferred the unit reserve to Mr. Jackson.  When they counted the unit reserve incident to the transfer, it balanced to the penny.  In fact, during the time Petitioner had been the custodian of the unit reserve, all of the counts done of the stock showed an exact balance.  (Tr. 36-36, 57-58, 94).

            3.  On September 18, 2000, while Mr. Jackson managed the office and was custodian of the unit reserve, the Whitneyville Branch was converted to a shared inventory system, under which clerks in the office no longer had individual stamp stocks for which they were accountable.  Rather, all clerks sold postage from the common, or floor, stock, which was replenished, when necessary, by issuance of stock from the unit reserve to a designated retail clerk.  Incident to the conversion, all of the clerks in the office turned in their individual stamp accountabilities to the unit reserve.  (Tr. 30-31, 39, 65; PX 3a).

            4.  Much of the stock turned in by the clerks was obsolete and should have been returned to the stamp distribution office for destruction.  Usable stock from the clerks could have been integrated into the unit reserve.  However, Mr. Jackson did neither, and, as a result, the unit reserve contained separate collections of stamps from the individual clerks and significant quantities of obsolete stock.  The unit reserve was poorly organized and was in disarray.  (Tr. 30, 39-40, 64-65; PX 3a).

            5.  Petitioner completed his detail and returned to manage the Whitneyville Branch just after Thanksgiving 2000.  Mr. Jackson was assigned to manage the Mt. Carmel office but retained responsibility for the unit reserve at Whitneyville.  Accordingly, transactions of the unit reserve, such as issuance of stock to the retail clerk for addition to the floor stock, had to wait until Mr. Jackson could visit Whitneyville.  (Tr. 30-31, 37, 59, 62).

            6.  Petitioner was reluctant to take responsibility for the unit reserve because of its disorganized condition and because it contained such a large amount of obsolete stock.  He advised his manager of his reluctance.  (Tr. 29, 60, 66, 86).

            7.  In March 2001, management temporarily assigned a window technician from the New Haven Post Office to Whitneyville to try to straighten out the unit reserve.  She had access to the unit reserve, and, in addition to organizing the unit reserve and preparing obsolete stock to be redeemed, she occasionally issued stock to the designated retail clerk to add to the floor stock.  (Tr. 29-30, 37, 40-45, 49, 62-64; PX 3).

            8.  Eventually, over his objections, Petitioner was directed by his manager to take over the Whitneyville unit reserve.  Petitioner and Mr. Jackson began counting the stock on about March 26, 2001, but because of Mr. Jackson’s duties at Mt. Carmel, he was unable to devote more than a few hours at a time to perform the task.  He and Petitioner would count what stock they could during Mr. Jackson’s visits, but they would have to try to re-verify their prior partial counts as well.  While this was going on, the window technician from New Haven still had access to, and was working with, the unit reserve and, on at least one occasion, issued stock from the unit reserve to the designated retail clerk.  (Tr. 30, 32, 63-65, 67, 86-87, 89; PX 3b, 3h).

            9.  Petitioner and Mr. Jackson finished the count of the unit reserve on April 11, 2001.  The count was recorded on PS Form 3294, which reflected that there was an overage of $76.53.  (PX 2; RX 1).  After the count, Petitioner, as the custodian, had exclusive access to the unit reserve.  (Tr. 31, 63, 77, 81).

            10.  On April 21, 2001, a count of the floor stock by Petitioner and the designated retail clerk revealed an overage of $1,393.88 (Tr. 21, 23, 25-26, 45, 50-51, 68, 78; PX 1).

            11.  On November 24, 2001, Petitioner and the retail clerk counted the stock in the unit reserve.  The account balanced to the penny.  The stock on hand was exactly what the records of the station reflected should be in the unit reserve.  Included in the count was obsolete stock previously counted by Petitioner and Mr. Jackson and boxed for redemption that had not yet been sent for destruction.  Petitioner and the clerk accepted the values recorded for the packages of redeemed stock and did not recount that stock.  (Tr. 21, 46-47, 70-72, 80, 90-93; RX 9, 10).

            12.  On February 21, 2002, incident to Petitioner transferring custody of the unit reserve, Petitioner and his successor counted the unit reserve.  This time there was a shortage of $1,799.  (Tr. 9-16, 74, 84, 88; RX 3, 4, 8).

