A-80770, OCTOBER 27, 1936, 16 COMP. GEN. 444

A-80770: Oct 27, 1936

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AS FOLLOWS: REFERENCE IS MADE TO A FRAUDULENT LOAN OF $774.00 OBTAINED BY PIERCE J. 142 WAS STOLEN FROM MR. CROUSER AND THAT THE LOAN WAS MADE BY THE OFFICE OF THE VETERANS' ADMINISTRATION AT OKLAHOMA CITY. THE AMOUNT OF THIS FRAUDULENT LOAN WAS RECOVERED BY RECLAMATION THROUGH THE TREASURY DEPARTMENT FROM THE ENDORSERS OF THE CHECK COVERING THE LOAN. CROUSER WAS IDENTIFIED AS THE PERSON WHO HAD FRAUDULENTLY NEGOTIATED THE ADJUSTED-SERVICE CERTIFICATE BELONGING TO CHARLIE P. THERE WERE NO FUNDS AVAILABLE FROM THAT SOURCE. THE VETERAN WAS NOT RECEIVING DISABILITY COMPENSATION AT THAT TIME. NOR HAS HE SINCE RECEIVED AN AWARD FROM WHICH A DEDUCTION MIGHT HAVE BEEN MADE TO REIMBURSE THE ENDORSERS OF THE FRAUDULENT CHECK.

A-80770, OCTOBER 27, 1936, 16 COMP. GEN. 444

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - FRAUDULENT LOANS - REIMBURSEMENT OF ENDORSERS SUSTAINING LOSS THE AMOUNT OF A FRAUDULENT LOAN OBTAINED BY A VETERAN ON THE ADJUSTED- SERVICE CERTIFICATE OF ANOTHER MAY NOT, WITHOUT AUTHORIZATION OF THE VETERAN, BE WITHHELD FROM BENEFITS DUE HIM ON HIS OWN CERTIFICATE UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT. 1099, FOR REIMBURSEMENT OF THE ENDORSERS, WHO, THROUGH RECLAMATION PROCEEDINGS, SUFFERED THE LOSS ON THE CHECK COVERING THE FRAUDULENT LOAN.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, OCTOBER 27, 1936:

THERE HAS BEEN CONSIDERED THE QUESTION PRESENTED IN YOUR LETTER OF SEPTEMBER 24, 1936, AS FOLLOWS:

REFERENCE IS MADE TO A FRAUDULENT LOAN OF $774.00 OBTAINED BY PIERCE J. CROUSER, A-4,076,349, ON JUNE 2, 1931, PAID BY CHECK NO. 93344 BY FORMER DISBURSING OFFICER, M. L. MORRIS, SYMBOL 99139, ON THE SECURITY OF THE ADJUSTED-SERVICE CERTIFICATE ISSUED TO CHARLIE P. GLENN, A-4,281,201.

THE INVESTIGATION CONDUCTED BY THE SECRET SERVICE DIVISION OF THE TREASURY DEPARTMENT REVEALS THAT ADJUSTED-SERVICE CERTIFICATE NO. 3,529,142 WAS STOLEN FROM MR. CHARLIE P. GLENN BY PIERCE J. CROUSER AND THAT THE LOAN WAS MADE BY THE OFFICE OF THE VETERANS' ADMINISTRATION AT OKLAHOMA CITY, OKLAHOMA, UPON PRESENTATION OF ADJUSTED-SERVICE CERTIFICATE NO. 3,529,142, TOGETHER WITH A NOTE EXECUTED OVER THE NAME OF CHARLIE P. GLENN FORGED BY PIERCE J. CROUSER. THE AMOUNT OF THIS FRAUDULENT LOAN WAS RECOVERED BY RECLAMATION THROUGH THE TREASURY DEPARTMENT FROM THE ENDORSERS OF THE CHECK COVERING THE LOAN.

