In the Matter of the Petition by

CAROLYN WILLIAMS
909 Grove Street
at
San Francisco, CA 94117-1713
P.S. Docket No.AO 03-338

APPEARANCE FOR PETITIONER:
Mardina Graham
1737 Newcomb Avenue
San Francisco, CA  94124-2347

APPEARANCE FOR RESPONDENT:
Adam Alvarez
Labor Relations Manager
United States Postal Service
P.O. Box 882290
San Francisco, CA  94188-2290

INITIAL DECISION

            Petitioner, Carolyn Williams, a former Postal Service employee, filed a Petition challenging the Postal Service's assertion that she owed the Postal Service a debt of $39,367.20.  The Petition was docketed under the procedures set forth in 39 C.F.R. Part 966, which allow a former employee to challenge collection of a debt alleged by Respondent.

            A hearing was held in San Francisco, California on March 31, 2004.  The Postal Service presented testimony from the supervisor who succeeded Petitioner as custodian of the unit reserve account at West Portal Station in San Francisco, and two accounting supervisors.  Petitioner testified on her own behalf and also presented testimony from a manager at the Accountable Paper unit, and a former financial supervisor.  Both parties also relied on documents previously filed.  The following findings of fact are based on the entire record.

FINDINGS OF FACT
 

            1.  Petitioner retired on January 3, 2003, having worked for the Postal Service for many years.  During her last eleven years, she was a customer service supervisor at two stations in San Francisco – West Portal and Parkside.  As such, she was the custodian of the unit reserve stock at both stations.[1]  (Tr. 101).

            2.  On January 2, 2003, in preparation for turning the unit reserve over to Lance Cochrane, Petitioner and Mr. Cochrane counted the unit reserve at West Portal (Tr. 13-15).

            3.  Before starting the count, Mr. Cochrane was aware that Petitioner had been working with someone in the accounting office to clear up a large discrepancy that had existed at West Portal for some time (Tr. 16).

            4.  After a telephone conversation involving Petitioner, Mr. Cochrane, and Ms. Gray at the accounting office on January 2, 2003,[2]  Petitioner completed a PS Form 17, Stamp Requisition, and an entry into the POS computer system, showing that $49,894.37 in stamps was shipped from the West Portal unit reserve.[3]  Petitioner signed the Form 17 as “shipper,” and Mr. Cochrane signed as “witness.”  No stamps were actually shipped out on January 2, 2003, but the effect of the Form 17 and POS entry on that date was to reduce the unit reserve accountability to $157,037.78.  (Tr. 16-19, 23-24, 27-29, 102-03, 110, 116; Ans. Exs. 11, 25, 27; Respondent’s March 16, 2004 supplement, pp. 4, 6 and 7; same documents also included in Pet. Ex. 2).

            5.  Petitioner and Mr. Cochrane then completed their count of the unit reserve, using $157,037.78 as the opening balance.  Their count showed an overage of $13,200.12, compared to that opening balance.  (Tr. 17, 26; Ans. Exs. 7 and 24; same documents also included in Pet. Ex. 2).

            6.  Sometime shortly thereafter, Petitioner signed a statement giving permission to the accounting office to use the $13,200.12 overage to offset any shortage in the retail floor stock at West Portal if necessary.  Petitioner also requested that she be reimbursed for a payment she had made in August 2002 for an earlier shortage.  Based on the above, the accounting office used the $13,200.12 overage to reimburse Petitioner $2,767.95 for the August 2002 shortage payment, and to offset $9,575.96 against a shortage in the West Portal retail floor stock that was found approximately a week after the unit reserve count on January 2, 2003.  (Tr. 26-27, 41-45, 104; Ans. Exs. 13 and 21).

             7.  Sometime after Petitioner had retired and Mr. Cochrane had taken over the West Portal account, the accounting office determined that Petitioner’s reduction of her unit reserve accountability by $49,894.37 (see Finding #4) was an erroneous action.  Therefore, the apparent $13,200.12 overage found on January 2, 2003, was then determined to be a $36,694.25 shortage.  (Tr. 40, 45-46, 48; Ans. Exs. 21 and 24; Pet. Ex. 1).

            8.  On March 12 and March 14, 2003, Mr. Cochrane wrote memos to the accounting office asking that the offset against the floor stock shortage be reversed, and that the $13,200.12 overage be instead offset against the large unit reserve shortage.  The accounting office did so, and also added back in the $2,767.95 that had been reimbursed to Petitioner.  With two other minor adjustments that are not clearly explained in the record, the accounting office determined that the total shortage for which Petitioner should be charged was $39,367.20.  (Tr. 42-45, 54-59; Ans. Exs. 21, 23, 24 and 29).

            9.  An accounting record called a “Range Report” lists all additions to the West Portal unit reserve for calendar year 2002.  It shows that $49,894.37 was added to the unit reserve on June 18, 2002.  Most of the entries on this particular list represent stamp stock received by West Portal from the Stamp Distribution Office (also referred to as the Accountable Paper office), but it is possible that this entry was made to correct an error of some sort, and does not represent a stock shipment.  (Tr. 17-20, 70, 74-76, 81-86; Ans. Ex. 25, also p. 4 of Respondent’s March 16, 2004 supplement).

            10.  On April 21, 2003, Petitioner’s former supervisor issued her a letter of indebtedness for $39,367.20, and on August 19, 2003 he issued her a Notice of Involuntary Administrative Salary Offsets for the same amount (Pet. Exs. 1 and 6) [4].

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 is not required to prove any specific dereliction, or act of negligence, by the employee.  When a properly conducted inventory, or audit, shows a stock 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.

