A-84227, MARCH 12, 1937, 16 COMP. GEN. 844

A-84227: Mar 12, 1937

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VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - LOANS BASED ON VETERANS' FALSE CLAIMS - INTEREST CHARGES AND FORFEITURE OF BALANCE DUE WHERE THERE WAS ISSUED TO A VETERAN A CORRECTED ADJUSTED SERVICE CERTIFICATE WITHOUT REQUIREMENT OF INDEMNITY BOND. LOANS ARE OBTAINED BY THE VETERAN ON BOTH CERTIFICATES. THERE IS A FAILURE OF COLLATERAL FOR THE LOAN GRANTED ON THE SECURITY OF THE ORIGINAL AWARD AND INTEREST SHOULD BE CHARGED ON SAID LOAN UNTIL THE LOSS SUSTAINED BY THE GOVERNMENT HAS BEEN REPAID. WHERE THERE WAS ISSUED TO A VETERAN A DUPLICATE ADJUSTED SERVICE CERTIFICATE UPON HIS ALLEGATION OF NONRECEIPT OF THE ORIGINAL. LOANS ARE OBTAINED BY THE VETERAN ON BOTH CERTIFICATES. THERE IS A FAILURE OF COLLATERAL FOR THE LOAN GRANTED ON THE SECURITY OF THE ORIGINAL CERTIFICATE AND INTEREST SHOULD BE CHARGED ON SAID LOAN UNTIL SETTLEMENT IS MADE UNDER THE VETERAN'S APPLICATION FOR THE BALANCE DUE.

A-84227, MARCH 12, 1937, 16 COMP. GEN. 844

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - LOANS BASED ON VETERANS' FALSE CLAIMS - INTEREST CHARGES AND FORFEITURE OF BALANCE DUE WHERE THERE WAS ISSUED TO A VETERAN A CORRECTED ADJUSTED SERVICE CERTIFICATE WITHOUT REQUIREMENT OF INDEMNITY BOND, UPON HIS ALLEGATION OF NONRECEIPT OF THE CERTIFICATE REPRESENTING THE ORIGINAL AWARD, AND LOANS ARE OBTAINED BY THE VETERAN ON BOTH CERTIFICATES, THERE IS A FAILURE OF COLLATERAL FOR THE LOAN GRANTED ON THE SECURITY OF THE ORIGINAL AWARD AND INTEREST SHOULD BE CHARGED ON SAID LOAN UNTIL THE LOSS SUSTAINED BY THE GOVERNMENT HAS BEEN REPAID, THE BALANCE DUE THE VETERAN ON THE CERTIFICATE ISSUED UNDER THE CORRECTED AWARD TO BE APPLIED IN REDUCTION OF HIS INDEBTEDNESS THUS INCURRED. WHERE THERE WAS ISSUED TO A VETERAN A DUPLICATE ADJUSTED SERVICE CERTIFICATE UPON HIS ALLEGATION OF NONRECEIPT OF THE ORIGINAL, AND LOANS ARE OBTAINED BY THE VETERAN ON BOTH CERTIFICATES, THERE IS A FAILURE OF COLLATERAL FOR THE LOAN GRANTED ON THE SECURITY OF THE ORIGINAL CERTIFICATE AND INTEREST SHOULD BE CHARGED ON SAID LOAN UNTIL SETTLEMENT IS MADE UNDER THE VETERAN'S APPLICATION FOR THE BALANCE DUE, THE INDEBTEDNESS THUS ARRIVED AT TO BE DEDUCTED FROM SAID BALANCE AND THE REMAINDER, IF ANY, PAID TO THE VETERAN, THE FALSE STATEMENT AND CLAIM OF THE VETERAN IN CONNECTION WITH THE DUAL LOAN NOT BEING SUCH FRAUD AS TO REQUIRE A FORFEITURE THEREOF IN THE ABSENCE OF A SPECIFIC STATUTORY AUTHORITY IN THIS REGARD, BUT A MATTER FOR THE DEPARTMENT OF JUSTICE AS TO WHETHER THERE IS INVOLVED A CRIME.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, MARCH 12, 1937:

YOUR LETTER OF FEBRUARY 24, 1937, IS AS FOLLOWS:

ON DECEMBER 26, 1924, THE WAR DEPARTMENT CERTIFIED AN ADJUSTED SERVICE CREDIT TO THE VETERANS' ADMINISTRATION IN THE CASE OF LOWELL MASON, A- 2896725, WHICH FORMED THE BASIS OF AN ADJUSTED SERVICE CERTIFICATE NO. 1582464, ISSUED TO HIM BY THE VETERANS' ADMINISTRATION, IN THE AMOUNT OF $1,159.00 EFFECTIVE JANUARY 1, 1925. THE CERTIFICATE WAS MAILED TO HIM ON MARCH 17, 1925, AT 361 STERLING PLACE, BROOKLYN, NEW YORK, THE ADDRESS FURNISHED ON HIS APPLICATION (FORM WWC-1).

