In the Matter of the Proposed Debarment of March 4, 1983 NATHAN DAL SANTO 1182 Elm Street at Kankakee, IL 60901-5434 P.S. Docket No. 15/130 APPEARANCE FOR RESPONDENT: Charles C. Hall, Esq. Young, Welsch, Young & Hall 408 North Vermilion Street P. O. Box 583 Danville, IL 61832-0583 APPEARANCE FOR POSTAL SERVICE: Michael Vandamm, Esq. Law Department United States Postal Service Washington, DC 20260-1121 Cohen, James A.
By letter dated December 20, 1982, the Assistant Postmaster General, Mail Processing Department, notified Nathan Dal Santo (Respondent) that the Postal Service proposed to debar him, and any company in which he has a substantial interest or control, from being awarded Postal Service contracts for a period of three years. The letter cited, as cause for the debarment, Respondent's conviction in the United States District Court, based on a guilty plea, to charges of violating 18 U.S.C. § 1341, by the submission of false and fraudulent claims for increased compensation under nine Postal Service highway transportation contracts.
Pursuant to § 1-604.3 of the Postal Contracting Manual (PCM) and 39 C.F.R. § 957.5, Respondent timely requested a hearing on the proposed debarment to explain the circumstances resulting in his conviction. In the request for a hearing, Respondent admitted he was convicted of violating 18 U.S.C. § 1341, but denied he was engaged in a scheme to defraud the United States Postal Service. In support of the request for a hearing, Respondent states he will "show that any increased compensation paid to him on the contracts in question were funds received for and paid to drivers and employees who were lawfully entitled to increases in wages and that no funds were kept for personal use. . ."
The Postal Service has filed a Motion for Summary Judgment in which it argues that consideration of the circumstances of the conviction is irrelevant, since the proposed debarment is based on the fact of conviction which, standing alone, supports a debarment under the PCM. It also argues that Respondent's contention that he did not retain any funds for personal use is irrelevant to the basis of the proposed debarment and that " m oreover, to the extent Respondent is now denying any of the allegations in the indictment, he is collaterally estopped by the judgment of conviction."
Respondent filed a reply to the motion in which he argues that, under 39 C.F.R. § 957.6(a), the Judicial Officer is required to grant the request for a hearing and that the matter should not be decided pursuant to the motion without first holding a hearing.
Respondent was convicted of committing a criminal offense in the performance of nine highway transportation contracts with the United States Postal Service. Under § 1-604.1b(1) of the PCM such a conviction constitutes cause for debarment. However, under § 1-604.1a, the debarment must be "in accordance with procedures" set forth in § 1-604.3 and "under the conditions" specified in § 1-604.1(c). Section 1-604.3(a)(4) provides that an individual whose debarment has been proposed is entitled to a hearing, on timely request, before the debarment may be imposed. (See also 39 C.F.R. ??957.4(b)(4) and 957.6(a)). Moreover, under § 1-604.1(c) of the PCM, the circumstances of a conviction and all mitigating factors are relevant to the consideration of whether a convicted individual should be debarred and are matters on which evidence may be taken at a hearing. (See § 1-604.3(b) of the PCM; 39 C.F.R. § 957.21)
However, consideration of mitigating circumstances, and the hearing itself, may be circumscribed by the particular cause on which a proposed debarment is based. In this regard, § 1-604.1(c)(2) of the PCM states that "the existence of a cause set forth in paragraph (b)(1) or (2) of this section shall be established by criminal conviction in a court of competent jurisdiction." With respect to the present case, the Judgment and Probation Commitment Order states that Appellant was convicted of "Mail fraud as charged in counts 1 through 10 in the Indictment. . ." The indictment , in turn, charges that Respondent "devised and intended to devise a scheme and artifice to defraud and to obtain money from the Untied States Postal Service by means of false and fraudulent pretenses, promises, and representations. . ." (Indictment, paras. 3-6). This language, as incorporated in the conviction order, establishes Respondent's participation in a scheme to defraud the Postal Service for purposes of the debarment regulations. Cf. Tempo Trucking and Transfer Corp. v. Dickson, 405 F. Supp. 506, 518 (E.D.N.Y. 1975). Respondent therefore is precluded from arguing otherwise at an oral hearing. Respondent's further contention that he did not personally retain funds obtained pursuant to this scheme does not appear to conflict with the charges contained in the indictment. Therefore, evidence in support of this contention may be presented at the hearing.
Finally, it is noted that, in addition to the propriety of debarment, the period of debarment proposed in this case is also subject to review. In this regard, § 1-604.2 of the PCM states that, unless a specific period of debarment is otherwise controlling, "debarment by the Postal Service shall be for a reasonable, definite, stated period of time, commensurate with the seriousness of the offense or the failure or inadequacy of performance. . ." For purposes of determining what is "reasonable", Respondent will be allowed to present evidence at the hearing regarding his present responsibility as a contractor with the Postal Service. Peter Kiewit Sons' Co. v. U. S. Army Corps of Engineers, et al., 534 F. Supp. 1139 (D.D.C. 1976).
The Motion for Summary Judgment is denied. A hearing in this matter, within the limitations discussed in this decision, will be held on March 23, 1983, at 10:00 A.M., in Room 10821, 475 L'Enfant Plaza West, S.E., Washington, D.C. 20260-6100. Respondent is advised that, under 39 CFR § 957.9, if he fails to appear at the hearing the Postal Service's evidence will be received and a Postal Service Decision will be issued without further notice to Respondent.
In the event the date and location of the hearing are not convenient to the parties, they should confer and advise of mutually agreed alternate dates and places for the hearing.
In preparation for the hearing the parties are to take the following actions no later than one week prior to the hearing"
1. Exchange and furnish witness lists to the Judicial Officer. The witness lists shall include a reasonably detailed statement of the intended testimony of each witness and the approximate time it is expected the direct examination of each witness will take.
2. Executed and furnish to the Judicial Officer a stipulation of all non-contested facts, issues of fact, and issues of law. The stipulation is to be comprehensive and detailed so that no hearing time will have to be devoted to matters which are not in dispute.
3. Exchange exhibits which are intended to be introduced into evidence.