In the Matter of the Petition by

TONY R. WHITE
1102 Lyngate Drive, Southeast

at

Huntsville, AL 35803-2390

P.S. Docket No. DCA 03-76

APPEARANCE FOR PETITIONER:
J. Danny Hackney, Esq.
2351 Lime Rock Road
Birmingham, AL  35216-3006

APPEARANCE FOR RESPONDENT:
Sandra W. Bowens, Esq.
Memphis Law Office
United States Postal Service
225 N. Humphreys Boulevard
Memphis, TN  38166-0170

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Tony R. White, filed a Petition under the Debt Collection Act of 1982, after receiving a Notice of Involuntary Collection^[1] dated January 21, 2003, from the North Alabama Mini-Cluster Leader in Huntsville, Alabama.  The Notice stated Respondent’s intent to withhold $2,126.70 from Petitioner’s salary because of shortages in Petitioner’s unit reserve at the Downtown Station in Huntsville.  A hearing was held in Huntsville, Alabama.

FINDINGS OF FACT

            1.  In June 2001, Petitioner, who was then a Supervisor of Customer Services at the Downtown Station in Huntsville, Alabama, assumed the position of acting station manager.  In his position as customer services supervisor, Petitioner had been responsible for supervising the carriers at the station.  In his position as acting station manager, he also assumed responsibility for supervising the window clerks and became responsible for the unit reserve, or main stock, at the station.  Petitioner had had no training in finance and no training related to operating the main stock before assuming the position of acting station manager.  (Transcript pages (Tr.) 137, 139, 167; Respondent’s Exhibit (Resp. Exh.) 3).

            2.  Petitioner and his predecessor counted the main stock as part of the turnover of responsibility.  At the time of the turnover, Petitioner’s predecessor printed out from the IRT^[2] a “unit inventory by denomination” – a list of the particular types and numbers of stamps that were supposed to be in the main stock.  Petitioner compared the list to what was physically in the main stock and found that there were discrepancies – i.e., the particular types and numbers of stamps actually in the vault did not match the types and numbers on the printout.  He brought those discrepancies to the attention of his predecessor and was told that as long as the ending balance was correct, not to worry about those discrepancies.  (Tr. 28, 140-141).

            3.  At the time of the count, Petitioner received from his predecessor a Form 17 or other document and was told that that document represented stock that had been consigned to an outside vendor for sale.^[3]  Petitioner included the consignment stock as part of the main stock when he did his count.  The value of the consigned stock at that time was $1,020.  At the conclusion of the count, Petitioner’s count of the main stock was within two or three dollars of the total amount of stock that was supposed to be in the vault.  Petitioner’s predecessor then filed the inventory-by-denomination document in the manager’s office.^[4]  (Tr. 24, 35, 142-144, 182-183).

            4.  When Petitioner issued stock to window clerks from the main stock, he was required to document the transaction using a PS Form 17.  During his tenure as main stock custodian, Petitioner failed to document some transactions.  In December 2001, Petitioner discovered that the main stock was approximately $11,000 short in $34.00 coils of stamps.  In January 2002, Petitioner counted the accountability of one of the window clerks and discovered that the clerk had an overage of approximately $18,000.  Petitioner and the clerk then agreed to fill out a Form 17 indicating that the clerk had been issued three hundred $34.00 coils of stamps.  However, no such stock was physically transferred to the clerk.  In this manner, the clerk’s overage was reduced by $10,200 and Petitioner’s shortage was reduced by the same amount.  In March 2002, Petitioner again counted the accountability of the same clerk and discovered that the clerk had an overage of approximately $2,760.  He and the clerk again agreed to fill out a Form 17 indicating the issuance of sixty $34.00 coils, without actually physically transferring any stock.  (Resp. Exh. 1 (Inspection Service Exh. 1, 8, 11)).

            5.  On April 3, 2002, the Downtown Station was audited by personnel from the Alabama District Finance Department.  The main stock was counted by Petitioner and by the person who was taking over responsibility for the main stock, with a Postal Systems Coordinator from the Finance Department acting as observer.  The main stock was found to be $2,060.70 short.  Both Petitioner and his successor signed a  PS Form 3294-P reflecting that shortage.  (Resp. Exh. 5, 18; Tr. 89-90, 99).

            6.  During or shortly after the April 3, 2002 main stock count, Petitioner provided a Form 17 that he said represented the consignment stock (see Finding 3) and asked that that stock be included as part of the main stock count – thereby reducing the shortage that had been found.^[5]  The value of the consignment at that time remained $1,020.  The Postal Systems Coordinator concluded that the consignment stock had been counted as part of a window clerk’s accountability and refused to include it as part of the main stock.  (Tr. 52, 60, 108-111).

            7.  The April 3, 2002 count included, as part of the main stock, stamps that Petitioner had sent for destruction in January 2002.  On or about April 2, 2002, it was determined that the destruction certificate prepared by Petitioner listed two more $33.00 coils than had actually been sent.  As a result, the shortage in the main stock was actually $66.00 more than the $2,060.70 indicated on the Form 3294, or a total of $2,126.70.  (Tr. 103-104; Resp. Exh. 7).

