A-46902, MAY 2, 1934, 13 COMP. GEN. 309

A-46902: May 2, 1934

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1934: THERE IS BEFORE THIS OFFICE FOR PREAUDIT THE WORLD WAR ADJUSTED COMPENSATION CASE OF THOMAS J. THE PURPOSE OF WHICH AWARD IS TO ALLOW THE TREASURER OF THE UNITED STATES TO PARTIALLY REIMBURSE AN ENDORSING BANK FROM WHICH RECLAMATION HAD BEEN MADE ON A FORGED CHECK IN THE SUM OF $768.50. THE VETERAN APPLIED FOR AND WAS ISSUED AN ADJUSTED-SERVICE CERTIFICATE OF THE FACE VALUE OF $1. FOR WHICH ONE WILLIE MCKINNEY WAS NAMED BENEFICIARY. THE FORGERIES ON THESE LOAN TRANSACTIONS WERE DISCOVERED AND THE AMOUNT THEREOF. WAS CHARGED BY THE THEN VETERANS' BUREAU AGAINST THE VETERAN'S LOAN ACCOUNT. WAS RECLAIMED FROM THE ENDORSERS AND THE AMOUNT THEREOF WAS CREDITED TO THE VETERAN'S LOAN ACCOUNT.

A-46902, MAY 2, 1934, 13 COMP. GEN. 309

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - CHECKS - FORGERIES WHERE A GOVERNMENT CHECK HAS BEEN NEGOTIATED ON A FORGED INDORSEMENT OF THE PAYEE'S NAME AND RECLAMATION OF THE PROCEEDS THEREOF HAS BEEN PROPERLY AND DULY MADE THERE NO LONGER EXISTS A DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE FORGER AND THE UNITED STATES. SECTION 308 (A) OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED BY THE ACT OF JULY 3, 1926, 44 STAT. 827, SPECIFICALLY PROHIBITS THE WITHHOLDING OF ANY BENEFITS FROM A BENEFICIARY UNDER THE ACT FOR THE PURPOSE OF REIMBURSING AN INDORSER SUSTAINING A LOSS ON A CHECK FORGED BY SUCH BENEFICIARY.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, MAY 2, 1934:

THERE IS BEFORE THIS OFFICE FOR PREAUDIT THE WORLD WAR ADJUSTED COMPENSATION CASE OF THOMAS J. JACKSON, A-1,041,560, XC-1,268,004, INVOLVING AN ADMINISTRATIVELY APPROVED AWARD IN FAVOR OF THE TREASURER OF THE UNITED STATES IN THE SUM OF $735.04, THE NET AMOUNT DUE ON THE VETERAN'S ADJUSTED-SERVICE CERTIFICATE, THE PURPOSE OF WHICH AWARD IS TO ALLOW THE TREASURER OF THE UNITED STATES TO PARTIALLY REIMBURSE AN ENDORSING BANK FROM WHICH RECLAMATION HAD BEEN MADE ON A FORGED CHECK IN THE SUM OF $768.50, THE VETERAN HEREIN HAVING FRAUDULENTLY OBTAINED SAID CHECK AND NEGOTIATED SAME AT THE BANK ON A FORGED ENDORSEMENT OF THE PAYEE'S NAME THEREON. IN THE AUDIT OF THE CASE THE QUESTION ARISES WHETHER SUCH REIMBURSEMENT MAY LAWFULLY BE MADE FROM THE PROCEEDS OF THE VETERAN'S CERTIFICATE.

