In the Matter of the Complaint Against ) December 8, 1994 ) DOROTHY JONES ) 17330 26th Avenue, S.E. ) ) at ) ) Bothell, WA 98012-6548 ) P.S. Docket No. PF-61 APPEARANCE FOR RESPONDENT: Dorothy Jones, pro se 17330 26th Avenue, S.E. Bothell, WA 98012-6548 APPEARANCE FOR POSTAL SERVICE: Geoffrey A. Drucker, Esq. Enforcement Division United States Postal Service Washington, DC 20260-1144
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. In the Complaint, the Postal Service alleges that Dorothy Jones ("Respondent") violated 31 U.S.C. §3802(a)(1) by making 145 false claims for postal services. Specifically, Respondent is alleged to have intentionally mailed 145 letters with insufficient postage between November 3, 1992 and March 26, 1993. The Postal Service contends that Respondent is liable for an assessment of $75.62 (twice the amount of the $37.81 postage shortage) plus civil penalties of $36,250 ($250 for each false claim), for a total liability of $36,325.62.
On September 13, 1993, Respondent filed a Petition in the form of a "Declaration", in which she denied any liability with respect to the allegations in the Complaint and requested a decision on the record. On September 15, 1993, the Judicial Officer assigned this proceeding to the undersigned as Presiding Officer. On September 17, 1993, counsel for the Postal Service transmitted the Complaint to the Presiding Officer and moved to dismiss the Petition for failure to specifically admit or deny each of the allegations of the Complaint as required under 39 C.F.R. §962.3(f). By Order dated September 21, 1993, Respondent was granted ten (10) days in which to file an Amended Petition. Respondent filed an Amended Petition on October 1, 1993, again asking for a decision on the record. Pursuant to an Order dated October 6, 1993, the parties timely filed additional documents. By Order dated November 3, 1993, the partes were granted until November 30, 1993, to file written arguments. Pursuant to this Order, the Postal Service filed Proposed Findings of Fact and Conclusions of Law on November 23, 1993, and Respondent filed a Declaration with exhibits attached, on November 30, 1993.
A. Background
1. Effective February 3, 1991, and at all times relevant to this Complaint, the postage rate for a single piece of First-Class mail weighing less than one ounce was 29 cents (Domestic Mail Manual §311.22 (previous edition), Module R100.1.2 (revised edition dated July 1, 1993).
2. At all times relevant to this Complaint, Respondent knew that the First-Class rate was 29 cents (Comp. ¶¶ 7, 8, 9, 10, 11; Am. Ptn. ¶¶ 7, 8, 9, 10, 11; V. Decl. ¶¶ 4, 7, 12, 15, 18, Ex. 3, 4, 6).
3. At all times relevant to this Complaint, Respondent Dorothy Jones resided at 17330 26th Avenue, Southeast, Bothell, WA 98012 (Comp. ¶ 2; Am. Ptn. ¶ 2).(1)
4. At all times relevant to this Complaint, Respondent did business as Jones Informational Publications and Jones Specialty Merchandise and received mail for these businesses at 16212 Bothell Way, Southeast, Suites F232 and F316, Mill Creek, WA 98012 ("Respondent's Bothell Way mailing address") and at 17730 15th Avenue, N.E., Suite 178, Seattle, WA 98155-3808 (V. Decl., ¶¶ 3, Ex. 1, 2, 13, 14; Comp. ¶ 3; Am. Ptn. ¶ 3 ).
5. On April 22, 1992, Postal Inspector James C. Vach received a report from the Postmaster of Bothell, Washington concerning mail being deposited at his post office with only 2¢ postage. The return address on this mail was Respondent's Bothell Way mailing address (V.Decl. ¶2).
6. On April 23, 1992, Inspector Vach contacted Respondent by phone and informed her that it is illegal to mail letters bearing only 2¢ postage. Respondent replied that she had been misled by someone from Puerto Rico and promised not to mail short-paid letters again (V. Decl.¶4).
7. On April 27, 1992, Inspector Vach received a report from the Lynnwood, Washington post office that several bundles of letters bearing only 2¢ postage had been deposited for delivery. On that same date, an employee of the Everett, Washington post office informed Inspector Vach that his facility had received bundles of envelopes with metered postage of 2.9¢. The return address on all of this mail was Respondent's Bothell Way mailing address. (V. Decl. ¶¶ 5, 6.)
8. Inspector Vach telephoned Respondent on April 27, 1992, and told her that additional short-paid mail had been found, including some mail metered at 2.9¢. Inspector Vach warned Respondent that if she did not stop depositing short-paid mail, she might be criminally prosecuted. Respondent assured the inspector that this problem would not recur. (V. Decl. ¶7.)
9. On April 30, 1992, an employee of the Everett, Washington post office called Inspector Vach to inform him that on April 28, 1992, Jones Informational Publications had deposited letters in collection boxes bearing metered postage of only 2.9¢ (V. Decl. ¶8).
