In the Matter of the Petition by

MICHAEL B. SCHOENECKER
762 Mohican Lane
at
Mendota Heights, MN 55120-1633
P.S. Docket No. DCA 04-154

APPEARANCE FOR PETITIONER:
Albert E. Lum
Scialla Associates, Inc.
52-40 72nd Place
Minneapolis, MN  55401-9450

APPEARANCE FOR RESPONDENT:
Allen E. Damerow
Labor Relations Specialist
United States Postal Service
100 S. 1st Street
Minneapolis, MN  55401-9450

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Michael Schoenecker, filed a Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets, dated October 14, 2004, from his supervisor.  This Notice stated the Postal Service's intention to withhold $1,043.97 from Petitioner's salary to recover a shortage in a unit reserve account for which Petitioner was accountable.

            A hearing was held in St. Paul, Minnesota on January 6, 2005.[1]  The Postal Service presented testimony from a Postal Inspector, an Internal Control Analyst and the Manager of Customer Service Operations for St. Paul.  Petitioner testified on his own behalf and called two former managers of Petitioner’s Station.  Both parties 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 was the customer service supervisor at Dayton’s Bluff and Seeger Square Stations in St. Paul.  Seeger Square is known as a Finance Station, and is a smaller office under the jurisdiction of Dayton’s Bluff.  (Tr. 20-21, 83-84).[2]

            2.  One Station Manager is in charge of both Dayton’s Bluff and Seeger Square.  Prior to February 2004, Mr. McCuskey was the Station Manager and was also the custodian of the unit reserve stock at both stations.  In February 2004, both stations were transferred to Ms. Lundquist as Acting Station Manager, and Petitioner, her immediate subordinate, was assigned to be the unit reserve custodian at both stations.  (Tr. 20-21, 26, 32, 42, 53, 75, 84; PS Ex. 3).

            3.  At the time of the transfer in February 2004, both unit reserve accounts were audited by Mr. McCuskey, Ms. Lundquist, and Petitioner, with help from an internal control analyst, and both accounts were balanced when Petitioner took over.  (Tr. 39, 55-56, 85).

            4.  Also at the time of the February 2004 transfer, the combinations to the safes holding the unit reserve accounts were changed by Ms. Lundquist, with assistance from a maintenance technician (Tr. 57, 76-77, 86).

            5.  From the time of the transfer in February 2004, at her direction, Ms. Lundquist had access to the Seeger Square unit reserve account in the POS computer system and to the stamp stock itself in the safe.  On occasion, when Petitioner was unavailable, Ms. Lundquist issued stock from the unit reserve.  (Tr. 19, 48, 70, 72, 77-79, 90; Pet. Ex. 2).

            6.  From June 28 – July 2, 2004, a team from the Postal Inspection Service and the Postal Service Inspector General’s Office conducted a Financial Security Review of the Dayton’s Bluff and Seeger Square Stations.  This included audits of various accounts, including the unit reserve and retail floor stock at Seeger Square.  Petitioner participated in these audits.  The unit reserve was found to be $2,645.57 short, and the floor stock was over by $1,601.60.  (Tr. 7-11, 21, 32, 33; PS Exs. 1, 2, 7, 11, 13, and 16).

            7.  On August 4, 2004, Petitioner was issued a letter of indebtedness for $1,043.97.  The letter stated that the $2,645.57 unit reserve shortage had been offset by the $1,601.60 retail floor stock overage.  (PS Ex. 7).

            8.  On October 14, 2004, Petitioner was issued the Notice of Involuntary Administrative Salary Offsets for the same amount.  (Attached to Petition).

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, Petitioner has not disputed that there was a net loss of $1,043.97, and Respondent’s evidence is sufficient to prove that loss.

            Petitioner’s contention is that he cannot be held liable because he did not have exclusive control of the unit reserve account because his supervisor, the Acting Station Manager, also had access to the account and to the safe in which the unit reserve stamp stock was stored.

            Respondent's position is simply that a loss from the unit reserve has been proved and that Petitioner, as custodian, is strictly liable for that loss.  In response to Petitioner’s argument, Respondent argues that Petitioner knew he was accountable for the unit reserve and that he should not have permitted anyone else to have access to it.  Further, Respondent argued that the likely cause of the shortage was an error Petitioner made in moving 60¢ stamps from the unit reserve to the retail floor stock and that the shared access with Ms. Lundquist had no impact on that.  This is quite speculative, however, as the evidence does not establish with any degree of certainty when, or how, the loss occurred.

            It is contrary to postal regulations for more than one person to have access to the unit reserve stock.[3]  Normally, it is the custodian's responsibility to insure that no one else has access, and clearly a custodian can not make himself immune from liability by giving access to an unauthorized person and then claiming he did not have exclusive control.  It is a different situation, however, when the custodian's management directs, approves or condones a practice of shared access.  (Eric Ortiz, P. S. Docket No. DCA 01-336 (December 31, 2001); Donald La Montagne,

            P. S. Docket No. DCA 99-283 & 350 (October 21, 1999).  In this case, it was Petitioner's supervisor, the Acting Station Manager, who had the shared access.  According to Petitioner, it was the Acting Station Manager who directed that the unit reserve be set up this way and Respondent presented no evidence to contradict this. 

            Because Petitioner did not have exclusive control of the unit reserve, and because the shared access was approved or condoned by higher authority, the loss cannot be attributed to Petitioner.  The Petition is sustained.  Respondent may not collect $1,043.97 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._.”  Documents filed by Respondent with the Answer will be identified as “PS Ex._.  Documents filed by Petitioner will be identified as “Pet. Ex._.”  

[3] Handbook F-1, §422.1, Subsections 1 and 2.  Also, Postal Service Handbook PO-208, Retail Operations, February 1999, Updated with Postal Bulletin Revisions Through October 4, 2002, §415.11.