ON NOVEMBER 28, 1930, THE WAR DEPARTMENT RECEIVED A SECOND APPLICATION FROM THE VETERAN WHICH WAS FORWARDED TO THIS ADMINISTRATION AS A DUPLICATE OF THE ORIGINAL APPLICATION. THE VETERAN CLAIMED THAT THE SECOND APPLICATION WAS THE ONLY ONE EVER FILED BY HIM. HOWEVER, THE SIGNATURES, FINGERPRINTS AND IDENTIFYING INFORMATION APPEARING ON BOTH APPLICATIONS APPEARED TO BE IDENTICAL.

IN MAY, 1931, THE VETERAN EXECUTED FORM 6920, AFFIDAVIT--- SUBMITTED AS EVIDENCE OF LOSS, DESTRUCTION, OR DEFACEMENT OF ADJUSTED SERVICE CERTIFICATE, IN WHICH HE STATED THAT THE ORIGINAL ADJUSTED SERVICE CERTIFICATE NO. 158264, HAD NOT BEEN RECEIVED BY HIM. THE ORIGINAL CERTIFICATE WAS CANCELLED ON THE RECORDS AND A NEW CERTIFICATE NO. 3690672, ISSUED ON JULY 3, 1931, IN THE AMOUNT OF $840.00 WITHOUT THE REQUIREMENT OF AN INDEMNITY BOND. THE AMOUNT OF THE ADJUSTED SERVICE CERTIFICATE WAS REDUCED PURSUANT TO A RECERTIFICATION OF THE AMOUNT OF THE VETERANS' ADJUSTED SERVICE CREDIT TO CORRECT AN ERROR IN THE ORIGINAL CERTIFICATION.

ON JULY 8, 1931, THE NEW CERTIFICATE NO. 3690672 WAS ACCEPTED BY THE OFFICE OF THIS ADMINISTRATION AT NEW YORK AS SECURITY FOR A LOAN IN THE AMOUNT OF $420.00. CHECK NO. 413115 UNDER SYMBOL NO. 99138, ISSUED BY DON ILER, FORMER DISBURSING OFFICER, WAS MAILED TO THE VETERAN ON THAT DATE AT 119 WEST 57TH STREET, ROOM 808, NEW YORK, NEW YORK. ON DECEMBER 16, 1935, THE ORIGINAL ADJUSTED SERVICE CERTIFICATE NO. 1582464 WAS ACCEPTED BY THE OFFICE OF THIS ADMINISTRATION AT NEWINGTON, CONNECTICUT, FOR A LOAN IN THE AMOUNT OF $579.50. CHECK NO. 5209, SYMBOL NO. 89892, ISSUED BY G. F. ALLEN, WAS MAILED TO THE VETERAN ON THAT DATE AT C/O HEMPHILL-NOYES AND COMPANY, 872 MAIN STREET, BRIDGEPORT, CONNECTICUT. SIGNATURES OF THE VETERAN APPEARING ON BOTH VETERAN'SNOTES (FORM 1185) ARE UNMISTAKABLY THE SAME AS OTHER SIGNATURES OF THE VETERAN IN THE FILES OF THE VETERANS' ADMINISTRATION.