10. By letter dated June 4, 1992, the Bothell Postmaster informed Respondent that he was revoking her postage meter license because she had misused it to make short-paid mailings (V. Decl. ¶11 & Exhibit 3). By letter of that same date, Regional Chief Inspector J.E. Swagerty warned Respondent
that deliberately mailing matter with less than the required postage was illegal (V. Decl. ¶13 & Exhibit 4).
11. On June 8, 1992, an employee of a Seattle, Washington Post Office facility informed Inspector Vach that on June 5 or 6, 1992, a total of six bundles of 2.9¢ metered mail (30-60 letters per bundle) had recently been deposited in collection boxes. The return addressee on the short-paid letters was Jones Informational Publications. (V. Decl.¶14.)
12. Also on June 8, 1992, Inspector Vach met with Respondent to discuss the additional short-paid mailings. Respondent blamed the mailings on a former female employee whom she refuse to identify. During this meeting, Respondent signed a Statement of Voluntary Discontinuance agreeing that she would not mail matter with insufficient postage or represent that short-paid mailing was legal. Respondent acknowledged in this statement that she had been advised that use of the mail with the intent to avoid the payment of proper potage, or promoting the same, constituted a violation of federal law. (V. Decl. ¶16 & Exhibit 6.)
13. By letter dated June 9, 1992, the Bothell Postmaster informed Inspector Vach that on June 5, 1992, Jones Informational Publications deposited envelopes in the mail bearing a meter strip of only 2.9¢ (V. Decl. ¶17
& Exhibit 7). On June 10, 1992, Inspector Vach had another meeting with Respondent to warn her against posting any more short-paid mail (V. Decl.¶18).
14. On November 2, 1992, an employee of the Lynwood, Washington Post Office called Inspector Vach to report that eight envelopes with "First Class" stamped on them in red ink and bearing only 2¢ postage had been discovered. In the upper left-hand corner of this mail was Respondent's Bothell Way mailing address which had been blacked out and covered by a blank white label. (V. Decl. ¶20.) Eleven pieces of mail of the same description were reported on November 5, 1992, by an employee at a Seattle, Washington postal facility (V. Decl ¶21).
15. During the period from November 3, 1992 to March 26, 1993, at least 145 individuals from all over the country received unsolicited mail from Jones Informational Publications or Jones Specialty Merchandise, with postage due (V. Decl. ¶27 & Exhibits 14-15). The postage that had been placed on these 145 mailings consisted of stamps in the following denominations: 4¢ - 58 pieces; 2¢ - 50 pieces; 1¢ - 18 pieces; 3¢ - 13 pieces; 5¢ - 5 pieces; 10¢ - 1 piece (V. Decl., Exhibit 15).
16. Between December 9, 1992 and February 16, 1993, the Seattle Washington Post Office received a number of large orders for small denomination stamps from "Jones" at Respondent's home address. The total of all of the orders amounted to 34,200 stamps. The orders included at least 10,800 2¢ stamps, 2,300 3¢ stamps, 20,300 4¢ stamps, and 800 5¢ stamps (V. Decl. ¶25 & Exhibit 12). Of the total stamps ordered from the Jones home
address, Respondent's cancelled checks show that she personally paid for at least 5000 of the 2¢ stamps and 15,000 of the 4¢ stamps (V. Decl., Exhibit 12(d), (f), (h), (j), & (m)).
17. On March 16, 1993, the Postal Service filed three Complaints alleging that Respondent, d/b/a Jones Informational Publications violated 39 U.S.C. §3005 by engaging in different schemes for obtaining money or property through the mail by means of false representations (P.S. Docket Nos. 40/122, 40/123, and 40/124).
18. Attached to the Complaint in P.S. Docket No. 40/124 is a flyer from Jones Informational Publications which states, inter alia, "I mail all my First Class letter[s] for only 2 cents each. Not 29 cents and I do it with the complete cooperation of the U.S. Postal Service and the Federal Government." (Complaint in P.S. Docket No. 40/124, Exhibit 1.) The flyer solicits recipients to send $39.95 to order an informational package showing how to mail first- class letters for 2 cents postage as well as the resale rights to "[t]his 'Special' mailing process" (Id.) The return address on the order coupon is Jones Informational Publications at Respondent's Bothell Way mailing address.
19. Respondent did not file an Answer to any of these Complaints. On April 30, 1993 (No. 40/123) and May 3, 1993 (Nos. 40/122 and 40/124) the Judicial Officer determined that Respondent was in default and issued the requested Cease and Desist Orders against her.
