October 21, 1992
In the Matter of the Petition by
RODNEY WELCH
P.O. Box 91
at
Ruston, LA 71273-0091
P.S. Docket No. DCA-148
APPEARANCE FOR PETITIONER:
Rodney Welch, pro se
APPEARANCE FOR RESPONDENT:
D. Aubrey Wells
MSC Director, Human Resources
2400 Texas Avenue
Shreveport, LA 71102-9994
FINAL DECISION UNDER DEBT COLLECTION ACT OF 1982
Petitioner, Rodney Welch, has filed a petition requesting a hearing, based on written submissions, under the Debt Collection Act of 1982 as amended, 5 U.S.C. § 5514(a), as a result of a Notice of Involuntary Administrative Salary Offsets issued to him on July 27, 1992. The Notice advised Petitioner that action would be taken to collect a debt in the amount of $1,429.00 allegedly owed to the United States Postal Service (Respondent) because Petitioner authorized the payment of three money orders totaling that amount, contrary to instructions in the Domestic Mail Manual. The Notice further advised that 15 percent of Petitioner’s disposable pay, or approximately $256.08, would be deducted from each of Petitioner’s paychecks until the debt was paid.
An earlier petition related to this alleged debt was filed by Petitioner in June 1992 and was assigned Docket No. DCA-140. The earlier petition was dismissed as premature by the Hearing Official since a Notice of Involuntary Administrative Salary Offsets meeting the statutory requirements had not been issued. However, the documents filed by both parties in DCA-140 have been incorporated into the record of this matter.
FINDINGS OF FACT
1. On or about August 30, 1988, three postal money orders were
presented to be cashed at the Ruston, LA, post office, at which Petitioner was the postmaster. Two of the money orders were in the amount of $700.00 each and the third was in the amount of $29.00. “Grambling State University” was handwritten in the “PAY TO” box on each of the money orders. The address “PO Box 25, Grambling, Louisiana” was written into the appropriate spaces below the “PAY TO” box. Above the “PAY TO” box on each money order was written “For Tanya Kilgore” or “For Tanya Kilgore Tuition” followed by a Social Security number. The name “Lea C. Brown” was written in between “Grambling State University” and “For Tanya Kilgore” on each of the money orders. In each case “Lea C. Brown” was partly in and partly above the “PAY TO” box and somewhat overlapped either “Grambling State University” or “For Tanya Kilgore.” The name “Opal Kilgore” and an address in California appeared in the area of each money order reserved for the purchaser’s name and address. “For Tanya Kilgore” or “Accnt of Tanya Kilgore” was also handwritten along the bottom of each money order. (Respondent’s Exhibit (Resp Exh) 13).
2. The evidence in the record indicates that Lea C. Brown presented the
money orders to be cashed. An endorsement reading “Lea C. Brown” appears on the reverse side of each money order, as does a notation indicating that the person cashing the money orders presented two college identifications, one from Grambling and one from “Cal State, Long Beach, CA.” Petitioner’s initials also appear on the reverse side of each money order, indicating the window clerk who received the money orders obtained approval from Petitioner before cashing them. (Id.)
3. At some time after the money orders were cashed, the Ruston, LA,
police department received a complaint concerning the theft of the money orders. In the course of a subsequent investigation undertaken by the USPS Inspection Service, Petitioner gave two sworn statements to the Postal Inspector. In the first statement, on November 2, 1988, upon being shown copies of the money orders Petitioner stated that he did not remember authorizing the money orders to be cashed, although he acknowledged that his initials seemed to be on the back of one of the money orders. He also stated that he would probably have sent the party seeking to cash the money orders to Grambling State “due to them being made payable to Grambling State & Lea Brown.” In a second statement, on June 6, 1989, Petitioner was shown the originals of the money orders and verified that his initials appeared on all three, indicating that he had approved cashing the money orders. He also stated that “[d]ue to these money order [sic] being made – Pay to – Lea C. Brown and due to her having two identications [sic] these Money Orders were cashed.” (Id.)
4. On or about March 3, 1989, the purchaser of the money
orders was reimbursed the amount of the purchase price - $1,429.00 (Resp Exh 14).