AN APPLICATION (FORM 1701) WAS EXECUTED BY THE VETERAN AND FORWARDED TO THE OFFICE OF THIS ADMINISTRATION AT NEWINGTON, CONNECTICUT, FOR SETTLEMENT OF HIS ORIGINAL CERTIFICATE NO. 1582464 UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936. SETTLEMENT OF THIS CERTIFICATE, HOWEVER, WAS NOT CERTIFIED TO THE TREASURY DEPARTMENT DUE TO THE FACT IT HAD BEEN DISCOVERED THAT LOANS HAD BEEN NEGOTIATED ON BOTH CERTIFICATES IN TIME TO PREVENT THE CERTIFICATION. THE CASE WAS SUBMITTED TO THE DEPARTMENT OF JUSTICE FOR PROSECUTION OF THE VETERAN FOR VIOLATION OF TITLE 18, U.S.C.A., SECTION 80. THE UNITED STATES ATTORNEY FOR THE DISTRICT OF CONNECTICUT, FROM CONCLUSIONS DRAWN FROM HIS INVESTIGATION OF THE CASE, DECIDED NOT TO PROSECUTE AND ADVISED THAT IT WAS BELIEVED THE VETERAN WOULD MAKE FULL RESTITUTION.

THE COMPTROLLER GENERAL IN HIS DECISION NO. A-72913, DATED MAY 5, 1936, IN THE CASE OF JAMES C. CARR, A-1201253, HELD AS FOLLOWS: "* * * THE RULE HAS BEEN ADOPTED OF CHARGING INTEREST ON THE AMOUNT OF THE LOAN UNTIL PAID ON THE BASIS THAT THE NOTES UPON WHICH THE LOANS WERE MADE CONSTITUTE BINDING CONTRACTS UPON THE VETERANS, IRRESPECTIVE OF THE CANCELLATION OF THE ADJUSTED SERVICE CERTIFICATE GIVEN AS COLLATERAL SECURITY THEREFOR. * * FAILURE OF THE COLLATERAL GIVEN TO SECURE THE NOTE, NAMELY, THE ADJUSTED SERVICE CERTIFICATE DID NOT AFFECT THE VALIDITY OF THE AGREEMENT (THE NOTE) OF THE VETERAN TO PAY INTEREST ON BORROWED MONEY. NOTHING APPEARS IN THE ADJUSTED COMPENSATION PAYMENT ACT OF 1936, PUBLIC NO. 425, TO JUSTIFY ANY MODIFICATION IN THE STATED RULE.'

THERE ARE RESPECTFULLY SUBMITTED FOR CONSIDERATION AND DECISION THE FOLLOWING QUESTIONS:

1. IS THERE FAILURE OF COLLATERAL FOR THE LOAN GRANTED ON THE SECURITY OF THE ORIGINAL CERTIFICATE NO. 1582464?

2. MAY INTEREST BE CHARGED ON THE LOAN MADE ON THE ORIGINAL CERTIFICATE OF $579.50 UNTIL THE AMOUNT OF THE LOSS SUSTAINED BY THE GOVERNMENT ON ACCOUNT OF THE NEGOTIATION OF BOTH CERTIFICATES HAS BEEN REPAID?

3. WOULD IT BE PROPER TO APPLY THE UNPAID BALANCE ON THE DUPLICATE CERTIFICATE NO. 3690672 AS A SET-OFF AGAINST THE VETERAN'S TOTAL INDEBTEDNESS?

IF THERE IS FAILURE OF COLLATERAL IN THIS CASE AND SET-OFF IS PROPER, YOUR DECISION IS DESIRED AS TO WHETHER OR NOT THE FOLLOWING METHOD OF COMPUTING THE VETERAN'S INDEBTEDNESS IS PROPER.

CHART LOAN ON ORIGINAL CERTIFICATE -------------------------------- $579.50 ACCRUED INTEREST AT THE RATE OF 3 1/2 PERCENT DECEMBER 16,

1935 (DATE OF THE LOAN), TO JANUARY 15, 1937 -------------- 21.97

TOTAL INDEBTEDNESS ON JANUARY 15, 1937, ON LOAN

SECURED BY ORIGINAL CERTIFICATE ---------------------- 601.47 (INTEREST, ADDED TO THE PRINCIPAL YEARLY ON THE ANNIVERSARY

DATE OF THE LOAN, WILL CONTINUE TO ACCRUE TO DATE OF

REPAYMENT.) FACE VALUE OF DUPLICATE CERTIFICATE ---------------- $840.00 LOAN ON DUPLICATE CERTIFICATE $420 PLUS INTEREST AT