20. Respondent principally contends in her Declarations and Amended Petition that her husband, Michael Jones, is solely responsible for the 145 short-paid mailings alleged herein. Respondent suggests that Michael Jones essentially took over her mail order business and set out to ruin it by running up debts and posting large quantities of mail with insufficient postage. Respondent alleges that this conduct by Michael Jones was part of a pattern of mental and physical abuse directed towards her because of marital disputes.
21. Record evidence supports Respondent's contention that Michael Jones was physically abusive to her, that he sometimes participated in her mail order business, and that he ordered large amounts of office supplies for the business for which neither he, nor she, was able to pay. However, all of this is largely irrelevant to the issues raised herein concerning the 145 short-paid mailings alleged in the Complaint, all of which were postmarked (where legible) between November 3, 1992, and March 26, 1993.
22. Almost all of Respondent's evidence concerning Michael Jones' involvement in the family mail order business--including ordering large amounts
of office supplies and postage stamps--predates his removal from the family home by court order on June 28, 1992.(2)
23. Although Respondent asserts (Am. Ptn. ¶11) that Michael Jones took all of her business records when he left the home and that he sent out the short paid mailings at issues here, there is no evidence whatsoever to show that Michael Jones engaged in any mailings on behalf of the Jones mail order business after he was removed from the home in June 1992.
24. Record evidence shows, on the other hand, that Respondent continued to operate the Jones mail order business by herself after Michael Jones was removed from the home ( Declaration of Dorothy Jones to Superior Court, Snohomish County dated October 9, 1992, ¶2).(3) Record evidence further shows that large orders for small denomination stamps were placed from Respondent's home address--at which Michael Jones was no longer
living--during the period from December 9, 1992 through February 16, 1993.
Moreover, Respondent personally paid for a large portion of these low denomination stamps with checks in her own name.(4)
25. Moreover, the denominations of the stamps purchased by Respondent during this period bear a strong correlation to the denominations found on the 145 short-paid mailings at issue here. The evidence shows that seventy-five percent of the 145 pieces of mail were posted with either 2¢ or 4¢ stamps, and ninety percent of the stamp orders and purchases attributable to Respondent between December 9, 1992, and February 16, 1993, were for 2¢ and 4¢ stamps.
26. The evidence also shows that Respondent, and not Michael Jones, controlled the mailing addresses shown on the 145 pieces of short-paid mail. The contents of the short-paid mailings all indicate that customer orders should be directed to either Respondent's Bothell Way mailing address or to 17730 15th Avenue, N.E., Suite 178, Seattle, WA. Postal records show Respondent, alone, as the individual who directed that mail addressed to Jones Informational Publications and Jones Specialty Merchandise be delivered to these addresses (Vach. Decl., Exhibits 2 & 13). (5)
27. In addition to the foregoing evidence which tends to show the Respondent, and not Michael Jones, is responsible for the 145 short-paid mailings at issue here, Respondent's failure to offer any defense in the false representation cases makes her the party legally responsible for promoting a scheme falsely representing that mailing letters with less then the required
amount of postage does not violate the law. Deliberately mailing letters with insufficient postage is, of course, the exact conduct alleged in this Complaint.(6)
28. Finally, Respondent's shifting and conflicting explanations for the short-paid mailings made prior to those alleged in the Complaint, suggest that Respondent's denials of responsibility are not entitled to weight. Thus, as shown above (¶6), when Postal Inspector Vach confronted Respondent concerning the earlier short-paid mailings reported, she first responded that she had been misinformed by an individual in Puerto Rico. When the short-paid mailings continued and she was again confronted with the evidence (¶12), Respondent blamed the mailings on an unnamed female employee. Even crediting Respondent's assertions (Am. Ptn. ¶¶ 7-11) that she failed to name Michael Jones as the perpetrator because of fears that he would retaliate against her, this is no justification for offering the Postal Inspector a totally false and misleading explanation.
29. Accordingly, I find, based on the record evidence as a whole, that Respondent is the individual responsible for the 145 short-paid mailings alleged in the Complaint.
1. Depositing mail with the Postal Service constitutes a "claim" under the Program Fraud Civil Remedies Act (PFCRA). The Act defines a "claim" as "any request, demand, or submission ... made ... for ... services ..." 31 U.S.C. §3801(a)(3)(A).
2. Because Respondent knew the amount of the correct postage and deliberately failed to pay the Postal Service the required amount, these mailings were false claims. 31 U.S.C. §3802(a)(1). Each of the 145 pieces of mail constitutes a separate claim under the Act. Frank Pepper, P.S. Docket No. PF-54 (1993); Thomas West Priebe, P.S. Docket No. PF-44 (1992).
3. Respondent is, therefore, subject under the Act to a penalty of $5000 for each claim. 31 U.S.C. §3802(a)(1). The Postal Service requests that a penalty of $250 for each claim be imposed. The appropriate amount of the penalty must be determined by examining all 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 that may be considered as guidance. E.g., 45 C.F.R. §79.31 (1988); 52 Fed. Reg. 27423, 27432. Some of these factors are discussed below.
