In the Matter of the Petition by
EMILIO CANTU, III
Post Office Box 202
at
George West, TX 78022-0202
P.S. Docket No. DCA 04-106

APPEARANCE FOR PETITIONER:
Albert E. Lum
52-40 72nd Place
Maspeth, NY  11378-1516

APPEARANCE FOR RESPONDENT:
Louis R. Bazaldua
Labor Relations Specialist
United States Postal Service
809 Nueces Bay Boulevard
Corpus Christi, TX  78469-0404

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Emilio Cantu, III, filed a Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets from his supervisor, dated July 7, 2004.  This Notice stated the Postal Service's intention to withhold $11,984.94 from Petitioner's salary to recover a shortage in an account at Petitioner’s post office.

            A hearing was held in Corpus Christi, Texas on February 3, 2005.  The Postal Service presented testimony from an internal control analyst, Petitioner’s postmaster, an accounting manager and two supervisors from Petitioner’s post office.[1]  Petitioner testified in his own behalf and also called a supervisory clerk from his office, and a former supervisor.  Both sides relied on documents that had previously been filed.  The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  At the time pertinent to this case, Petitioner had been the station manager, or acting station manager, at Portairs Station in Corpus Christi for approximately six years.  He had been the custodian of the unit reserve stamp stock at Portairs since 1999.  (Tr. 89-90).[2]

            2.  On March 21, 2003, Petitioner and his supervisory clerk, Mr. Padron, conducted an audit of the Portairs unit reserve and found a shortage of $10,505.54.  This amount was properly entered into the POS computer system.  Petitioner asked the District Finance Office to give some assistance in reviewing financial records.  (Tr. 8-9, 37-38; PS Exs. 3 and 4).

            3.  Mr. Weigold, an internal control analyst, came to Portairs on April 15, 2003 and, with Petitioner, conducted another audit of the unit reserve.  They completed a PS Form 3294, Cash and Stamp Stock Count and Summary, showing an additional shortage of $1,479.40.  Petitioner signed the form, indicating that he agreed with the count.  (Tr. 9-10; PS Ex. 1, pp. 6-8).

            4.  Mr. Weigold, using paperwork from the March 21, 2003 audit, was able to trace the $1,479.40 shortage to an error made when Petitioner and Mr. Padron counted the unit reserve on March 21.  At that time they made an entry showing that nine hundred $7.40 books were present when only seven hundred were actually present.  Two hundred $7.40 books equates to $1,480.  Therefore, there was not an additional loss that occurred after the March 21 audit, but the shortage reported on the March 21 audit should have been larger.  (Tr. 35, 39-40; PS Ex. 3).

            5.  Mr. Weigold also audited the retail floor stock, but found nothing to help resolve the unit reserve shortage.  He also reviewed all available records in an attempt to track the source of the large shortage found by Petitioner on March 21.  This included records of transactions between the unit reserve and the floor stock, and between the stamp distribution office and the Portairs unit reserve.  In general, he found all the records to be in order.  Much of his review, and discussion with Petitioner and other employees, focused on two transactions, discussed in Findings #6 and #7, below.  (Tr. 10-11; PS Ex. 3).

            6.  Records from the POS computer system at Portairs show that at the close of business on January 16, 2003, the retail floor stock at Portairs had less than $700 in stamp stock in its inventory.  These records also show a transfer of $17,405 from the unit reserve to the retail floor stock on January 17, 2003.  During their discussion of this transaction, Mr. Padron told Mr. Weigold that Petitioner gave him this stock for the retail floor stock before going on leave in January 2003, but that the transaction was not entered into the POS system at that time.  Mr. Cantu told Mr. Weigold that he remembered that this happened.[3]  (Tr. 11-13, 16, 18-23; PS Ex. 2, pp. 1-3; PS Ex. 3; PS Ex. 10, pp. 3-8).

            7.  POS records and paper records show a shipment of $34,285 of stamp stock received into the Portairs unit reserve from the stamp distribution office on January 21, 2003, and $18,085 of stamp stock issued from the unit reserve to the retail floor stock on that same day.  On their face, these POS computer entries, and those described in paragraph 6 above, appear to have been properly made.  These transactions did not cause the shortage found on March 21, 2003.  (Tr. 15, 23-27, 61; PS Ex. 2, pp. 6-10; PS Ex. 10, pp. 9-12).

