B-138872 OM, JUNE 2, 1959

B-138872 OM, JUNE 2, 1959

PRECIS-UNAVAILABLE

THE COMPTROLLER GENERAL:

A REQUEST FOR RELIEF OF ACCOUNTABILITY AND RESPONSIBILITY FOR FRAUDULENT PAYMENTS IN THE ACCOUNT OF LIEUTENANT COMMANDER A. N. BEAUSOLEIL, NAVY ACCOUNTS DISBURSING OFFICER, GREAT LAKES, ILLINOIS, SYMBOL 5152, HAS BEEN RECEIVED FROM THE ASSISTANT SECRETARY OF THE NAVY, BY LETTER DATED JANUARY 20, 1959. IT WAS DETERMINED THAT THE PAYMENTS OCCURRED WHILE MR. GEORGE W. PARKER, AGENT CASHIER FOR LIEUTENANT COMMANDER BEAUSOLEIL WAS DISCHARGING OFFICIAL DUTIES AND WITHOUT FAULT OR NEGLIGENCE ON HIS PART. APPARENTLY THE ASSISTANT SECRETARY VIEWS THE LOSS AS PHYSICAL SINCE RELIEF IS REQUESTED UNDER 31 U.S.C. 82A-1 AND 3 GAO 4570.10.

RELIEF IS REQUESTED FOR AN AMOUNT OF $178.22, THE UNLIQUIDATED BALANCE OF A TOTAL LOSS OF $623.00 RESULTING FROM TWO PAY RECEIPTS FORGED BY ENLISTED MEMBERS JAMES L. YEIK, 3740976, AN, USN, AND RALPH E. GRAY, 5179556, SA, USN, IN THE NAMES OF AND FOR AMOUNTS DUE LLOYD H. OSBORNE, 4058050, MMC, USN, AND KENNETH W. GLASS, 2915294, BTC, USN. THE OSBORNE PAYMENT WAS DELETED FROM THE PAYROLL MONEY LIST AND THE FRAUDULENT PAY RECEIPT WAS NOT RECEIVED WITH THE ACCOUNT.

NOTICE OF EXCEPTION WAS ISSUED BY THIS OFFICE MAY 26, 1958, FOR THE TOTAL AMOUNT OF THE LOSS AS REFLECTED IN LIEUTENANT COMMANDER BEAUSOLEIL'S STATEMENT OF ACCOUNTABILITY FOR MARCH 1 - 31, 1958, ON THE BASIS OF THE NAVY COMPTROLLER'S REPORT OF THE MATTER MARCH 18, 1958.

CORRESPONDENCE ENCLOSED WITH THE ASSISTANT SECRETARY'S REQUEST FOR RELIEF INCLUDES THE FOLLOWING INFORMATION:

1. LIEUTENANT COMMANDER BEAUSOLEIL INSTRUCTED MR. PARKER

BY LETTER DATED APRIL 27, 1957 TO DISBURSE FUNDS TO

PROPERLY IDENTIFIED PERSONNEL ON PRESENTATION OF

VOUCHER AND PAY RECEIPTS.

2. THE NAVY COMPTROLLER POINTED OUT IN LETTER OF OCTOBER

27, 1958 TO THE OFFICER IN CHARGE, NADO, GREAT LAKES, THAT

BOTH YEIK AND GRAY DENIED IN COURT-MARTIAL PROCEEDINGS

THAT THEY WERE REQUIRED TO FURNISH IDENTIFICATION IN

RECEIVING THE ILLEGAL PAYMENTS.

3. LIEUTENANT COMMANDER BEAUSOLEIL'S REPLY OF NOVEMBER 12,

1958, INCLUDED A STATEMENT BY MR. PARKER THAT TO THE

BEST OF HIS KNOWLEDGE AND BELIEF HE FOLLOWED HIS

INSTRUCTIONS OF APRIL 24, 1957 IN MAKING THE PAYMENTS.