4. The facts that Respondent's wrongful conduct extended over a period of many months and involved a large number of false claims are aggravating factors.
5. The fact that Respondent continued to engage in this conduct after several warnings from postal officials, and after signing a Statement of Voluntary Discontinuance, is an aggravating factor.
6. The fact that the material contained in these short-paid mailings constituted false representations, in violation of another federal statute (see Findings of Fact ¶ ¶17-19), is a matter in aggravation.
7. A further aggravating factor is the inconvenience, expense, and annoyance caused for the many Postal Service customers who received Respondent's letters with postage due.
8. The amount falsely claimed, in this case the value of services claimed, is also an important factor. The amount alleged, $37.81, is obviously very small and would not normally justify a large penalty. The Postal Service undoubtedly considered this in asking for a penalty of $250 per claim, rather than the $5000 statutory maximum. The Postal Service argues, however, that the 145 letters are only the "tip of the iceberg," and that Respondent actually mailed a far larger number of short-paid letters. The record supports that general conclusion, but it is impossible to establish a precise monetary figure. Of more importance in a case such as this are the time and money expended to investigate and litigate, and the damage done to the integrity of the system. These are significant aggravating factors in this case.
9. Respondent's submissions place much emphasis on the personal and financial trauma, including filing for bankruptcy, which she attributes to the breakup of her marriage and the misconduct of her husband. The Postal Service urges that these matters are irrelevant. Though Respondent's personal hardships certainly do not excuse any of the postal violations discussed herein, they will be considered in determining what penalty is appropriate.
10. Finally, the Administrative Law Judge must consider that the purposes of the Act are to recompense the Government for losses resulting from false claims (including the cost of investigating and litigating), and to deter the making of such claims. S. Rep. No. 99-212, 99th Cong., 1st Sess. 2 (1985). A penalty far in excess of the claims may be justified if the government's ancillary costs are great, Sharon Boddie, P.S. Docket No. PF-6 (P.S.D. October 27, 1992), and if strong aggravating factors are present. They are present in this case.
12. After considering all the circumstances of these claims, it is concluded that Respondent is liable for a civil penalty of $29,000, or $200 for each false claim.
13. The Statute, §3802(a)(1), provides that a person making false claims shall be subject to an assessment of not more than twice the amount of the claims. Respondent argues that the Postal Service's loss was less than the alleged $37.81 because some of the recipients paid the additional postage due. This is correct, but the assessment called for by the statute is based on the amount of the claims, not the actual loss. In this case, $75.62 is appropriate.
14. In conclusion, Respondent is liable to the Postal Service under 31 U.S.C. §3802(a)(1) for a civil penalty of $29,000 plus an assessment of $75.62, for a total of $29,075.62.
Judith A. Dowd Acting Chief Administrative Law Judge
2. Only two documents submitted by Respondent bear dates after June 28, 1992. Both are invoices for services or supplies for Jones Informational Publications, showing "Mike Jones" or "Mike" in the customer number block. One invoice is dated June 29, 1992, but it is a bill for services rendered on June 19, 1992 (Respondent's Declaration dated November 30, 1993, Exhibit 4,
(Fn. 2 cont'd. on p. 9)
2 (cont'd.)
p. 6). The other invoice is for supplies shipped on July 6, 1992, with no
indication of the date the merchandise was actually ordered (Respondent's Declaration dated November 30, 1993, Exhibit 9, p.10)
3. 3 Although Respondent contends that she stopped using direct mail solicitations after Michael Jones left the home and that she advertised only in newspapers and co-ops after that time (Am. Ptn. ¶12), Respondent offered no evidence to support this statement.
4. 4 Respondent's only explanation for her unusual stamp purchases is that she purchased stamps of various denominations to use in sending out orders received through her newspaper and co-op advertisements (Am. Ptn. ¶31). This proffered explanation does not address the issue of the large purchases of low denomination stamps and the correlation of her purchases with the stamp denominations found on the short-paid mail, as set out in ¶25, above.
5. 5 With respect to her name, and not that of Michael Jones, being listed on P.S. Forms 1532, Respondent alleges that an arsonist "burned the building down" (presumably the building housing the mail receiving service) and the store owner asked her to sign a new form (Respondent's Declaration dated November 29, 1993, ¶15). Respondent's explanation for having signed the P.S. Forms 1532 is totally unsubstantiated and lacks credibility.
6. 6 Respondent contends (Am. Ptn. ¶22-24) that she did not reply to the false representation complaints because she had ceased engaging in the mail order business by the time she received the complaints. Even assuming, arguendo, that Respondent's explanation is true, it is not a reasonable excuse for her complete failure to answer the serious charges stated in the false representation complaints, if only to state that she was no longer engaged in the mail order business.