October 10, 2013

In the Matter of the Petition by   
                                                          
KELLY M. VO
P.S. Docket No. DCA 13-206

APPEARANCE FOR PETITIONER:      
Michael Stichler, Esq.
Scialla Associates Inc.

APPEARANCE FOR RESPONDENT:  
Selena Williams
Labor Relations Specialist
United States Postal Service

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Kelly M. Vo, challenges a debt assessment issued by Respondent, United States Postal Service, seeking to collect $7,869.43 based on a shortage of stamps in a unit reserve account for which Petitioner was responsible.  A hearing was conducted in Long Beach, California.

FINDINGS OF FACT

1.  Petitioner was the unit reserve custodian for the East Long Beach Station of the Long Beach, California, Post Office for all time periods relevant to this litigation (Tr. 14, 21, 38, 143). 
2.  Petitioner was trained in the procedures necessary to manage a unit reserve account (Exh. 12; Tr. 70, 124-25, 174). 
3.  On March 6, 2008, Petitioner dispatched a shipment of stamps to the Stamp Destruction Office (SDO) for destruction.  The total value of those stamps, as recorded on a PS Form 17, was $11,157.56.  Included in that shipment were 350 coils of 24-cent Buckeye stamps, with a total value of $8,400.00.  (Exhs. 7, 18).
4.  This shipment was also recorded in a POS One entry, captioned “Returned to SDO/SSC”, that reflected the shipment of those stamps to the SDO.¹   This document specifically says that the shipment was “From:  Stock Custodian.”  (Exh. 7).
5.  Because of accounting errors found in the shipment at the SDO, the entire shipment was returned to Petitioner (Tr. 41-42).  On March 10, 2008, Petitioner again dispatched a shipment of stamps to the SDO.  The total value of that shipment was $10,252.42, and also included in that shipment were the 350 coils of Buckeye stamps.  The stamps in the second shipment were verified by the SDO as received on March 12, 2009, and as destroyed on an unspecified date.  (Exh. 6; Tr. 42-43).
6.  The record before me does not contain POS One entries reflecting either the return of the first shipment from the SDO or the March 10 dispatch of the second shipment (Tr. 46, 50).  While the Postal Service documentation showing the March 6, 2010 transfer to the SDO by Petitioner, the Postal Service did not produce documents from the POS One system showing the return of the stamps from the SDO or Petitioner’s returning the stamps on March 10, 2008 (Exh. 8).
7.  Petitioner testified she updated the records showing that she transferred the 350 coils of Buckeye stamps both the first and second times she sent the stamps to the SDO.  Petitioner could not locate the POS One receipts to support her testimony (Tr. 151-52, 164, 170). 
8.  The record does not contain evidence regarding the total number of Buckeye stamps in the unit reserve, either prior to or after the two shipments to the SDO (Tr. 45, 164-65).
9.  An inventory record of the unit reserve on May 17, 2008, reflected a system quantity of 326 coils of Buckeye stamps in the unit reserve (Exh. 8; Tr. 44).
10.  On August 18, 2009, an audit was completed by Ms. Vo and her designated replacement and observed by a district finance and control specialist with experience in auditing unit reserves (Exh. 4; Tr. 38).  The audit revealed shortages and overages which yielded a net inventory shortage of $7,869.43 (Exh. 4; Tr. 20, 24). 
11.  The auditors compared the system quantity (i.e., the expected quantity of particular stamps) with the physical count (i.e., those stamps actually counted).  They also counted the nonsalable stock present in the unit reserve.  The total value of the nonsalable stock was contained in a single item, Item 9100.  Item 9100 did not identify the particular stamps.  This audit showed a shortage of $8,400 in Item 9100.  (Exh. 4; Tr. 21-24).
12.  Based on the August 18, 2009 audit, Respondent assessed Petitioner with a debt of $7,869.43 (Exhs. 9, 10, 11). 
13.  Subsequently, Petitioner argued to the Postmaster that the Buckeye stamps which she claimed formed the basis of the alleged debt were destroyed, and therefore, the Postal Service did not have an actual loss.  Given this explanation, the Postmaster initially recommended to the District Finance Manager (DFM) that the debt be waived (Exh. 1, 23; Tr. 92-94). 
14.  The DFM did not concur with the Postmaster’s recommendation because it was not supported by the written records (Exh. 2).  Based on the DFM’s analysis of the available records, the Postmaster changed his position and concluded that Petitioner owed the $7,869.43 (Exh. 10; Tr. 99-100).

DECISION

Respondent bears the initial burden of showing that Petitioner was the accountable custodian of the East Long Beach Station and that a stock shortage representing an actual loss existed after a properly conducted audit of that account.  Chenika Squalls, P.S. Docket No. DCA 12-197 (December 7, 2012).  If Respondent meets its initial burden of proof, Petitioner may be held personally liable for the unit reserve shortage unless Petitioner is able to demonstrate circumstances that alleviate or offset the debt.  Zeola H. Brady, P.S. Docket No. DCA 10-190 (February 11, 2011).
 