5. On or about July 10, 1989, Petitioner was issued a letter of demand in
the amount of $1,429.00, based on an alleged violation of section 941.33 of the Domestic Mail Manual (DMM). Petitioner was further advised that if he failed to take action within specified timeframes, steps would be taken to collect the amount due through a salary offset. The referenced DMM section, which pertains to the signature requirements for cashing money orders, reads, in part:
“941.336 More Than One Payee. A money order completed by the
purchaser to show more than one firm or person as payee will be paid
as follows:
a. If the conjunction “or” is used to connect the payees, either payee
may cash the document.
b. If no conjunction is used, or if the conjunction “and” is used to
connect the payees, then all the listed payees must endorse the document.”
(Resp Exh 12, 16).
6. By letter dated August 4, 1989, Petitioner requested that the demand
for payment be reconsidered. In the letter, Petitioner argued that the money orders had been made out to Lea C. Brown and that “Grambling State University” could have been considered part of Lea Brown’s address rather than a payee. Petitioner also stated that he had been told by the Postal Inspector that Lea Brown had been caught. Therefore, Appellant argued that she, rather than he, should be made to pay the debt. Petitioner also emphasized that it was over two months (from August 30 to November 2, 1988) from the time the money orders had been cashed until he was informed and that it was very hard to remember what had happened at the time the money orders were cashed. (Resp Exh 11).
7. By letter dated August 16, 1989, Petitioner’s request for
reconsideration was denied by the Shreveport, LA, MSC Manager. The Manager concluded that Petitioner’s statement that “Grambling State University” might have been part of the address was not credible, particularly in view of Petitioner’s November 2, 1988, statement to the Inspector that the money orders were made payable to Lea Brown and Grambling State. Accordingly, the Manager stated, Petitioner should have secured both endorsements as required by the DMM [Finding 5]. (Resp Exh 10).
8. On October 5, 1989, another letter was issued notifying Petitioner that,
because he had taken no action to repay the debt, action would be taken to deduct the debt from Petitioner’s pay by involuntary salary offsets unless he had a “sound basis for contesting the . . . determinations concerning this matter.” (Resp Exh 9).
9. In response to a request by Petitioner for information concerning any
action taken against, or money collected from, the person who cashed the checks, the MSC Manager stated, in an October 27, 1989, letter, that the case had been submitted to the United States Attorney for possible indictment and prosecution. The Manager went on to state that no money had been recovered to date. (Resp. Exh 7, 8).
10. The record does not show any further action in this matter until
October 24, 1991, when Petitioner filed a Postal Service Form 2130, “Claim for Loss – Initial Letter,” with the Postal Data Center, reporting the $1,429.00 loss as “STOLEN CASHED MONEY ORDERS.” (Resp. Exh 5).
11. By letter dated May 27, 1992, the MSC Manager, noting that Petitioner
had filed the Form 2130, advised that the loss of funds could not be waived and repeated the demand that Petitioner pay the amount in full. He warned that if payment was not received within 15 days, steps would be taken to “involuntarily offset your salary to repay the indebtedness.” In response, on or about June 8, 1992, Petitioner filed a petition for hearing under the Debt Collection Act. (Resp. Exh 3, 4). The petition was received by the Postal Service Recorder and docketed as DCA-140. As noted above, on July 22, 1992, the petition was dismissed as premature by the Hearing Official.
12. As of June 26, 1992, an outstanding warrant continued to exist for the prosecution of Lea C. Brown as a suspect in connection with the cashing of the stolen money orders. (Respondent’s Supplemental Exhibit 2).
13. On July 27, 1992, Petitioner was issued a formal “Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act.” In a petition dated August 10, 1992, and received on August 21, 1992, Petitioner requested a hearing based on written submissions. That petition was docketed as DCA-148.
DECISION
In his petition, Petitioner makes two arguments. He first argues that the lapse of over three years between the issuance of the first letter of demand on July 10, 1989, and the issuance of the July 27, 1992, Notice of involuntary Salary Offsets should be sufficient basis for granting the petition.
