In the Matter of the Complaint Against ) March 4, 1993 ) DAVID L. ELLIS ) Apartment 3-D ) 106 Woodland Court ) ) at ) ) Carpentersville, IL 60110-2169 ) P.S. Docket No. PF-50 APPEARANCE FOR COMPLAINANT: Geoffrey A. Drucker, Esq. Enforcement Division United States Postal Service 475 L'Enfant Plaza, SW Washington, DC 20260-1144 APPEARANCE FOR RESPONDENT: None
This proceeding arises out of a Complaint issued by the Reviewing Official of the United States Postal Service under the Program Fraud Civil Remedies Act of 1986, Pub. L. 99-509, 31 U.S.C. § § 3801-3812, and 39 C.F.R. Parts 273 and 962. The Complaint was mailed to David L. Ellis ("Respondent") on December 23, 1992. On December 29, 1992, Respondent acknowledged receipt of the Complaint by signing a Domestic Return Receipt (PS Form 3811). To date, Respondent has failed to file a Hearing Petition as required by 39 C.F.R. Section 962.3.
By order dated February 2, 1993, the Judicial Officer referred the Complaint to the Administrative Law Judge for processing in accordance with 39 C.F.R. Section 962.4.
In the Complaint, the Reviewing Official alleged that Respondent is liable to the Postal Service for an assessment equal to the total amount of the false claims plus a civil penalty of $18,000 ($1500 for each of twelve claims) under 31 U.S.C. § 3802(a)(1).
In accordance with 39 C.F.R. § 962.4(a), this Initial Decision is based upon the information contained in the Complaint.
1. Respondent David L. Ellis is an individual who resides at 106 Woodland Court, Apartment 3-D, in Carpentersville, Illinois. Respondent did business with the U.S. Postal Service under the name "Ellis Wash On Wheels."
2. Respondent washed U.S. Postal Service vehicles for the Elgin, Illinois, Post Office pursuant to an oral agreement with the Postmaster of Elgin, who has now retired. Although he did not have a fixed schedule, Respondent typically washed vehicles at the Elgin Post Office on alternate Sunday evenings.
3. To receive compensation, Respondent submitted invoices to the Elgin Post Office on which he listed the identification numbers of the vehicles he allegedly washed. Respondent charged $5.00 for a one-ton truck, $4.50 for a half-ton truck, and $3.50 for a jeep. The Post Office typically paid Respondent by means of a no-fee postal money order, although it sometimes paid him in cash.
4. On an invoice dated September 17, 1990, Respondent charged the Postal Service $3.50 for washing a jeep bearing identification number 3194106 ("the jeep") (Ex.1). The Elgin Post Office transferred the jeep to another facility on September 17, 1990, and it was never returned. On six subsequent invoices claiming payment for vehicles that apparently had been washed, Respondent included a charge of $3.50 for having washed the jeep.1/ Respondent knew or had reason to know that he had not washed the jeep on or shortly before September 17, 1990, and the subsequent invoice dates because he had ample opportunity to keep track of the vehicles he washed.
5. On an invoice dated December 2, 1990, Respondent included an unspecified charge of $3.50 without claiming that he had washed the jeep or any other vehicle to support the $3.50 charge (Ex. 5).
6. Respondent submitted invoices dated February 3, 1991, and February 24, 1991, charging $189 on each for having washed forty-two different vehicles listed by identification number, including the jeep (Exs. 8, 10). Respondent knew or should have known that he had not washed any of the vehicles listed on or shortly before February 3, 1991, and February 24, 1991, because he had ample opportunity to keep track of which vehicles he washed.
7. Respondent submitted an invoice dated February 10, 1991, charging $5.00 for having washed a one-ton truck bearing identification number 6501243 ("the truck") and $3.50 for having washed the jeep (Ex. 9). Respondent knew or should have known that he had not washed the truck or the jeep on or shortly before February 10, 1991, because he had ample opportunity to keep track of which vehicles he washed.
8. Respondent submitted an invoice dated March 24, 1991, charging $4.50 for having washed a half-ton truck bearing identification number 8218720 (Ex. 12). Respondent did not wash this truck on or shortly before March 24, 1991, because it does not exist. Respondent knew or had reason to know that he did not wash a truck bearing identi-fication number 8218720 on or shortly before March 24, 1991, because he had ample opportunity to keep track of which vehicles he washed.