            8.  Petitioner was an inpatient at Audie Murphy Veterans Hospital in San Antonio, Texas from January 10 through January 17, 2003.  He had approved leave for those dates and also for January 21 through 24, 2003.  He came to the postmaster’s office on January 21, 2003, to submit a leave request for January 21-24.  (Tr. 59-60, 91-92, 97; PS Ex. 4, pp. 1-6; PS Ex. 9, p. 3).

            9.  On April 29, 2003, the postmaster issued Petitioner a Letter of Demand for $11,984.94, stating that the alleged debt was based on the March 21 audit ($10,505.54) and the April 15 audit ($1,479.40).  (Tr. 56; PS Ex. 1).

            10.  On May 13, 2003, Petitioner submitted a written request for reconsideration, stating that he was not in the office on January 17 or January 21 and did not receive stock or issue stock from the unit reserve on those dates, and arguing that his POS password must have been compromised, allowing someone else to have access to his accountability.  (PS Ex. 4).

            11.  On June 3, 2003, the postmaster replied, stating that the request would be held in abeyance until a Postal Inspection Service investigation was completed.  (Tr. 57; PS Ex. 4, p. 7).

            12.  The Inspection Service report to the postmaster, dated December 19, 2003, added nothing to the memorandum submitted by Mr. Weigold in April 2003.  On April 9, 2004, the postmaster recommended to the District Finance Manager that Petitioner be relieved of the alleged debt, based on the unit reserve transactions that had apparently occurred when Petitioner was not in the office.  (Tr. 57; PS Ex. 6).

            13.  The Finance Manager disapproved the postmaster’s recommendation and the postmaster then directed some additional investigation.  Statements were obtained from two subordinate supervisors and the supervisory clerk in the Portairs Station.  All denied that they had access to Petitioner’s password or that they made any POS entries involving the unit reserve in January 2003.  Based on this, the postmaster denied Petitioner’s request for reconsideration in a letter dated June 3, 2004.  (Tr. 58-59, 64; PS Exs. 8 and 9).

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.”  Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996, Updated With Postal Bulletin Revisions Through October 24, 2004), §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.  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, the $10,505.54 shortage found by Petitioner and Mr. Padron on March 21, 2003 is not disputed, and Respondent’s evidence is sufficient to prove that loss.  As for the additional $1,479.40, Petitioner testified that sometime after the audit, Mr. Padron found some $7.40 books that may have been related to that shortage, and that this was reported to Mr. Weigold.  As there is no other evidence in the record to support this, including no corroborative testimony from Mr. Padron or Mr. Weigold (Tr. 34, 81), Petitioner’s testimony is not persuasive.  Respondent has carried the burden of proving a loss of $11,984.94 from the unit reserve, and there is no dispute over the fact that Petitioner was the custodian of that account.

            Petitioner does not contend that the transactions on January 17 and 21, 2003, which he claims were entered into the system by someone other than him, caused the loss in this case.  His argument is that those transactions demonstrate that someone compromised the security of the unit reserve by gaining access to his password.

            The preponderance of evidence does not support Petitioner’s theory.  The record contains sworn testimony, and prior sworn written statements, from the two supervisors who might possibly have had access to the password.  Both denied that they ever had access to Petitioner’s password, or to the unit reserve stock.[4]  Also, while there is no dispute that Petitioner was on leave for the time periods he claims, and was in the hospital until January 17, 2003, the evidence of record does not prove that someone else made the POS entries that are questioned.  Petitioner has not demonstrated by a preponderance of evidence that the security of his unit reserve was compromised.

            Respondent has proved a loss from Petitioner’s account, and Petitioner has proved no basis for relief from liability.  The Petition is denied.  Respondent may collect $11,984.94 from Petitioner.

Bruce R. Houston
Chief Administrative Law Judge

[1] One of the supervisors testified by speakerphone from another location.

[2] References to the hearing transcript are “Tr._.”  Documents filed by Respondent with the Answer will be identified as “PS Ex._.”

[3] At the hearing, Mr. Padron was unable to remember anything about this, and Petitioner was not asked about it.

[4] Mr. Padron was not asked about it during his testimony, but he told the postmaster’s representative in May 2004 that he did not have access to Petitioner’s password (PS Ex. 8, p. 3).