A-60705, SEPTEMBER 21, 1936, 16 COMP. GEN. 275

A-60705: Sep 21, 1936

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ARE NOT FOR APPLICATION IN CASES OF FRAUD. WHERE THE AMOUNT OF A CHECK FRAUDULENTLY NEGOTIATED BY A VETERAN WAS RECLAIMED FROM THE INDORSING BANKS. AS FOLLOWS: REFERENCE IS MADE TO THE FRAUDULENT LOAN OF $325.50 OBTAINED BY LILBURN C. RECORDS SHOW THE AMOUNT OF THIS FRAUDULENT LOAN WAS RECOVERED FROM THE ENDORSER OF THE CHECK COVERING THE LOAN. DISABILITY ALLOWANCE PAYMENTS OF $6.00 PER MONTH WERE WITHHELD FROM THE VETERAN WHO OBTAINED THE FRAUDULENT LOAN FOR A PERIOD OF SEVENTEEN MONTHS. THE VETERAN'S DISABILITY ALLOWANCE WAS DISCONTINUED FEBRUARY 28. IN WHICH AMOUNT PARTIAL SETTLEMENT WAS MADE WITH THE ENDORSER OF THE CHECK COVERING THE FRAUDULENT LOAN. THIS REQUEST OF THE ASSISTANT TREASURER OF THE UNITED STATES TO WITHHOLD THE AMOUNT OF $157.50 WAS SUSTAINED BY YOUR DECISION DATED JUNE 3.

A-60705, SEPTEMBER 21, 1936, 16 COMP. GEN. 275

SET-OFF - VETERANS' BENEFITS - FRAUDULENT TRANSACTIONS THE SAVING CLAUSES APPEARING IN VETERANS' LEGISLATION WITH REGARD TO ASSIGNMENTS OF BENEFITS THEREUNDER, EXEMPTIONS FROM CLAIMS OF CREDITORS, ETC., ARE NOT FOR APPLICATION IN CASES OF FRAUD, AND WHERE THE AMOUNT OF A CHECK FRAUDULENTLY NEGOTIATED BY A VETERAN WAS RECLAIMED FROM THE INDORSING BANKS, MONEYS DUE THE VETERAN UNDER THE ADJUSTED COMPENSATION ACT OF 1936, 49 STAT. 1099, MAY BE WITHHELD FOR PURPOSES OF REIMBURSING THE INDORSERS, PARTICULARLY WHERE THE VETERAN HAS AUTHORIZED SUCH WITHHOLDING AND REIMBURSEMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, SEPTEMBER 21, 936:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 6, 1936, AS FOLLOWS:

REFERENCE IS MADE TO THE FRAUDULENT LOAN OF $325.50 OBTAINED BY LILBURN C. SMITH, A-2664974, ON MARCH 25, 1931, PAID BY CHECK NO. 793449, DISBURSING OFFICER J. B. SCHOMMER, SYMBOL NO. 99220, ON THE SECURITY OF THE ADJUSTED SERVICE CERTIFICATE ISSUED TO WILLIAM M. SMITH, A-2918970.

RECORDS SHOW THE AMOUNT OF THIS FRAUDULENT LOAN WAS RECOVERED FROM THE ENDORSER OF THE CHECK COVERING THE LOAN. DISABILITY ALLOWANCE PAYMENTS OF $6.00 PER MONTH WERE WITHHELD FROM THE VETERAN WHO OBTAINED THE FRAUDULENT LOAN FOR A PERIOD OF SEVENTEEN MONTHS, AT THE END OF WHICH PERIOD A TOTAL OF $102.00 HAD BEEN WITHHELD. THE VETERAN'S DISABILITY ALLOWANCE WAS DISCONTINUED FEBRUARY 28, 1933; HOWEVER, HE MADE ADDITIONAL REFUND IN THE AMOUNT OF $66.00, MAKING A TOTAL OF $168.00 RECOVERED FROM THE VETERAN, IN WHICH AMOUNT PARTIAL SETTLEMENT WAS MADE WITH THE ENDORSER OF THE CHECK COVERING THE FRAUDULENT LOAN.