Petitioner’s second argument is that the Postal Service should be seeking to recover the money from Lea C. Brown rather than from him because it was Lea Brown who stole the money orders from her roommate, inserted her own name in the “Pay To” block, and cashed them. In his petition, Petitioner recounts in some detail a conversation he allegedly had with Lea Brown when she cashed the money orders. Petitioner states that Lea Brown told him that she had taken the money orders to Grambling to pay Tanya Kilgore’s tuition but that Grambling refused to accept the money orders and told her she would have to get them cashed. Petitioner also states that Lea Brown told him that the tuition had to be paid that day. Petitioner argues that the police and Postal Inspectors caught
Ms. Brown and questioned her, but that she was not made to pay back the money even though she admitted taking the money orders.
Respondent adopts the arguments it made in its answer to the petition in DCA-140 before that matter was dismissed. In addition, Respondent reasserts its argument that the petition should be dismissed as untimely. The latter argument has been considered and rejected in connection with Respondent’s motion to dismiss and its motion for reconsideration and will not be addressed here.
With respect to the merits of the petition, Respondent argues that Petitioner failed to exercise reasonable care in authorizing payment of the money orders and that he failed to comply with required procedures and regulations in the performance of his duties on August 30, 1988, when the money orders were cashed.
Having considered the evidence in the record and the arguments, I conclude that Petitioner may properly be held liable for the amount of the loss in this case. Petitioner’s first argument, based on the time period between the first letter of demand and the formal Notice of Involuntary Administrative Salary Offsets, is not accepted. Petitioner has not identified any statute or regulation which Respondent violated nor has he alleged or demonstrated that his ability to defend against the assessment has been prejudiced.
As to Petitioner’s argument on the merits, in his first sworn statement, made to the Postal Inspector on November 2, 1988, Petitioner stated that he did not remember verifying that the money orders could be cased. However, Petitioner’s reaction to being shown copies of the money orders was that he would have sent anyone seeking to cash them to Grambling State because the money orders were made out to two payees – Grambling and Lea Brown. If that statement, which is closest in time to the incident, is accepted as accurate, then authorizing payment of the money orders was clearly in violation of the DMM requirement which mandated endorsements from both payees.
In a subsequent sworn statement made on June 6, 1989, Petitioner stated that the money orders were made out to only one payee, Lea C. Brown, implying that he would treat “Grambling State University” as part of her address. Finally, in his petition in DCA-148, filed nearly four years after the event, Petitioner recounts in some detail a conversation he allegedly had with Lea Brown when she sought to cash the money orders. It is difficult to accept Petitioner’s account of this conversation as credible since at no other place in the record, including documents in which Petitioner argued his position, is there any previous indication that such a conversation took place. Moreover, in his November 2, 1988, statement and in his August 4, 1989, letter, Petitioner asserted that he did not remember or, at best, found it difficult to remember the details of what took place. However, even accepting Petitioner’s account of the conversation, I conclude that it was not reasonable under the circumstances to have authorized cashing the money orders for Lea Brown without further inquiry. The position and the appearance of Ms. Brown’s name on the money orders is such that it could have been written in by someone else after the rest of the information had been completed by the purchaser. In addition, the other writing on the money orders indicates clearly that they were intended for Tanya Kilgore’s tuition payment to Grambling State University, and had been purchased by Opal Kilgore. The fact that these money orders, which included two of large value, were being presented for cashing by someone with no obvious connection to the money orders’ intended use – i.e., the payment of Tanya Kilgore’s tuition at Grambling State – should have alerted Petitioner to the need for some further inquiry before payment was authorized.
In this instance, Respondent has presented the case to the United States Attorney’s office for prosecution and a warrant has been issued for Ms. Brown’s arrest. The record does not identify any other specific, reasonable, steps which Respondent could have taken to recover the money. Accordingly, in the absence of such proof or repayment by Ms. Brown, Petitioner remains liable.
I conclude that Petitioner is liable for the loss in the amount of $1,429.00. Since no evidence has been presented that the repayment schedule proposed by Respondent will cause undue hardship, Respondent may collect the debt at the proposed rate.
David I. Brochstein
Administrative Judge