In the Matter of the Petition by

SONJA CHRISTOPHER
511 Gibson Avenue

at

Lexington, KY 40504-2619

P.S. Docket No. DCA 03-207

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

APPEARANCE FOR RESPONDENT:
Anthony Alfred
Labor Relations Specialist
United States Postal Service
320 Whittington Parkway, Suite 302
Louisville, KY  40222-7972

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Sonja Christopher, filed a timely Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets from a supervisor, dated May 8, 2003.  This Notice stated the Postal Service's intention to withhold $75,108 from Petitioner's salary to recover a shortage in an account for which Petitioner was responsible.

            A hearing was held in Lexington, Kentucky on September 24, 2003.^[1]  The Postal Service presented testimony from Randall Kearns, manager of Blue Grass Station in Lexington, Mark Hulme, the Officer-in-Charge of the Lexington Post Office for part of the time pertinent to this case, and Sandra Kelly, who took over the unit reserve stamp stock accountability at Blue Grass Station in December 2002.  The Petitioner testified in her own behalf, and also presented testimony from Tony Shearer and Dana Hughes, two other supervisors.  Both parties also relied on documents that had previously been filed, and Petitioner submitted one additional document during the hearing.  The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  During the time pertinent to this case, Petitioner was Supervisor of Customer Services at the Blue Grass Station in Lexington, Kentucky.  From 1993 through 2000, she was the custodian of the unit reserve stock at Blue Grass Station.  (Tr. 10-12, 91).^[2]

            2.  Petitioner transferred the accountability for the Blue Grass unit reserve to Mr. Shearer in early 2001.  Mr. Shearer transferred the account to Chris Taylor a few months later.  Chris Taylor transferred the account to Dana Montgomery Hughes in August or September of 2001, and Ms. Hughes transferred the account to Ms. Kelly in December 2002.  (Tr. 18-21, 74, 80-81, 85).

            3.  Each time the unit reserve account was turned over from one supervisor to another, the participants did a full audit of the stamp stock in the unit reserve, with the exception of stock listed as being “on consignment.”  Each time, until the turnover to Ms. Kelly in December 2002, the new custodian accepted responsibility for the full account, including the stamps “on consignment.”  On at least some of these turnovers, the incoming custodian questioned the amounts listed as being “on consignment,” but accepted the accountability after talking to someone in the Louisville District Office.  (Tr. 17, 20-21, 26-27, 77-78, 87).

            4.  A full audit of the Blue Grass unit reserve was also conducted during Mr. Shearer’s tenure as custodian, at the time the Blue Grass Station was converted from the IRT system to a new computerized stock management system – POS ONE.  Persons from the Louisville District Office participated in that audit and conversion.  It was noted that a large amount of stamps were listed as “on consignment,” but this was apparently not an impediment to the POS conversion and no action was taken regarding the stamps “on consignment.”  (Tr. 20-21, 81-83).

            5.  “Stamps on consignment” refers to a written agreement between the Postal Service and a retail business that wishes to sell stamps to the public.  Consignments are approved by the District Office and the requested stamps are supplied to the retailer from the unit reserve of the appropriate post office.  The retailer does not pay for the stamps at the time of consignment, but must remit money or return stamps every thirty days.  The unit reserve custodian retains a copy of a “Stamp Consignment Agreement,” showing the date of consignment, the amount and denomination of stamps consigned, and the name and address of the consignee.  Such agreements are signed by the consignee and a Postal Service contracting officer.  When a consignee wishes to replenish stamp stock, the consignee brings a “purchase card” to the post office, a sales associate issues additional stamps and records the transaction on a Form 8047X, Stamps on Consignment Replenishment and Analysis Record.  (Tr. 31-32, 49, 62-63; PS Ex. 5, 8 and 9).

            6.  Blue Grass Station may have had consignment agreements as early as 1995, but the only consignment documents in this record show two agreements in January and March 1999, with a total value of approximately $9,000.  There are no documents in the record that show any replenishment activity in connection with any consignment agreement.  (Tr. 49, 94, 108; PS Exs. 8 and 9).

            7.  Records from the Blue Grass Station show that three consignments, with a total value of $9,240, were listed on the unit reserve inventory on September 29, 1999.  The inventory list for May 5, 2000, shows three consignments with a total value of $80,718.  There are no available records that show when, why, or how this increase occurred.  (Tr. 30-31, 107; PS Ex. 3).

            8.  When the Blue Grass unit reserve was turned over from Ms. Hughes to Ms. Kelly in December 2002, the amount of the consignments that had been carried over on the three previous turnovers (see Findings #2, #3 and #7) was examined, apparently by someone in the Louisville District Office.  It was determined that there was no documentation to show that some $80,000 of stamp stock was actually on consignment.  (Tr. 24-25, 74-76, 87-88).^[3]

            9.  Until his retirement in late 1999, Mr. Kirkland was the T-6, i.e., supervisory clerk responsible for financial matters, at Blue Grass Station during the time Petitioner was unit reserve custodian.  The Unit Form 1412 for Blue Grass Station for October 19, 1999, shows $8,398.59 in Mr. Kirkland’s account.  The Unit Form 1412 for Blue Grass Station for October 20, 1999, shows $70,039.31 in Mr. Kirkland’s account, as do the Form 1412s for October 21 and October 22, 1999.  The Unit Form 1412 for Blue Grass Station for October 25, 1999, shows that Mr. Kirkland’s account was back down to $5,491.34. (Tr. 46-47, 92-93; PS Ex. 2, pp. 19, 28, 41, 51, and 67).^[4]

            10.  There was no need for the T-6, or any other clerk, to actually have $70,000 of stamp stock in his or her account.  (Tr. 61, 115-16).