1. Respondent submitted eleven invoices dated between September 17, 1990, and March 24, 1991, on which he charged the Postal Service for washing a vehicle or vehicles that he knew or had reason to know he had not washed on or shortly before the dates of the invoices. Each invoice bearing a charge for having washed a vehicle or vehicles that had not, in fact, been washed constituted a "claim" for money within the meaning of 38 U.S.C. § 3801(a)(3).
The false claims ranged from a single charge of $3.50 for allegedly having washed a jeep to $189 for allegedly having washed forty-two different vehicles. The total amount of the eleven false claims submitted by Respondent and paid by the Postal Service was $415.50.
2. Respondent submitted an invoice dated December 2, 1990, in which he made a claim for $3.50 without specifying the basis for this charge (Ex. 5). Since the invoice makes no specific claim that Respondent washed the jeep or any other vehicle, it has not been proved that this particular invoice constituted a false claim within the meaning of 38 U.S.C. § 3801(a)(3). Accordingly, Count 5 of the Complaint is dismissed.
3. The next issue is whether Respondent is subject to a $1500 penalty under 31 U.S.C. § 3802(a)(1) for each of the eleven false claims he made. Respondent filed eleven separate invoices falsely claiming payment for having washed a vehicle or vehicles that he had not, in fact, washed. Respondent also knew, or had reason to know, that his invoices contained false claims for payment. Under these circumstances, Respondent is subject to, in addition to any other remedy that may be prescribed by law, a civil penalty of not more than $5000 for each false claim. The Reviewing Official has requested a $1500 penalty for each claim. The requested penalty amounts to a total of $16,500 for the eleven false claims found. Since Respondent has failed to file a Petition in opposition to the Complaint, the allegation of liability for a $16,500 penalty is deemed admitted. See 39 C.F.R. § 962.4(a) and § 962.15(a)(2) and (d).
4. Although Respondent has technically admitted the amount of the penalty by failing to respond, the Administrative Law Judge has redetermined the amount of the penalty in view of the factors considered below. The amount of the penalty must be determined by examining all of the circumstances surrounding the false claims, including all aggravating and mitigating factors. See, S. Rep. No. 99-212, 99th Cong., 1st Sess. 18 (1985). Many government agencies have adopted a set of model regulations proposed by the President's Council on Integrity and Efficiency, which contains a list of factors which may be considered as guidance. E.g., 45 C.F.R. § 79.31 (1988); 52 Fed. Reg. 27423, 27432. The Administrative Law Judge is not bound by the regulations of other agencies, but has discussed some of those factors below.
5. First, Respondent knew that he was deceiving the government each time he submitted one of the eleven invoices. The deliberate nature of the false claims is an aggravating factor.
6. The amount of the money falsely claimed is also an important factor to consider. The fact that the Postal Service lost only $415.50 constitutes a mitigating circumstance. It would be difficult to justify the imposition of a $16,500 penalty under such circumstances.
7. An aggravating circumstance exists where the false claims occur over a lengthy period of time or are large in number. Here, Respondent filed a total of eleven false claims over a period of six months. This large number of claims filed over a relatively lengthy period of time is an aggravating factor.
8. Finally, in determining the amount of a penalty or assessment, the Administrative Law Judge must consider that the purposes of the statute are to recompense the government for losses resulting from false claims (including the cost of the investigation and the instant litigation), to deter the making of such claims in the future, and to protect the integrity of the government program in question. S. Rep. No. 99-212, 99th Cong., 1st Sess. 2 (1985). Here, the Reviewing Official alleged that one reason why a sizeable penalty is warranted is that the Postal Service has incurred substantial costs in investigating and litigating this matter. This is a clearly aggravating factor.
9. After considering all of the circumstances of these claims, it is concluded that Respondent is liable for civil penalties in the aggregate amount of $11,000, or $1000 for each of the eleven false claims.
10. The next issue is the amount of the assessment to be imposed upon Respondent under § 3802(a)(1). The statute provides, in pertinent part, that a person making such false claims shall be subject to an assessment, in lieu of damages sustained by the United States because of such claims, of not more than twice the amount of such claims. The Reviewing Official in this case only requested an assessment equal to the total amount of the false claims. Since Respondent submitted false claims totaling $415.50, he is liable for an assessment of $415.50.
11. In conclusion, Respondent is liable to the Postal Service under 31 U.S.C. § 3802(a)(1) for a civil penalty of $11,000 plus an assessment of $415.50.
Judith A. Dowd Administrative Law Judge