APPARENTLY, THE QUESTION OF WHETHER THE AGENT CASHIER REQUIRED THE TWO ENLISTED MEMBERS TO FURNISH POSITIVE IDENTIFICATION FOR THE PAYMENTS CANNOT BE RESOLVED. HOWEVER, IT APPEARS THERE WAS A LACK OF CONTROLS AT THE ACTIVITY IN MAKING PAYROLL PAYMENTS. THIS IS EVIDENCED BY THE PROCEDURE USED AS RELATED IN MR. PARKER'S LETTER OF OCTOBER 15, 1958 TO THE SECRETARY OF THE NAVY. IT WAS STATED THAT PERSONNEL NOT PAID IN THE REGULAR SCHEDULED PAY LINE REPORTED TO THE COUNTER BRANCH, PAY RECORD DIVISION; THAT AN AUTHORIZED PERSON IN THIS DIVISION INITIALED PAY RECEIPTS IN RED PENCIL SIGNIFYING THAT THE PAYMENTS WERE IN ORDER AND; THAT MEMBERS THEN CARRIED THE PAY RECEIPTS DOWN TO THE FISCAL PAYMENTS AND REPORTS BRANCH FOR PAYMENT. THUS IT APPEARS THAT IN THE ABOVE METHOD OF PAYMENTS THE PAY RECEIPTS WERE NOT COMPARED WITH THE AMOUNTS DUE THE MEMBERS, AS SHOWN ON THE MONEY LIST, BY THE PERSON ACTUALLY MAKING THE PAYMENTS. RATHER, PAYMENTS WERE MADE ON THE BASIS OF THE PENCILED INITIALS. PARAGRAPH 044630-2, NAVY COMPTROLLER MANUAL, STATES THAT AUTHORIZED CASH PAYMENTS WILL BE MADE TO A MEMBER WHEN HE PRESENTS A PROPERLY PREPARED NAV-COMPT. FORM 57 (PAY RECEIPT) WHICH IN TURN WILL BE COMPARED WITH THE AMOUNT DUE SHOWN ON THE NAV-COMPT. FORM 503A (MONEY LIST).

FURTHERMORE, ON A PREVIOUS OCCASION, YEIK TOOK ADVANTAGE OF THE ABOVE SITUATION TO OBTAIN AN AMOUNT IN EXCESS OF PAY DUE, AND WHILE THE DISBURSING OFFICER DETECTED THE OVERPAYMENT, IT APPEARS THAT YEIK WAS NOT CHARGED WITH THE DECEIT. TO ILLUSTRATE, YEIK WAS PAID $148.00 ON PAYROLL N2544, PAID FEBRUARY 20, 1958. THIS WAS HIS ONLY PAYMENT IN EXCESS OF $100.00 SINCE ATTACHMENT TO GREAT LAKES, AND, THEREFORE, MUST BE THE PAYMENT WITH WHICH THE NAVY COMPTROLLER WAS CONCERNED IN LETTER OF OCTOBER 27, 1958 TO THE OFFICER IN CHARGE. THE SUPPORTING PAY RECEIPT APPEARS NOT TO HAVE BEEN ALTERED AS INDICATED IN THE CORRESPONDENCE. TO THE CONTRARY, THE NOTATION "PAY NONE AOL" WAS CROSSED OUT IN INK ON THE MONEY LIST BY THE DISBURSING OFFICER, AND THE AMOUNT OF $148.00 WAS ENTERED UNDER AMOUNT DUE TO AGREE WITH THE PAY RECEIPT AMOUNT. ALSO, MONEY LIST TO PAYROLL NO. 2671 IS NOTED "OVPD 52. DREW 148 LAST PAYDAY S/B 48". IT MUST BE CONCLUDED THAT YEIK WAS AWARE OF THE NEGLIGENCE OR LACK OF DUE CARE IN THE METHOD OF MAKING PAYMENTS WHICH MADE THE FRAUD POSSIBLE.