            8.  By letter dated January 21, 2003, Petitioner was notified of Respondent’s intent to withhold $2,126.70 from his pay, beginning on March 8, 2003 (Resp. Exh. 13).^[6]

            9.  During his tenure as main stock custodian, Petitioner consulted by telephone and in person with personnel from the District Finance Office, and with supervisors and managers at other stations when he had questions regarding proper financial procedures (Tr. 73-76, 177).

DECISION

            Section 141 of Postal Service Handbook F-1, Post Office Accounting Procedures, provides that employees, such as Petitioner, 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.”  Respondent’s burden of proof in a case of an unexplained shortage is to show that a loss occurred from an account for which the employee was responsible.  When a properly conducted inventory or audit shows a 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.

            Respondent argues that Petitioner assumed responsibility for the main stock in June 2001 after having counted it and finding it in balance.  Respondent contends that the consignment stock was not counted as part of the main stock when Petitioner became the main stock custodian.  Therefore, Respondent contends that the April 2002 count, which showed a shortage, establishes a prima facie case that the Postal Service suffered a loss equal to the amount of the shortage.  Further, Respondent argues that Petitioner has not demonstrated that he exercised reasonable care in managing the main stock.  Finally, Respondent argues that Petitioner’s claim of lack of training and of being overworked does not warrant relieving him of liability for the shortage.

            Petitioner takes the position that he never signed any documents in June 2001, when the main stock was transferred to him.  That, and the absence of any documentary evidence relating to the June 2001 count, leads Petitioner to argue that he never accepted responsibility for the stock.  Further, Petitioner argues that the “consignment” stock, represented by the Form 17, was counted as part of the main stock when he performed the June 2001 count.  Finally, Petitioner argues that his lack of training and the extent of his responsibilities at the station should be considered mitigating factors in considering his liability.

            Notwithstanding the disappearance of the records relating to the June 2001 count of the main stock and, therefore, the absence of any documents bearing Petitioner’s signature, there is no doubt that Petitioner accepted responsibility for the stock.  Although he was reluctant to take over the main stock, there is no evidence that he attempted to refuse the transfer or that he later asked to be relieved of the responsibility.  Further, he performed the duties of the main stock custodian for a period of nearly a year after June 2001.

            The evidence also demonstrates that the main stock was essentially “balanced” at the time he took over responsibility.  Although there may have been deficiencies in the detailed listing of stamp stock, the total value of the stamps in the main stock was virtually the same as the total of the stock on the inventory list.  However, Petitioner included in his June 2001 count of the main stock the $1,020 in stock that had been consigned to the outside vendor.  Whether that stock properly should have been considered part of the main stock for accounting purposes need not be decided.  For the purposes of this decision, it is sufficient to find that Petitioner considered it part of the main stock and counted it as such at the time he took over responsibility for the main stock.

            Therefore, the count performed in April 2002, which did not include the consigned stock as part of the main stock, overstated the amount of the shortage by the value of the consignment.  Thus, the loss demonstrated by the April 2002 audit was $2,126.70 less $1,020, or $1,106.70.

            The evidence does not provide a basis for relieving Petitioner of responsibility for the loss.  As evidenced by his failure to document some stock transactions and his manipulation of the main stock records in January and March 2002 (Finding 4), it cannot be said that Petitioner “followed the postal procedures established when performing [his] duties.”

            Petitioner’s lack of training and the extent of his duties also do not provide a basis for relief.  Having taken on, however reluctantly, the duties of main stock custodian, it was Petitioner’s obligation to learn what was necessary and required and to perform those duties until relieved of the responsibility.  Carina Kim, P.S. Docket No. DCA 97-99, June 3, 1997.  Petitioner had available to him various sources of help (Finding 9), and it was up to him to utilize those sources as necessary.  As noted above, there is no evidence that, notwithstanding his ignorance of financial matters, Petitioner attempted to refuse the assignment as main stock custodian or that he asked to be relieved of the responsibility because of the extent of his other duties.

            Accordingly, the Petition is granted to the extent that the amount of Petitioner’s debt is reduced to $1,106.70, but is otherwise denied.

David I. Brochstein
Administrative Judge

[1]  Although labeled “Notice of Involuntary Collection,” the document was the functional equivalent of a Notice of Involuntary Administrative Salary Offsets under the Debt Collection Act.

[2]  Integrated Retail Terminal

[3]  The document is not in the record.

[4]  Petitioner’s predecessor testified that both he and Petitioner signed the inventory list, that he stapled the inventory list to a Form 3294 (“Cash and Stamp Stock Count and Summary”), and that he filed it in the manager’s office (Tr. 16, 26, 35).  Petitioner denies signing either the inventory printout or the Form 3294 (Tr. 153).  Neither document could be located in April 2002, when the shortage that is the subject of this case was discovered, and neither document is in the record of this case.

[5]  The Form 17 is not in the record.

[6]  Respondent had previously (in August 2002) begun to withhold money from Petitioner’s pay without having issued a Notice of Involuntary Administrative Salary Offsets.  Petitioner filed a Debt Collection Act Petition that was docketed as P.S. Docket No. DCA 02-455.  Respondent later agreed to refund the money that had been withheld, and the Petition was dismissed without prejudice.  (Record in DCA 02-455).