AT THE TIME MR. CROUSER WAS IDENTIFIED AS THE PERSON WHO HAD FRAUDULENTLY NEGOTIATED THE ADJUSTED-SERVICE CERTIFICATE BELONGING TO CHARLIE P. GLENN, HE HAD ALREADY BORROWED THE FULL 50 PERCENT LOAN VALUE ON HIS OWN ADJUSTED -SERVICE CERTIFICATE. THERE WERE NO FUNDS AVAILABLE FROM THAT SOURCE, THEREFORE, FROM WHICH TO REIMBURSE THE ENDORSERS OF THE FRAUDULENT CHECK. THE VETERAN WAS NOT RECEIVING DISABILITY COMPENSATION AT THAT TIME, NOR HAS HE SINCE RECEIVED AN AWARD FROM WHICH A DEDUCTION MIGHT HAVE BEEN MADE TO REIMBURSE THE ENDORSERS OF THE FRAUDULENT CHECK.

THE VETERAN HAS APPLIED FOR SETTLEMENT OF HIS ADJUSTED-SERVICE 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 THE VETERANS'ADMINISTRATION BE ADVISED WHETHER OR NOT A VOUCHER IN THE AMOUNT YET DUE ON THE VETERAN'S ADJUSTED-SERVICE CERTIFICATE, WHICH IS SOMEWHAT LESS THAN THE AMOUNT OF THE FRAUDULENT LOAN HE RECEIVED, MAY BE CERTIFIED PAYABLE TO THE TREASURER OF THE UNITED STATES AND FORWARDED TO THE DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT, FOR REIMBURSEMENT OF THE ENDORSERS OF THE CHECK COVERING THE FRAUDULENT LOAN AT THE TIME SETTLEMENT IS MADE TO THE VETERAN UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936.

THE PORTION OF SECTION 7 OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT. 1101, QUOTED IN YOUR LETTER, SUPRA, WOULD APPEAR TO HAVE NO APPLICATION TO THE FACTS HERE INVOLVED AS THE AMOUNT OF CHECK NO. 93344, WHICH WAS RECLAIMED THROUGH THE USUAL RECLAMATION PROCEEDINGS AND PAID TO THE RIGHTFUL PAYEE RENDERED THE UNITED STATES WHOLE IN THE MATTER--- THE "INDEBTEDNESS OF THE VETERAN" IN SUCH CIRCUMSTANCES NOT BEING "TO THE UNITED STATES" WITHIN THE MEANING OF THE STATUTE, BUT RATHER TO THE ENDORSER WHO SUSTAINED THE LOSS ON THE CHECK THROUGH RECLAMATION PROCEEDINGS. THE STATUTE PROPERLY FOR CONSIDERATION HERE IS SECTION 3 OF THE ACT OF AUGUST 12, 1935, 49 STAT. 609, PROVIDING, 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. * * *

YOUR SUBMISSION FAILS TO STATE WHETHER THE VETERAN HAS AUTHORIZED YOUR ADMINISTRATION TO WITHHOLD A PARTICULAR AMOUNT FROM BENEFITS OTHERWISE DUE HIM FOR THE PURPOSE OF REIMBURSING THE ENDORSER WHO SUSTAINED THE LOSS ON THE INVOLVED CHECK. IF THE VETERAN HAS GRANTED SUCH AUTHORITY, THEN 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 YET DUE ON HIS CERTIFICATE PAYABLE TO THE TREASURER OF THE UNITED STATES AS REIMBURSEMENT TO THE ENDORSER OF THE INVOLVED CHECK WHO SUFFERED THE LOSS THEREON--- YOUR PARTICULAR ATTENTION IN THIS CONNECTION BEING INVITED TO THAT PART OF MY DECISION OF SEPTEMBER 21, 1936, A-60705, 16 COMP. GEN. 275, TO YOU, READING AS FOLLOWS:

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 INDORSER 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.

(SEE, ALSO, DECISION TO YOU, A-16103, DATED SEPT. 22, 1936, 16 COMP. GEN. 287.)

IF THE VETERAN HAS NOT AUTHORIZED THE WITHHOLDING OF BENEFITS OTHERWISE DUE HIM FOR THE PURPOSE OF REIMBURSING THE ENDORSER FOR THE LOSS SUSTAINED UPON THE CHECK FRAUDULENTLY OBTAINED AND NEGOTIATED BY HIM, THEN THE PROVISIONS OF THE 1935 STATUTE ABOVE QUOTED WOULD PRECLUDE ANY SUCH ACTION. (SEE 14 COMP. GEN. 50.)