In the Matter of the Petition by

ANNE W. DAVIS

P.S. Docket No. AO 07-203

APPEARANCE FOR PETITIONER:

Anne W. Davis
APPEARANCE FOR RESPONDENT:
James Tavares 
Labor Relations Specialist
United States Postal Service

INITIAL DECISION

            Petitioner, Anne Davis, filed a Petition for Hearing after receiving a Notice of Intent to Collect Delinquent Debt from the Postal Service Accounting Service Center.  This Notice stated an intention to collect $8,565.47, identified as the amount remaining from an alleged debt of $10,385.00, about which Petitioner had been disputing with Postal Service officials since February 2006.

A hearing was held in Providence, Rhode Island on December 4, 2007. The Postal Service presented testimony from an Acting Post Office Operations Manager and a financial analyst.  Petitioner testified in her own behalf, and also presented testimony from the Post Office Operations Manager, and two other postmasters. Both parties also relied on documents previously filed, and the Postal Service filed one additional document at the hearing. Both parties filed written arguments after receiving their copies of the hearing transcript. The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  During the time pertinent to this case, Petitioner was the Postmaster on Nantucket Island, Massachusetts.  Three separate offices compose the Nantucket Post Office – the Main Office, Station One, and Siasconset.  (Petition; Tr. 42, 66, 73-75, 93). [1]

            2.  Each of the three offices has its own unit reserve account, maintained in separate locked safes.  Petitioner was the custodian of all three unit reserve accounts.  (Tr. 42-43, 57-58, 74-75, 93).

            3.  On or about April 22, 2004, the Stamp Distribution Office in Providence, Rhode Island sent a shipment of stamps valued at $10,385 to the Siasconset office at Nantucket.  Petitioner signed a PS Form 17 on April 30, 2004, acknowledging that she received that shipment.  (Tr. 26, 28-29, 51-52, 90; multiple copies of Form 17 attached to Petition).

            4.  When a unit reserve custodian receives a shipment of stamps from a Stamp Distribution Office, proper procedure is for the custodian and a witness to open the package and count the stamps to verify that what is received is the same as what the accompanying Form 17 shows was shipped.  No witness was available, so Petitioner did this by herself on April 30, 2004.  (Tr. 28-29, 80-81; Form 17).

            5.  Once a stamp shipment has been counted and verified, the custodian should promptly enter the amount of the shipment into the unit reserve accountability in the computer system and secure the stamps in the appropriate safe.  Petitioner put the stamps into the Siasconset safe, but neglected to enter the amount into the computer system.  Therefore, the Siasconset unit reserve accountability was not increased by the amount of the shipment - $10,385 – as it should have been.  (Tr. 30, 51, 88, 90).

            6.  On or about June 16, 2004, the Acting Manager of Post Office Operations for Cape Cod visited the Nantucket Post Office to look into reports of mismanagement of financial matters and other matters.  He found that reports of daily financial transactions, PS Form 1412, had not been reconciled for a long time, and that counts of clerk accounts, in connection with a transfer to a new computer management system, had not been done.  As a result, he was unable to determine whether the overall accountability of the office was in balance.  (Tr. 10-13, 17; PS Ex. 5).

            7.  On June 25, 2004, the Senior Manager of Post Office Operations removed Petitioner from her position as Nantucket Postmaster and placed her in Administrative Leave Status.  She was required to turn in her keys to the office and was not allowed access to the office, except as a customer, after that date.[2]  (Tr. 67, 88; PS Exs. 5 and 6).

            8.  In late June/early July 2004, the Acting Manager of Post Office Operations sent a financial control analyst and a postmaster from a nearby office to Nantucket to review and organize the financial records in the Nantucket office.  They did not immediately count the stamps in any of the three unit reserve accounts, but first attempted to reconcile the backlog of Form 1412s in order to establish a baseline of what they believed should be in each account.  (Tr. 14, 19-20, 23-25, 37, 40, 46).

            9.  Eventually, the financial control analyst and the assisting postmaster counted all the stamp accounts on Nantucket.  This included the three unit reserve accounts, retail floor stock accounts and individual clerk accounts.  The unit reserve counts were done from July 21-23, 2004.  The Siasconset unit reserve was counted on July 22, 2004.  (Tr. 22-23, 47-48: PS Ex. 3).

            10.  The auditors compiled figures showing the shortages or overages in each of the many accounts noted above.  Their “bottom line” showed a net shortage of $94.88 for the Nantucket office as a whole.  When they conducted these counts and compiled these figures, they were unaware of the April 2004 shipment of $10,385 discussed in Findings #3-5 above.  (Tr. 31-33, 47-51; PS Ex. 7).