            13.  Respondent issued Petitioner a letter of debt determination followed, on November 5, 2002, by a Notice of Involuntary Administrative Salary Offsets seeking repayment of $1,799 (Tr. 19-20; RX 5, 6).  Petitioner filed a Petition challenging collection of the debt.

            14.  Petitioner was careful and followed established procedures when issuing stock to the designated retail clerk.  He was very organized and thorough in managing the unit reserve.  Petitioner was known by his supervisor to be a very competent manager, and the shortage of February 21, 2002, was his only financial discrepancy on record.  Petitioner had had accountabilities for 14 years and this unit reserve for a total of four years and had never had a shortage.  All previous counts of his accountability balanced to the penny.  (Tr. 38, 50, 69, 94).

            15.  Postal Service regulations establish the standard for liability of a custodian of a unit reserve for a loss to his assigned accountability:

“Employees 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), Section 141).

DECISION

            Respondent has demonstrated that on February 21, 2002, a $1,799 shortage existed in the unit reserve for the Whitneyville Branch (Finding 12).  Petitioner was the custodian of that unit reserve account (Findings 1, 9, 12).  Proving the existence of the shortage in Petitioner’s account is usually sufficient to show that Respondent has suffered a loss in the amount of the shortage.

            However, in this case, Petitioner argues that the records of the station were not a reliable indicator of the amount of stock that should have been on hand.  He points to the disorganized condition of the unit reserve when he took it over and the fact that the window technician was conducting transactions affecting the unit reserve while he and Mr. Jackson were trying to count the stock (Findings 4-9).  However, the count Petitioner and Mr. Jackson concluded on April 11, 2001, demonstrated that the unit reserve had a slight overage when Petitioner took it over, and the November 24, 2001 count showed that the amount of stock on hand balanced exactly with the amount included in the branch’s records for the unit reserve (Finding 11).  Under these circumstances, Petitioner has not shown any connection between the condition of the unit reserve stock when he took it over and the February 21, 2002 shortage.

            Additionally, Petitioner argues that the April 21, 2001 overage in floor stock (Finding 10) represented stock of the unit reserve and that he should receive credit for the $1,393.88 overage.  However, Petitioner has not shown a connection between the floor stock overage in April 2001 and the shortage of February 21, 2002.  Petitioner does not suggest that he erroneously transferred stock from the unit reserve to the floor without accounting for it.  Rather, he suggests that such erroneous transfer must have occurred before he became custodian.  However, as discussed above, the intervening counts of April 11, 2001 and that the count of the unit reserve on April 11 showed a slight overage, and November 24, 2001, balancing exactly, make any connection between the floor stock overage and Petitioner’s shortage of February 21, 2002, unlikely.  Petitioner has not shown that he is entitled to credit for the floor stock overage.

            Respondent has established a loss in the amount of $1,799.  Petitioner is strictly accountable for the loss unless the evidence shows that he followed Postal Service procedures in managing the unit reserve (Finding 15).  In this case, the evidence shows that Petitioner followed established procedures when issuing stock to the retail clerk and was careful in doing so.  He was very organized and thorough in managing the unit reserve, and, except for this one shortage of February 21, 2002, he had never had a discrepancy in any of the counts of the unit reserve for the four years he was custodian.  (Findings 2, 11, 14).  Respondent argues that Petitioner’s reliance on the previous counts of the obsolete stock during the count of November 24, 2001 (Finding 11), in lieu of opening the packages and recounting the contents demonstrates a failure to follow established procedures.  Recounting the stock might have been the better practice.  However, Petitioner was relying on the record of counts he and Mr. Jackson had concluded on April 11, 2001 (Finding 11); the packages of obsolete stock had been under Petitioner’s exclusive control in the unit reserve since they were counted (Finding 9); and the count of November 24 balanced to the penny (Finding 11).  Thus, assuming Petitioner’s failure to recount the obsolete stock was not consistent with established procedures, when all the evidence is considered, the preponderance of the evidence demonstrates that he followed established procedures in managing the unit reserve.  Accordingly, Petitioner will be relieved of liability for this shortage.

            Petitioner is not liable for the shortage.  The Petition is granted.

Norman D. Menegat
Administrative Judge