THE RATE OF 3 1/2 PERCENT, JULY 8, 1931, TO

SEPTEMBER 30, 1931 ------------------------------- 423.35

------- 416.65

BALANCE DUE UNITED STATES ------------------------------ 184.82

IN THE CASE OF EDWARD H. PESH, A-2285106, ADJUSTED SERVICE CERTIFICATE NO. 437972, IN THE AMOUNT OF $230.00, WAS ISSUED EFFECTIVE JANUARY 1, 1925, PURSUANT TO CERTIFICATION OF ADJUSTED SERVICE CREDIT FROM THE WAR DEPARTMENT. THE RECORDS SHOW THAT THIS CERTIFICATE WAS MAILED TO THE VETERAN ON JANUARY 1, 1925, AT 350 35TH STREET, OGDEN, UTAH. IN JANUARY 1928, THE VETERAN COMPLETED FORM 6920, AFFIDAVIT--- SUBMITTED AS EVIDENCE OF LOSS, DESTRUCTION OR DEFACEMENT OF ADJUSTED SERVICE CERTIFICATE, IN WHICH HE STATED THAT HE HAD NEVER RECEIVED ADJUSTED SERVICE CERTIFICATE NO. 437972.

ON MARCH 5, 1928, DUPLICATE ADJUSTED SERVICE CERTIFICATE NO. 3323535 WAS ISSUED AND MAILED TO THE VETERAN ON THAT DATE TO CORINNE, UTAH. ON MAY 9, 1928, THE DUPLICATE CERTIFICATE NO. 3223535 WAS PLEDGED AS COLLATERAL SECURITY FOR LOAN WITH THE OFFICE OF THIS ADMINISTRATION AT SALT LAKE CITY, UTAH, COVERED BY CHECK NO. 2914, SYMBOL 99149, IN THE AMOUNT OF $27.00, DATED MAY 9, 1928, WHICH WAS MAILED TO THE VETERAN AT CORINNE, UTAH. ON JUNE 5, 1931, THE VETERAN APPLIED FOR A LOAN ON THE SECURITY OF HIS ORIGINAL ADJUSTED SERVICE CERTIFICATE NO. 437972 AT THE SAME STATION ON WHICH DATE CHECK NO. 18405, SYMBOL 99149, IN THE AMOUNT OF $115.00 WAS MAILED TO HIM AT ROUTE NO. 1, CORINNE, UTAH. AN APPLICATION (FORM 1701) WAS FILED WITH THE OFFICE AT SALT LAKE CITY FOR SETTLEMENT OF THE ORIGINAL CERTIFICATE NO. 437972.

IN CHECKING THE APPLICATION AGAINST THE FILES, DISCOVERY WAS MADE THAT BOTH ADJUSTED SERVICE CERTIFICATES HAD BEEN NEGOTIATED FOR LOANS AND SETTLEMENT OF THE ORIGINAL CERTIFICATE WAS NOT CERTIFIED.

THERE ARE RESPECTFULLY SUBMITTED FOR YOUR CONSIDERATION AND DECISION THE FOLLOWING QUESTIONS.

1. IS THERE FAILURE OF COLLATERAL FOR THE LOAN GRANTED ON THE SECURITY OF THE ORIGINAL CERTIFICATE NO. 437972?

2. MAY INTEREST BE CHARGED ON THE LOAN OF $115.00 MADE ON THE ORIGINAL CERTIFICATE UNTIL SETTLEMENT IS MADE ON THE DUPLICATE CERTIFICATE?

3. SHOULD THE FORFEITURE PROVISIONS OF SECTION 172 OF THE JUDICIAL CODE (TITLE 28, U.S.C. 279) BE INVOKED (OR IF NOT APPLICABLE, IS THERE ANY OTHER PROVISION OF LAW TO BE INVOKED) AS REGARDS PAYMENT OF THE UNPAID BALANCE BECAUSE OF THE VETERAN'S FALSE CLAIMS AGAINST THE GOVERNMENT, TO WIT, HIS PRESENTATION OF THE FALSE AFFIDAVIT IN APPLYING FOR THE DUPLICATE CERTIFICATE AND HIS PRESENTATION FOR PAYMENT OF A VETERAN'S NOTE (FORM 1185) AND APPLICATION (FORM 1701/?

IF THERE IS FAILURE OF COLLATERAL IN THIS CASE AND SET-OFF IS PROPER, YOUR DECISION IS DESIRED AS TO WHETHER OR NOT THE FOLLOWING METHOD OF COMPUTING THE VETERAN'S INDEBTEDNESS IS PROPER.