The parties do not dispute that Petitioner was the accountable custodian (Finding 1).  The August 18, 2009 audit was conducted properly and shows an actual loss (Findings 10, 11, and 12).  Respondent has met its initial burden of proof.

Petitioner raises three arguments in an attempt to alleviate or offset the debt. First, Petitioner argues that the Postmaster initially waived the debt; therefore, the debt has been forgiven.  Petitioner bases this argument on our Rules of Practice which provide that the Postmaster makes the initial determination of employee indebtedness.  See 39 C.F.R. § 961.3(f).  Therefore, according to Petitioner, once the Postmaster decided that the debt is waived, it was permanently waived.  Petitioner’s argument fails for two reasons.  First, there is no authority for the conclusion that once a postmaster makes a decision, he or she cannot reconsider it.  A postmaster may reconsider a decision.  Second, a district finance manager is the proper person to review the waiver of a debt.  See Handbook F-101 Field Accounting Procedures, Sections 15-2.6 and 15-2.7; see also, PS Form 2130 Employee Receivable Resolution (“Submit . . . to DFM for [waiver] approval”).  Petitioner’s first argument is unpersuasive.

Second, Petitioner alleges that her training was inadequate to manage a unit reserve.  However, Petitioner completed the necessary training to operate a unit reserve (Finding 2); therefore, lack of training does not serve as a basis to alleviate the debt.  See Chenika Squalls, P.S. Docket No. DCA 12-197 (December 7, 2012).  Petitioner’s second argument is also unpersuasive.

This dispute comes down to Petitioner’s third argument.  Petitioner argues that the Postal Service did not experience an actual loss because the 350 coils of nonsalable Buckeye stamps were destroyed in March 2008.  Petitioner argues that when she sent the 350 coils of Buckeye stamps to the SDO on March 10, 2008, they were not removed from her accountability.  In support of her argument, Petitioner points to the 326 coils of Buckeye stamps that were still in her POS One accountability as of May 17, 2008.

While this argument is appealing on its face because the amounts are roughly similar (i.e., 350 compared to 326), Petitioner does not provide sufficient evidence to support the argument.  All I have in the record is Petitioner’s testimony which carries little weight.  The SDO returned the initial shipment because the transmission sheet, written by Petitioner, did not match the stamps included with the shipment.

Petitioner testified that she was responsible for updating the POS One system for all inventory transferred in and out of the unit reserve (Tr. 168).  If Petitioner adequately updated the POS One system, I would expect to see a “paper trail” showing the updates.

The lack of expected documents in the record undermines Petitioner’s argument.  When asked what happened to the 326 coils of Buckeye stamps as of May 17, 2008, Petitioner explained that she moved the 350 coils (not 326) into the Item 9100 account even though she did not physically have the stamps in the unit reserve (Exh. 21; Tr. 165).  The record does not include any documentation of this conversion, but this testimony is corroborated by the $8,400 entry in Item 9100 on the August 18, 2009 audit.

The record also lacks documentation explaining how the 350 coils of Buckeye stamps were reduced by 24 coils between the middle of March 2008 and the middle of May 2008.  While the numbers are similar, I find it difficult to conclude that these are the same stamps.  See Stephan Slaughter, P.S. Docket No. DCA 12-30 (October 4, 2012).  Petitioner does not provide an explanation or documentation as to how the 350 coils of nonsalable stock became 326 coils.  If the error was that the stamps were not removed from her accountability when she sent 350 coils to the SDO on March 10, 2008, I would expect to see the same number of coils (i.e., 350) on May 17, 2008, not 326.

The lack of explanation on the change in the number of coils leads to the next problem.  The record lacks documentation about the starting number of Buckeye stamp coils at the beginning of March 2008, before either the first or second shipment to the SDO.  Petitioner testified that she transferred all of the Buckeye stamps in the unit reserve to the SDO (Tr. 164-65).  If the starting amount as of March 5, 2008 had been 350 coils of Buckeye stamps in the unit reserve and 350 coils were transferred to the SDO, I might be able to conclude that all of the stamps had been transferred and there was an error updating the POS One system to show the transfer.  However, given this record, the starting point could also have been 676 coils of Buckeye stamps at the beginning of March 2008.  Because the record does not have the starting point, I am unable to draw such a conclusion in Petitioner’s favor.  On balance, Petitioner’s third argument fails to fully rebut the Postal Service’s argument by a preponderance of the evidence.

I do believe Petitioner’s testimony that she moved 350 coils of Buckeye stamps worth $8,400 into Item 9100 sometime after May 17, 2008.  Based on the May 17, 2008 POS One Report, the system showed 326 coils worth $7,824.  The difference between the two amounts is $576.  Therefore, I am crediting Petitioner with $576.

CONCLUSION

The Petition is granted in part and denied in part.  Respondent may collect $7,293.43.²

Peter F. Pontzer
Administrative Judge

¹ POS One or POS is the Postal Service’s electronic inventory system.
² $7,869.43 - $576 = $7,293.43.