THE ASSISTANT TREASURER OF THE UNITED STATES, ON DECEMBER 6, 1934, REQUESTED THAT THE BALANCE NOT RECOVERED FROM THE VETERAN, $157.50, BE WITHHELD FROM HIS ACCOUNT AND FORWARDED TO THE TREASURER OF THE UNITED STATES FOR PROPER DISPOSITION. HE FORWARDED A WAIVER EXECUTED BY THE VETERAN AUTHORIZING THIS ADMINISTRATION TO WITHHOLD THE AMOUNT OF THE FRAUDULENT LOAN FROM ANY MONEYS STANDING TO HIS ACCOUNT IN THE VETERANS' ADMINISTRATION OR WHICH MIGHT HEREAFTER BECOME DUE HIM, FOR THE PURPOSE OF REIMBURSING THE ENDORSER WHO SUSTAINED THE LOSS BY REASON OF RECLAMATION PROCEEDINGS, AND FURTHER AUTHORIZING THE TREASURER OF THE UNITED STATES TO MAKE SETTLEMENT WITH THE ENDORSER WHO SUSTAINED THE LOSS. THIS REQUEST OF THE ASSISTANT TREASURER OF THE UNITED STATES TO WITHHOLD THE AMOUNT OF $157.50 WAS SUSTAINED BY YOUR DECISION DATED JUNE 3, 1935, A-60705, WHEREIN YOU STATE: "THE RELEASE WHICH WAS OBTAINED FROM THE FORGER * * * MAY BE ACCEPTED TO AUTHORIZE CHECK TO BE DRAWN IN FAVOR OF THE VETERAN (THE FORGER) FOR SO MUCH OF THE AMOUNT DUE HIM FROM THE UNITED STATES AS EQUALS THE UNSETTLED AMOUNT OF THE CHECK FORGED BY HIM AND THE CHECK SO DRAWN IN FAVOR OF THE VETERAN (THE FORGER) MAY BE SENT TO THE ENDORSER FROM WHOM RECLAMATION WAS MADE, AND UPON PROPER ENDORSEMENT BY THE PAYEE AND SAID ENDORSER, PAYMENT MAY BE MADE IN THE USUAL MANNER, IF OTHERWISE CORRECT.' HOWEVER, THE VETERAN HAD ALREADY OBTAINED LOANS TOTALLING THE FULL 50 PERCENT LOAN VALUE OF HIS CERTIFICATE. THERE WERE, THEREFORE, NO BENEFITS PAYABLE TO HIM FROM WHICH THIS AMOUNT OF $157.50 COULD BE WITHHELD.

THE VETERAN HAS APPLIED FOR SETTLEMENT OF HIS CERTIFICATE UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, SECTION 7 OF WHICH PROVIDES THAT "NO DEDUCTION ON ACCOUNT OF ANY INDEBTEDNESS OF THE VETERAN TO THE UNITED STATES, EXCEPT ON ACCOUNT OF ANY LIEN AGAINST THE ADJUSTED SERVICE CERTIFICATE AUTHORIZED BY LAW, SHALL BE MADE FROM THE ADJUSTED SERVICE CREDIT OR FROM ANY AMOUNTS DUE UNDER THE WORLD WAR ADJUSTED COMPENSATION ACT AS AMENDED, OR THIS ACT.' IN VIEW OF THIS PROVISION OF THE ACT, IT IS REQUESTED THAT THIS ADMINISTRATION BE ADVISED AS TO WHETHER OR NOT A VOUCHER IN THE AMOUNT OF $157.50 MAY BE CERTIFIED PAYABLE TO THE TREASURER OF THE UNITED STATES AND FORWARDED TO THE DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT, FOR REIMBURSEMENT TO THE ENDORSER OF THE CHECK COVERING THE FRAUDULENT LOAN AT THE TIME SETTLEMENT IS MADE TO THE VETERAN UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936. THE RECORD ESTABLISHES THAT THE AMOUNT OF THE CHECK FRAUDULENTLY NEGOTIATED BY THE VETERAN WAS RECLAIMED FROM THE ENDORSING BANKS THROUGH THE USUAL RECLAMATION PROCEEDINGS INSTITUTED IN SUCH CASES AND THAT SETTLEMENT WAS MADE WITH THE RIGHTFUL PAYEE BY THE TREASURER OF THE UNITED STATES IN THE AMOUNT RECLAIMED. HENCE, THERE IS NO ,INDEBTEDNESS OF THE VETERAN TO THE UNITED STATES" IN RESPECT OF THE INVOLVED CHECK, IN VIEW OF WHICH SECTION 7 OF THE ADJUSTED COMPENSATION PAYMENT ACT OF 1936, QUOTED IN YOUR SUBMISSION, IS NOT FOR INVOKING HERE. THE ONLY APPLICABLE PROVISION OF LAW FOR CONSIDERATION HERE, THEREFORE, IS THAT CONTAINED IN SECTION 3 OF THE ACT OF AUGUST 12, 1935, 49 STAT. 609, READING, IN PERTINENT PART, AS FOLLOWS:

PAYMENTS OF BENEFITS DUE OR TO BECOME DUE SHALL NOT BE ASSIGNABLE, AND SUCH PAYMENTS MADE TO, OR ON ACCOUNT OF, A BENEFICIARY UNDER ANY OF THE LAWS RELATING TO VETERANS SHALL BE EXEMPT FROM TAXATION, SHALL BE EXEMPT FROM THE CLAIMS OF CREDITORS, AND SHALL NOT BE LIABLE TO ATTACHMENT, LEVY, OR SEIZURE BY OR UNDER ANY LEGAL OR EQUITABLE PROCESS WHATEVER, EITHER BEFORE OR AFTER RECEIPT BY THE BENEFICIARY. * * *

WHILE THE FOREGOING PROVISIONS, INCLUDING THOSE CONTAINED IN SECTION 7 OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, WERE ENACTED FOR THE BENEFIT OF VETERANS AND THEIR BENEFICIARIES GENERALLY, SUCH STATUTORY PROVISIONS DO NOT EXPRESSLY OR IMPLIEDLY PRECLUDE A VETERAN FROM AUTHORIZING THE GOVERNMENT TO WITHHOLD A PARTICULAR AMOUNT FROM BENEFITS OTHERWISE DUE HIM FOR THE PURPOSE OF REIMBURSING AN ENDORSER WHO SUSTAINED A LOSS THROUGH HIS FRAUDULENT NEGOTIATION OF A GOVERNMENT CHECK--- THE EFFECT OF THE STATUTE, IN RESPECT OF ASSIGNMENTS, APPEARING MERELY AS RENDERING UNENFORCEABLE ANY CLAIM BY A PERSON TO WHOM A VETERAN MAY HAVE ATTEMPTED TO ASSIGN MONETARY BENEFITS DUE AND PAYABLE UNDER VETERANS LEGISLATION. THE CONTROLLING FACT MUST BE THE FRAUD OF THE VETERAN AND THE STATUTORY INHIBITION IS NOT TO BE INTERPRETED AS CONDONING FRAUD.

IN THE FACTS AND CIRCUMSTANCES APPEARING, THEREFORE, PARTICULARLY IN THAT THE VETERAN IN THE INSTANT CASE HAS AUTHORIZED YOUR ADMINISTRATION TO WITHHOLD THE AMOUNT OF THE FRAUDULENT LOAN FROM ANY MONEY STANDING TO HIS ACCOUNT IN THE VETERANS' ADMINISTRATION FOR THE PURPOSES OF REIMBURSING THE ENDORSER WHO SUSTAINED THE LOSS BY REASON OF RECLAMATION PROCEEDINGS AND FURTHER AUTHORIZED THE TREASURER OF THE UNITED STATES TO MAKE SETTLEMENT WITH SAID ENDORSER, IT WOULD APPEAR PROPER FOR YOUR ADMINISTRATION AT THE TIME SETTLEMENT IS MADE WITH THE VETERAN UNDER THE ADJUSTED COMPENSATION PAYMENT ACT 1936 TO CERTIFY A VOUCHER IN THE AMOUNT OF $157.50 PAYABLE TO THE TREASURER OF THE UNITED STATES AS REIMBURSEMENT TO THE ENDORSER OF THE INVOLVED CHECK, CITING THIS DECISION AS AUTHORITY FOR SUCH ACTION.