            11.  Looking just at Siasconset, the auditors found overages in the unit reserve and retail floor stock totaling $5,982.16.  Subtracting some clerk shortages, they found the net overage for Siasconset to be $5,214.41.  (Tr. 49; PS Ex. 3, pp. 5-6; PS Ex. 7).

            12.  The three unit reserve safes were not sealed when Petitioner was removed from the office, and the unit reserve accounts were not turned over to the new Officer-in-Charge (OIC) until after the audits were completed on or about July 23, 2004.  During the interim, however, the unit reserve accounts continued to be used to replenish stamp stock for retail sales.  A clerk had previously been given access to the Main Office unit reserve safe by Petitioner.  This is contrary to Postal Service rules regarding security of a unit reserve.  It is not clear whether he also had access to the other two unit reserve safes.

  None of the accounts were transferred to him when Petitioner left, but he was permitted to continue whatever his previous practice had been until the new OIC took over.[3]  (Tr. 14, 20, 42, 54-56, 64, 67, 72-76, 88, 90, 94; PS Ex. 5).

            13.  The matter of the “missing” shipment of $10,385 was not discovered until approximately April 2005 when the Postal Service Accounting Center in Minnesota, in tracking stamp shipments, noted that the shipment of $10,385 to Siasconset in April 2004 had never been “picked up,” i.e. entered into the computer system as having been received in Siasconset.  The Nantucket OIC was then directed to make the entry, thereby raising the accountability of the Siasconset unit reserve by $10,385.  (Tr. 30, 38-39, 52-53; emails attached to March 30, 2006 letter filed with Petition).

            14.  On February 17, 2006, the Acting Post Office Operations Manager issued Petitioner a letter stating that she owed the Postal Service $10,385.  (Tr. 26, 39-40, 92; letter attached to Petition).

DECISION

            Respondent’s theory of liability is based on Petitioner’s overall responsibility for the financial management of the Nantucket Post Office and her failure to carry out that responsibility as postmaster.  Respondent points specifically to Petitioner’s admitted failure to properly account for the stamp shipment in April 2004, her action in allowing a clerk to have access to a unit reserve safe, the general disarray of office financial records in June/July 2004, and the fact that the Nantucket office, as a whole, would have been short an amount very close to the unaccounted for $10,385 had the auditors been aware of that shipment when they counted in July 2004.

            Petitioner’s principal contention is based on the fact that no one counted the unit reserve accounts until approximately one month after she gave up control of them.  While she admits forgetting to enter receipt of the April 2004 shipment into the system, she insists that she put the stamps into the safe.  Therefore, she argues, she cannot be held liable for losses that may have occurred after she was no longer the custodian of those accounts.

            There is merit to Petitioner’s argument, but it is not sufficient to relieve her completely from liability.  Perhaps it was not unreasonable for Respondent’s auditors to first attempt to reconcile the financial records to establish what the total accountability of the Nantucket Post Office should have been when Petitioner departed, but surely there would have been some value in counting the unit reserves immediately to determine what was actually there.  The failure to do this, especially when the unit reserve accounts continued to be used, would often be a basis for relieving a former custodian of any liability.

            In this case, however, Petitioner’s misfeasance created the situation in which it was not possible to immediately and accurately identify potential losses.  It is inappropriate for her to be able to use this as a defense to liability for a loss that can be proven.

            The flaw in Respondent’s argument that it has a $10,385 loss is that Respondent treats the Nantucket Post Office as a single entity, whereas all the evidence supports a conclusion that the three unit reserve accounts are entirely separate.  The $10,385 stamp shipment in April 2004, on which the alleged debt is based, belonged only to Siasconset.  Therefore, the figures Respondent has shown for shortages and overages in the other two accounts, Main Office and Station One, are not relevant.  Examining the auditors’ detailed report of all their counts (PS Ex. 7) shows that Siasconset had overages totaling $5,982.16 in the unit reserve and retail floor stock accounts in July 2004 (Finding #11).  There is no reason not to offset that amount against the $10,385.

            I conclude, therefore, that Respondent has proved a loss of $4,402.84.  Respondent may collect that amount from Petitioner.  Petitioner must be credited with any amount already collected.  

Bruce R. Houston
Chief Administrative Law Judge

[1]  References to the hearing transcript are "Tr._."  References to documents filed with Respondent's Answer, and by Respondent at the hearing, will be identified as “PS Ex._.”  References to documents filed with the Petition will be identified as Petitioner’s exhibits.

[2] This action was based on matters not relevant to this case, as well as on the financial matters discussed herein.  Petitioner remained on administrative leave for approximately two months.  No disciplinary action was taken against her and in September 2004 she was re-assigned as postmaster of a smaller post office.  She retired from the Postal Service in June 2006.  (Tr. 33-34, 66-69, 92, 94; PS Exs. 5 and 6).

[3] This clerk no longer works for the Postal Service and he was not called as a witness (Tr. 70).