IT IS ALSO NOTED THAT WHILE THE FRAUD WAS PERPETRATED BY MEMBERS WITH LOW RATINGS, THE PAY RECEIPTS WERE ACCOMPLISHED IN THE NAMES OF TWO MEMBERS WITH RATINGS OF "CHIEF". CERTAINLY IT SEEMS THAT THE TYPE OF UNIFORM WORN, LACK OF INSIGNIA, AND AGES OF THE MEMBERS, SHOULD HAVE BEEN NOTICED BY THE AGENT CASHIER IN SATISFYING HIMSELF OF THE PROPRIETY OF THE PAYMENTS.

SECTION 31 U.S.C. 82A-1 APPLIES ONLY TO THE ACTUAL PHYSICAL LOSS OR DEFICIENCY OF GOVERNMENT FUNDS AND DOES NOT INCLUDE DEFICIENCIES RESULTING FROM ILLEGAL OR ERRONEOUS PAYMENTS.

RELIEF MAY BE GRANTED A DISBURSING OFFICER FOR ANY DEFICIENCY RESULTING FROM ILLEGAL, IMPROPER, OR INCORRECT PAYMENTS MADE NOT AS A RESULT OF BAD FAITH OR LACK OF DUE CARE. 31 U.S.C. 82A-2.

PARAGRAPH 041370-7, NAVY COMPTROLLER MANUAL, SPECIFICALLY STATES THAT DISBURSING OFFICERS ARE LIABLE FOR ILLEGAL PAYMENTS MADE BY THEIR ASSISTANTS OR DEPUTIES.

SINCE THE ASSISTANT SECRETARY OF THE NAVY HAS MADE THE DETERMINATION TO RELIEVE UNDER 31 U.S.C. 82A-1, AND HAS REQUESTED RELIEF FOR THE AGENT CASHIER RATHER THAN THE DISBURSING OFFICER, AND SINCE DOUBT EXISTS AS TO WHETHER THE FACTS ESTABLISH A PHYSICAL LOSS, OR AN ILLEGAL, IMPROPER, OR INCORRECT PAYMENT, FOR WHICH RELIEF WOULD NOT BE GRANTED IF CONSIDERED UNDER 31 U.S.C. 82A-2, THE MATTER IS SUBMITTED FOR CONSIDERATION.

INDORSEMENT DIRECTOR, DEFENSE ACCOUNTING AND AUDITING DIVISION

RETURNED. THE DEFICIENCY IN THE ACCOUNTS HERE INVOLVED CLEARLY RESULTED FROM ILLEGAL, IMPROPER, OR INCORRECT PAYMENTS AND CANNOT BE CONSIDERED AS AN ACTUAL PHYSICAL LOSS OF GOVERNMENT FUNDS. SEE 2 COMP.GEN. 277; B- 76903, JULY 13, 1948; B-75978, JUNE 1, 1948. CF. B 133862-O.M., NOVEMBER 29, 1957. HENCE RELIEF MAY NOT BE GRANTED AS REQUESTED UNDER 31 U.S.C. 82A-1, BUT IS FOR CONSIDERATION UNDER 31 U.S.C. 82A-2. HOWEVER, THERE IS NOTHING IN THE RECORD BEFORE US TO SUPPORT A FINDING THAT THE PAYMENTS WERE NOT THE RESULT OF BAD FAITH OR OR LACK OF DUE CARE AS REQUIRED BY 31 U.S.C. 82A-2 AS A PREREQUISITE FOR GRANTING RELIEF. THE RECORD INDICATES A LAXITY IN DISBURSING PROCEDURES WHICH WOULD TEND RATHER TO SUPPORT A FINDING THAT THE PAYMENTS WERE DUE TO LACK OF DUE CARE. THUS, ON THE BASIS OF THE PRESENT RECORD, RELIEF MUST BE DENIED. MOREOVER, IN VIEW OF THE SPECIFIC PROVISIONS OF PARAGRAPH 041370-7, NAVY COMPTROLLER MANUAL, THE DISBURSING OFFICER, AS WELL AS THE AGENT CASHIER WHO ACTUALLY MADE THE PAYMENTS, MUST BE HELD LIABLE.