CHART FACE VALUE OF DUPLICATE CERTIFICATE ------------------------- $230.00 LOAN ON DUPLICATE CERTIFICATE --------------------- $27.00 INTEREST FROM MAY 9, 1928, TO SEPTEMBER 30, 1931 -- 5.73 LOAN ON ORIGINAL CERTIFICATE ---------------------- 115.00 INTEREST FROM JUNE 5, 1931, TO JANUARY 15, 1937 --- 26.03

------ (INTEREST ON THIS LOAN TO BE COMPUTED TO DATE OF

SETTLEMENT ON THE CERTIFICATE.)

TOTAL AMOUNT OF LIENS AGAINST DUPLICATE CERTIFICATE

FOR BOTH LOANS AS OF JANUARY 15, 1937 -------------- 173.76

BALANCE DUE VETERAN IN SETTLEMENT, JANUARY 15, 1937,

UNLESS THE BALANCE IS TO BE FORFEITED -------------- 56.24

IN VIEW OF THE FACT THAT A NUMBER OF SIMILAR CASES ARE BEING HELD IN ABEYANCE, YOUR EARLY CONSIDERATION AND DECISION OF THE QUESTIONS SUBMITTED HEREIN WILL BE APPRECIATED.

REFERRING TO THE CASE OF LOWELL MASON, ALL THREE QUESTIONS ARE ANSWERED IN THE AFFIRMATIVE, AND THE METHOD OF COMPUTATION OF THE VETERAN'S INDEBTEDNESS AS INDICATED IN YOUR LETTER IS CORRECT.

REFERRING TO THE CASE OF EDWARD H. PESH, QUESTIONS ONE AND TWO ARE ANSWERED IN THE AFFIRMATIVE, AND THE METHOD OF COMPUTATION OF THE VETERAN'S ACCOUNT AS STATED IN YOUR LETTER IS CORRECT. WITH RESPECT TO QUESTION 3, IT MAY BE STATED THAT WHILE IT HAS BEEN, UNDER CERTAIN CIRCUMSTANCES, THAT THE FRAUDULENT PRESENTATION OF A CLAIM AGAINST THE GOVERNMENT FOR A GREATER AMOUNT THAN IS DUE VITIATES AND DESTROYS CLAIMANT'S RIGHT IN THE ENTIRE CLAIM (SEE 14 COMP. GEN. 150 AND CASES THEREIN CITED), SUCH RULE IS NOT FOR APPLICATION IN STATING A VETERAN'S ACCOUNT BASED UPON AN ADJUSTED SERVICE CERTIFICATE LAWFULLY ISSUED TO HIM. THE FRAUD HERE DID NOT GO IN THE SECURING OF THE CERTIFICATE, BUT RATHER IN THE LOANS BY WHICH HE OBTAINED MONEY IN EXCESS OF THE AMOUNT LAWFULLY DUE UNDER THE CERTIFICATE AT THE PARTICULAR TIME. THERE ARE NO PROVISIONS OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, OR THE ADJUSTED COMPENSATION PAYMENT ACT OF 1936 WHICH DECLARE THAT AN ADJUSTED SERVICE CERTIFICATE SHALL BE VOID BY REASON OF AN ATTEMPT BY THE VETERAN TO SECURE GREATER BENEFITS UNDER THE LAW THAN THOSE TO WHICH HE IS ENTITLED. HIS CRIME, IF ANY, FOR WHICH THE STATUTE FIXES THE PUNISHMENT, IS A MATTER FOR THE CONSIDERATION OF THE DEPARTMENT OF JUSTICE, BUT THE CRIME DOES NOT VOID THE CERTIFICATE PROPERLY ISSUED UNDER THE LAW. SEE SECTIONS 702 AND 704 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, 45 STAT. 949 AND 44 STAT. 830, AND, ALSO, SECTION 10 OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT. 1102. THE CERTIFICATE CONSTITUTES A PROPERTY RIGHT AND SERVES AS A SECURITY TO THE GOVERNMENT FOR ANY AMOUNT NOT IN EXCESS OF ITS FACE VALUE LAWFULLY OR UNLAWFULLY PAID TO THE VETERAN UNDER THE STATUTE.

ACCORDINGLY, THERE APPEARS NO AUTHORITY IN THE VETERANS' ADMINISTRATION TO CAUSE A FORFEITURE OF THE BALANCE DUE UNDER THE CERTIFICATE, AND QUESTION 3 RELATING TO THE CASE OF EDWARD H. PESH IS ANSWERED IN THE NEGATIVE.