THE VETERAN APPLIED FOR AND WAS ISSUED AN ADJUSTED-SERVICE CERTIFICATE OF THE FACE VALUE OF $1,573, EFFECTIVE JANUARY 1, 1925, FOR WHICH ONE WILLIE MCKINNEY WAS NAMED BENEFICIARY. IT APPEARS THAT SOME YEARS LATER THE VETERAN UNLAWFULLY CAME INTO POSSESSION OF THE ADJUSTED-SERVICE CERTIFICATE OF ONE ROBERT H. FRY, A-1,089,072, AND BY IMPERSONATING SAID FRY HE FRAUDULENTLY OBTAINED THEREON TWO LOANS, TO WIT, $189 ON SEPTEMBER 8, 1928, AND $48.39 ON JANUARY 23, 1929. THEREAFTER, THE FORGERIES ON THESE LOAN TRANSACTIONS WERE DISCOVERED AND THE AMOUNT THEREOF, WITH INTEREST, WAS CHARGED BY THE THEN VETERANS' BUREAU AGAINST THE VETERAN'S LOAN ACCOUNT, THE VETERAN HIMSELF UP TO THIS TIME HAVING OBTAINED LOANS ON HIS OWN CERTIFICATE AS FOLLOWS: $138 ON APRIL 1, 1927; $43.70 ON FEBRUARY 7, 1928; AND $41.44 ON JANUARY 21, 1929. SUBSEQUENTLY, THE AMOUNT OF THE CHECK COVERING THE FIRST LOAN ON FRY'S CERTIFICATE, $189, WAS RECLAIMED FROM THE ENDORSERS AND THE AMOUNT THEREOF WAS CREDITED TO THE VETERAN'S LOAN ACCOUNT. WITH RESPECT TO THE CHECK COVERING THE SECOND LOAN, $48.39, ON FRY'S CERTIFICATE, HOWEVER, IT APPEARS THAT RECLAMATION PROCEEDINGS THEREON WERE ABANDONED, IN VIEW OF WHICH SAID SECOND LOAN WAS LEFT AS A CHARGE AGAINST THE VETERAN'S LOAN ACCOUNT. ON MARCH 4, 1931, THE VETERAN OBTAINED AN ADDITIONAL LOAN ON HIS OWN CERTIFICATE FOR $430.57, THAT SUM BEING THE DIFFERENCE BETWEEN 50 PERCENT OF HIS CERTIFICATE, $786.50, AND $355.93, THE PRINCIPAL AND INTEREST ON ALL PREVIOUS LOANS (INCLUDING THE $48.39 OBTAINED ON FRY'S CERTIFICATE). IN VIEW OF HIS ACCEPTANCE OF THIS ADJUSTMENT NO QUESTION WITH RESPECT THERETO ARISES.

IT APPEARS FROM THE RECORD THAT THE VETERAN WAS TRIED AND CONVICTED FOR THE FRAUDULENT LOANS OBTAINED ON FRY'S ADJUSTED SERVICE CERTIFICATE AND THAT HE WAS SENTENCED THEREFOR TO PAY A FINE OF $500 AND TO SERVE 4 MONTHS IN JAIL, WHICH SENTENCE WAS APPARENTLY EXECUTED. IN ADDITION TO THE FORGERY COMMITTED ON FRY'S CERTIFICATE, IT APPEARS THAT THE VETERAN WAS SIMILARLY INVOLVED LATER IN ANOTHER CASE, HE HAVING FRAUDULENTLY OBTAINED A LOAN CHECK IN THE SUM OF $768.50 DRAWN IN FAVOR OF ARRELIOUS JACKSON, A- 4,422,065, AND HAVING FORGED THE NAME OF THE PAYEE THEREON AND ILLEGALLY NEGOTIATED THE CHECK AT THE BANK OF ARIZONA, PRESCOTT, ARIZ. THIS CHECK WAS TRANSMITTED THROUGH REGULAR BANKING CHANNELS TO THE TREASURY OF THE UNITED STATES WHERE IT WAS PAID ON AUGUST 8, 1932. UPON DISCOVERY OF THE FORGERY, HOWEVER, RECLAMATION WAS DULY MADE ON THE CHECK AND SETTLEMENT MADE WITH THE RIGHTFUL PAYEE OF THE CHECK, THE RECLAMATION HAVING BEEN MADE FROM THE SECOND ENDORSER, THE BANK OF ARIZONA, PRESCOTT, ARIZ.

