August 14, 2006
In
the Matter of the Petition by
LEWIS
R. GILLIAM JR
P.S. Docket No. AO 06-63
APPEARANCE FOR PETITIONER:
Albert E. Lum
APPEARANCE FOR RESPONDENT:
C. L. McDonough
Labor Relations Specialist
United States Postal Service
INITIAL DECISION
Petitioner, Lewis Gilliam, a former Postal Service employee, filed a Petition for Hearing after money began being withheld from his retirement annuity.[1] He challenged the Postal Service's assertion that he owed the Postal Service $30,055.85 for losses at the Mechanicsville, Virginia Post Office while he was a supervisor there.
A
hearing was held in
FINDINGS
OF FACT
1. Petitioner retired in February 2006, after a long career with the Postal Service. From 1997 until his retirement, he was a supervisor at the Mechanicsville, Virginia Post Office. For a large part of that time, he was the custodian of the unit reserve stock at Mechanicsville. (Tr. 11, 59; PS Ex. 2).[2]
2. On or about July 12, 2002, in preparation for the Mechanicsville unit reserve being turned over from Petitioner to another supervisor, Petitioner and the other supervisor, Ms. Compton, conducted an audit. They found the unit reserve to be short $102,312.09. (Tr. 10, 23, 25, 61; PS Ex. 5; Pet. Ex. C).
3. Following the audit, Petitioner explained that he believed there was no real shortage because he had recently shipped a large volume of obsolete stamps for destruction, and they had not yet been removed from his unit reserve accountability. (Tr. 26, 63, 69-70; Pet. Ex. C).
4. A unit reserve custodian is responsible for returning obsolete or excess stamp stock, sometimes called “redeemed stock,” to a Stamp Destruction Committee for destruction. The procedure requires that the custodian and a witness count the stock and seal it into boxes that are then shipped by registered mail. PS Form 17 is used to record the quantity and value, by denomination, in each box. Four copies of the Form 17 are sent with each box, and the custodian retains a fifth copy. In accordance with procedures in effect during the time Petitioner was the stock custodian, the amount of stock shipped for destruction was not subtracted from the unit reserve account in the computerized stamp stock management system until the Stamp Destruction Committee verified the amounts and returned a copy of the Form 17 to the custodian.[3] (Tr. 32-33).
5. On or about May 28, 2002, Petitioner and a clerk counted and shipped $88,939.79 to the stamp destruction committee. In October 2002, after Ms. Compton had control of the unit reserve, the stamp destruction committee sent back copies of Form 17s confirming Petitioner’s May 28, 2002 shipment. Ms. Compton then, in stages over a short period of time, removed that amount from the unit reserve accountability. (Tr. 26-28, 37-39, 62; Pet. Exs. C and D).[4]
6. Sometime before July 2002, a window clerk left the Mechanicsville office and the amount of stamp stock assigned to him was added to the unit reserve accountability. In October 2005, Petitioner gave a sealed envelope containing stamp stock to a supervisory clerk and asked that it be counted. This clerk and the supervisor who was then the custodian of the unit reserve counted these stamps and found a total of $2,548.50. (Tr. 43-47; 63-65, 71-72; Pet Ex. B).
7. In February 2003, Ms. Compton, who had taken over the unit reserve from Petitioner in July 2002, began receiving bills from the Postal Service Accounting Center stating that she owed the Postal Service $30,055.85. After various people looked into this, it was decided that Petitioner, rather than Ms. Compton, should be charged with this debt. On December 10, 2003, the postmaster issued Petitioner a Letter of Demand for $30,055.85, based on the audit shortage of $102,312.09 found in July 2002. (Tr. 8-10, 21-23; Pet. Ex. C; PS Exs. 4 and 5).
DECISION
Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss.
Respondent’s theory of liability here is based on the undisputed facts that a shortage of more than $102,000 was found in the Mechanicsville unit reserve on July 12, 2002, and that Petitioner was custodian of the unit reserve at that time. Further, Respondent argues that Petitioner was responsible for keeping accurate records of all transactions involving the unit reserve, and that he did not do so.
The issue in this case is over how much of a loss Respondent has proved. There are some flaws in Respondent’s argument. First, we do have records, and testimony, to show that Petitioner shipped $88,939.79 of stamp stock to the stamp destruction committee shortly before the July 2002 audit, and that the committee confirmed these shipments shortly after the audit (Finding #5). Respondent has offered no explanation as to why this amount should not be subtracted from the $102,312.09 shortage.
The Letter of Demand issued to Petitioner in December 2003, states that “after a thorough investigation,” a shortage of $30,055.85 was “clearly identified.” We have no evidence, however, as to what constituted the “thorough investigation,” and no evidence as to how the $30,055.85 was calculated. The postmaster testified, but it appears that his only direct involvement was to turn the matter over to “Finance,” and issue the Letter of Demand when someone told him to. The only “Finance” person who testified appeared to be very knowledgeable about procedures and record-keeping, but she was not involved in examining the documents pertinent to this case.
Based on this record, the $102,312.09 shortage must be reduced by $88,939.79, leaving a balance of $13,372.30.
Petitioner argues that an additional $2,548.50 should be subtracted, based on the stamps found and counted in October 2005 (Finding #6). Petitioner testified that these stamps belonged to a former clerk, whose account was closed during the time Petitioner was custodian of the unit reserve and whose stamps were then added to the unit reserve accountability but not counted during the July 12, 2002 audit.
It is unclear why the value of these stamps was added to the unit reserve simply by transferring an amount shown in the POS computer system, as Petitioner described (Tr. 71-72), but the stamps themselves just remained in a bag uncounted. Petitioner’s testimony was not contradicted by any other evidence, however, and there is no doubt that the stamps do exist. Therefore, Petitioner will be given credit for them.
Respondent’s evidence is sufficient to establish a loss of $10,823.80 ($102,312.09 - $88,939.79 - $2,548.50) from Petitioner’s account. The Petition is granted in part and denied in part. Respondent may collect $10,823.80 from Petitioner. He must be credited with any amount already withheld on account of the alleged debt.
Bruce R.
Chief Administrative Law Judge
[1] This case was originally docketed as P. S. Docket No.
DCA 06-28. Once it was determined that
Petitioner had already retired, that case was dismissed and the case was
re-docketed as an Administrative Offset case, to be processed under the rules
applicable to former employees.
[2] References to the hearing transcript are "Tr._." References to documents attached to Respondent's Answer, and to a supplement to the Answer, are "PS Ex._." References to documents submitted by Petitioner are “Pet. Ex._.”
[3] The current procedure, since September 2002, is that
the custodian subtracts the amount shipped from the unit reserve at the time of
shipment. Any corrections are made
later. (Tr. 33).
[4] A statement written by Ms. Compton in September 2003
(Pet. Ex. C) uses the figure $88,920.46.
The Form 17s submitted by Petitioner (Pet. Ex. D) add to
$88,939.79. As the record contains no
explanation for the difference, we give Petitioner the benefit of the doubt and
use the higher figure.