            11.  Mr. Kirkland was the unit reserve custodian at Blue Grass before Petitioner took it over in 1993.  Mr. Kirkland trained Petitioner on how to perform the duties of that job, including how to use the IRT computer system to manage the unit reserve account.  He may have continued to have access to the unit reserve accountability on the IRT system, but Petitioner never gave him the combination to the safe where the unit reserve stamp stock was kept, and he did not have access to the stock itself.  (Tr. 66, 92, 95).

            12.  An investigation of this matter by the Postal Inspection Service is still ongoing.  (Tr. 23-24, 35-36, 53).

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’s theory of liability in this case is based on a conclusion that the alleged loss occurred sometime between October 19 and October 25, 1999, the time of the large unexplained changes in Mr. Kirkland’s account, and that Petitioner is liable because she was the unit reserve custodian at that time.  Respondent asserts that a loss is proved because there are no records to demonstrate that there ever was any amount close to $80,000 on consignment from the Blue Grass Station.  Therefore, because the unit reserve accountability includes stamps on consignment, Respondent’s position is that the unit reserve was short the difference between what the May 5, 2000 inventory listed as consignments and what Respondent asserts actually was on consignment.

            The outcome of this case is determined by the many things that are missing from this record.  Mr. Hulme testified that, in doing his investigation into this matter after he became the Blue Grass OIC in February 2003, he focused on the October 1999 time frame because of a “suspense” item.^[5]  He also testified, however, that he did not know when this suspense was created, and there are no documents in the record that show who created it or why, when it was created, or for what amount.

            Despite several references during the hearing to an investigation being conducted by the Postal Inspection Service, no Postal Inspector testified, and there is nothing in the record to show what the investigation revealed.^[6]  Also, despite much testimony about Mr. Kirkland’s possible actions that may have some relevance, Mr. Kirkland did not testify and there is nothing in the record that makes clear what caused the October 1999 perturbations in his account, or how the activity in his account is related to the consignments.

            Respondent’s apparent theory, according to Mr. Hulme’s testimony, is not that stamps went out on consignment without approval and are now missing, but that someone improperly made a system entry to cover up another shortage in the unit reserve (Tr. 63-65).  That may be a plausible theory, but there is no evidence that anyone ever went to the consignees to count how much stamp stock they actually had.  Further, there is no audit record to show that the unit reserve was short any specific amount on any specific date.

            There were some references in Mr. Hulme’s testimony to a document identified as PS Ex. 6 in the case file.  This document lists several amounts and dates for the Blue Grass unit reserve and Mr. Hulme stated that it was prepared by Ken Keefer (Tr. 62).  Mr. Keefer did not testify, the document is undated and unsigned, and even if its authenticity is accepted, there is no other evidence to explain or support the derivation of the figures on this document.  It is not at all clear what this document purports to prove.

            There are references to a February 2003 audit, but there is no documentation of that audit, or any other documentation to show that the Blue Grass unit reserve should have had $75,108 more in stamp stock than it actually had in October 1999, February 2003, or any other particular time.  Even assuming that the $80,000 consignment figure that appeared on several documents beginning in October 1999 was an incorrect figure, i.e., that consignees were not actually accountable for this amount, Respondent has not proved that the difference between this figure and some other figure represents a real loss of postal funds.

            Petitioner’s argument that she was not properly trained is not at all persuasive in light of the fact that she was responsible for the unit reserve for nearly six years before the apparent error was made in October 1999.  Also, her contention that the error is based on some sort of unexplained “adjustment” that the Louisville District Office directed her to make is not very helpful.  Nevertheless, for the reasons stated above, Respondent has not carried its burden of proving a loss of the alleged amount.

            The Petition is granted.  Respondent may not collect $75,108 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 the hearing transcript are “Tr._.”  References to documents attached to Respondent’s Answer will be “PS Ex._.”  

[3]  Ms. Kelly testified that “Louisville sent me the copies of the contracts” showing that only “around $7000” was approved to be on consignment.  These documents are not part of the record.  As explained in Respondent’s Answer, the $75,108 alleged debt is calculated by subtracting $5,610, which the Answer says was the amount of consignments “authorized,” from the $80,718 shown on the May 5, 2000 inventory.  There is no evidence, however, that shows where the $5,610 figure came from.  There is also no evidence to show what amount of consignments appeared on the unit reserve inventory in December 2002, or on any other date after May 5, 2000.

[4]  A Unit Form 1412 is a Postal Service form that is a daily financial report of a post office or station.  The form lists the total stamp stock received or issued by the unit, and includes a list titled, “Clerk Balances,” which lists the amount of cash and stamp stock in each clerk’s account on a particular day.  

[5]  “Suspense” is an accounting entry used to designate an apparent shortage in an account.

[6]  In the Answer, Respondent listed an Investigative Memorandum as an exhibit and stated that this document was used to determine Petitioner’s responsibility.  It turned out that Respondent’s representative was misinformed, and there is no Investigative Memorandum.