THE VETERAN DIED ON JULY 30, 1932, AND THERE HAS BEEN PRESENTED TO THIS OFFICE FOR PREAUDIT AN ADMINISTRATIVELY APPROVED AWARD DISPOSING OF THE PROCEEDS OF THE CERTIFICATE, $1,573, AS FOLLOWS: (A) $837.96 TO LIQUIDATE THE VETERAN'S LOAN ACCOUNT (INCLUDING $48.39 OBTAINED ON FRY'S CERTIFICATE WITH INTEREST) PURSUANT TO THE PROVISIONS OF SECTION 502 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED; AND (B) THE BALANCE, $735.04, TO THE TREASURER OF THE UNITED STATES FOR THE PURPOSE OF PARTIALLY REIMBURSING THE BANK OF ARIZONA, FROM WHICH RECLAMATION WAS MADE ON THE FORGED CHECK, SUPRA, IN THE AMOUNT OF $768.50.

THE QUESTION WHICH PRESENTS ITSELF IN THE PREAUDIT OF THIS CASE IS WHETHER THE LAW PERMITS WITHHOLDING FROM THE PROCEEDS OF AN ADJUSTED SERVICE CERTIFICATE ANY AMOUNT THEREOF FOR THE PURPOSE OF REIMBURSING AN ENDORSER OF A FORGED CHECK FROM WHOM RECLAMATION HAS BEEN MADE, WHERE THE ENDORSEMENT OF THE PAYEE'S NAME WAS FORGED BY THE OWNER OF THE CERTIFICATE.

IN THE INSTANT CASE NO LOSS HAS BEEN SUSTAINED BY THE GOVERNMENT ON THE FORGED CHECK FOR $768.50, AND THERE IS NO DEBT OF THE VETERAN TO THE UNITED STATES INVOLVED IN THIS CASE SO FAR AS THIS FORGED CHECK IS CONCERNED. FURTHERMORE, THE GOVERNMENT IN ISSUING THE CHECK FOR $768.50 IN FAVOR OF ARRELIOUS JACKSON DID NOT DEAL DIRECTLY OR INDIRECTLY WITH THE VETERAN INVOLVED IN THIS CASE, NAMELY, THOMAS J. JACKSON.

SECTION 308 (A) OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED BY THE ACT OF JULY 3, 1926, 44 STAT. 827, PROVIDES AS FOLLOWS:

NO SUM PAYABLE UNDER THIS ACT TO A VETERAN OR HIS DEPENDANTS, OR TO HIS ESTATE, OR TO ANY BENEFICIARY NAMED UNDER TITLE V, NO ADJUSTED SERVICE CERTIFICATE, AND NO PROCEEDS OF ANY LOAN MADE ON SUCH CERTIFICATE SHALL BE SUBJECT TO ATTACHMENT, LEVY, OR SEIZURE UNDER ANY LEGAL OR EQUITABLE PROCESS, OR TO NATIONAL OR STATE TAXATION, AND NO DEDUCTIONS ON ACCOUNT OF ANY INDEBTEDNESS OF THE VETERAN TO THE UNITED STATES SHALL BE MADE FROM THE ADJUSTED SERVICE CREDIT OR FROM ANY AMOUNTS DUE UNDER THIS ACT.

TO PERMIT REIMBURSEMENT TO BE MADE TO THE BANK FROM THE PROCEEDS OF THE CERTIFICATE, AS PROPOSED IN THE AWARD SUBMITTED FOR PREAUDIT, WOULD BE IN EFFECT TO PERMIT INDIRECTLY THAT WHICH THE BANK COULD NOT DO DIRECTLY. SUCH ACTION WOULD BE A CLEAR VIOLATION OF THE STATUTE. THERE IS NO AUTHORITY FOR AWARDING ANY PART OF THE PROCEEDS OF THE VETERAN'S CERTIFICATE TO THE TREASURER OF THE UNITED STATES FOR THE PURPOSE OF REIMBURSING THE BANK OF ARIZONA FROM WHICH RECLAMATION OF THE FORGED CHECK WAS MADE.