            In this case, there is no dispute over the accuracy of the count done on January 2, 2003, or the fact that Petitioner was the accountable custodian of the West Portal unit reserve until January 2, 2003.  The issue is whether there is sufficient uncertainty over the accuracy of the previously established balance in the unit reserve to conclude that Respondent has failed to prove a loss from that account.

            Respondent argues that Petitioner’s reduction of her unit reserve accountability by $49,894.37 on the day of the transfer audit, January 2, 2003, has been demonstrated to have been improper and once that action was reversed the audit showed a large shortage, which proves a loss.

           Petitioner contends that there was no real loss to the Postal Service, but only a paperwork error.  Her theory is that the error originated sometime in 2002 when she sent a large quantity of redeemed stock to the accountable paper unit.[5]  In a written statement, dated September 5, 2003, Petitioner stated that she returned stock in June 2002, but that the accounting office did not receive copies of the paperwork.  Therefore, she said she was “instructed by one of the general accounting staff to put it back into my accountability the amount of $46000, which had already been destroyed by accountable paper depository.”  (Pet. Ex. 7).  In her testimony, when asked about the June 18, 2002 accounting entries (Ans. Exs. 25 and 27 – see Findings #4 and #9) that added $49,894.37 to her accountability, she stated that she did not know how, or by whom, these entries were made (Tr. 117-19).  Later, however, when asked about her September 5, 2003 statement, she testified that she did as instructed and added $46,000 to her accountability (Tr. 123).  

           As for the action on January 2, 2003, to subtract $49,894.37 from her accountability, Petitioner testified that she called Ms. Gray in the accounting office because she knew the West Portal unit reserve was short and asked if accounting had any overages on their books for West Portal.  She said Ms. Gray told her there was a $49,000 overage.  Petitioner then said that she gave the phone to Mr. Cochrane because he was taking over the unit reserve and needed to be told what to do.  After Mr. Cochrane and Ms. Gray finished their conversation, which Petitioner says she could not hear, Mr. Cochrane prepared the PS Form 17 showing that $49,894.37 was shipped out from the unit reserve, and Petitioner signed the form (Tr. 102-03, 109-10; Respondent’s March 16, 2004 supplement, p. 6).  In summary, therefore, Petitioner contends that the $49,894.37 subtraction from her account on January 2, 2003, was directed by the accounting office to correct the erroneous addition of that same amount to her account back in June 2002.

            Mr. Cochrane’s version of the events of January 2003 is different.  He testified that Petitioner called someone, whom he assumed to be Ms. Gray, on January 2, 2003, but that he did not speak to Ms. Gray at all.  According to his testimony, it was Petitioner who repeated to him the instruction she claimed to have received from Ms. Gray, i.e., to reduce the accountability by $49,894.37.  He then signed the Form 17 as a witness to the transaction.  (Tr. 16-17, 23-24, 29-30).

           Ms. Gray testified that Petitioner did call her occasionally about accounting issues, but that she had no recollection of the conversation discussed above.  She did recall that, at about the time of Petitioner’s retirement, Petitioner called her with a confusing problem and that she suggested Petitioner call Ms. Munoz, because Petitioner stated that Ms. Munoz was aware of the problem.  (Tr. 61-62, 68-69).[6]

           There are a number of things that make Petitioner’s theory not credible.  First, neither Mr. Cochrane nor Ms. Gray supports her account of what happened on January 2, 2003.  Next, if the accounting office was actually carrying on their books a $49,000 overage for the West Portal unit reserve, there should be a written record of that, but Petitioner presented none.  Also, if an error was made regarding a redeemed stock shipment in 2002 that caused the unit reserve accountability to be incorrectly increased, there should be some record to support that, but none was presented.  Finally, Petitioner’s testimony about the June 2002 accounting entries was inconsistent.

           Petitioner had control of the West Portal unit reserve during the time pertinent to this case.  If her defense to the alleged debt is that there was no loss because the June 18, 2002 addition of $49,894.37 to her unit reserve accountability was an error and, therefore, that the balance was not accurate when she and Mr. Cochrane counted it on January 2, 2003, the burden was on her to present evidence to demonstrate that.  She failed to do so.  In summary, Petitioner failed to present evidence to show that the subtraction of $49,894.37 from the West Portal unit reserve on January 2, 2003 was legitimate, or that the balance in that accountability prior to the subtraction of $49,894.37 was not accurate.

           Respondent has proved, by a preponderance of evidence, that there was a loss of $39,367.20 from the West Portal unit reserve while Petitioner still had custody of that account.  Petitioner has shown no basis for relieving her of liability for that loss under the applicable standard quoted above.  The Petition is denied.  Respondent may collect $39,367.20 from Petitioner.

                                                                        Bruce R. Houston
                                                                        Chief Administrative Law Judge

[1] Although there are many documents in the case file pertaining to Parkside, the alleged debt in this case concerns only West Portal (Tr. 7-8).  References to the hearing transcript are “Tr._.”  References to documents attached to the Petition, or to Respondent’s Answer, will be “Pet. Ex._,” or “Ans. Ex._.”

[2] Petitioner and Mr. Cochrane recalled this conversation in different ways (Tr. 16, 23-24, 102-03, 110).  Ms. Gray did not recall it at all (Tr. 62, 68-69).  This will be discussed later.

[3]  This same amount had been added to the unit reserve accountability on June 18, 2002 (see Finding #9).

[4]  As Petitioner had already retired, this was procedurally incorrect under the applicable rules, 39 C.F.R. Part 966, but as Petitioner has been accorded all her rights under those rules, this was a harmless error.

[5]  This is the office that supplies stamp stock to post offices, and which also receives obsolete stamp stock shipped back by post offices for destruction (redeemed stock).

[6] Ms. Munoz also worked in the accounting office, but has retired and was not called as a witness.