A-86839, JUNE 22, 1937, 16 COMP. GEN. 1101

A-86839: Jun 22, 1937

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INDEBTEDNESS ALTHOUGH THE AMOUNT TO THE CREDIT OF A FORMER GOVERNMENT EMPLOYEE IN THE RETIREMENT FUND IS AVAILABLE TO LIQUIDATE A LOAN INDEBTEDNESS DUE THE HOME OWNERS' LOAN CORPORATION. SUCH FUNDS SHOULD NOT BE SO APPLIED WHERE THERE ARE OTHER GOVERNMENT CLAIMS AGAINST THE EMPLOYEE FOR THE COLLECTION OF WHICH THERE IS NO OTHER REMEDY. RETIREMENT ANNUITIES OF FORMER GOVERNMENT EMPLOYEES ARE AVAILABLE FOR SET -OFF TO LIQUIDATE A LOAN INDEBTEDNESS DUE THE HOME OWNERS' LOAN CORPORATION. UNPAID TAXES WHICH THE CORPORATION HAS BEEN OR WILL BE REQUIRED TO PAY TO PROTECT THE GOVERNMENT'S INTEREST IN THE PROPERTY INVOLVED. IS AS FOLLOWS: THE GENERAL MANAGER OF THE HOME OWNERS' LOAN CORPORATION HAS SUBMITTED TO THIS COMMISSION FOR CONSIDERATION A COMMUNICATION IN CONNECTION WITH A DIFFICULTY WHICH HAS ARISEN INVOLVING THE ACCOUNT ACCUMULATED UNDER THE PROVISIONS OF THE RETIREMENT ACT OF MAY 29.

A-86839, JUNE 22, 1937, 16 COMP. GEN. 1101

SET-OFF - RETIREMENT DEDUCTIONS AND ANNUITIES - SECURED AND UNSECURED, AND REAL PROPERTY TAX, INDEBTEDNESS ALTHOUGH THE AMOUNT TO THE CREDIT OF A FORMER GOVERNMENT EMPLOYEE IN THE RETIREMENT FUND IS AVAILABLE TO LIQUIDATE A LOAN INDEBTEDNESS DUE THE HOME OWNERS' LOAN CORPORATION, SUCH FUNDS SHOULD NOT BE SO APPLIED WHERE THERE ARE OTHER GOVERNMENT CLAIMS AGAINST THE EMPLOYEE FOR THE COLLECTION OF WHICH THERE IS NO OTHER REMEDY, BUT WHERE THE CORPORATION HAS EXHAUSTED ITS PROPERTY FORECLOSURE, AND OTHER REMEDIES, THE DEBT MAY BE CONSIDERED ON A PARITY WITH OTHER UNSECURED CLAIMS. RETIREMENT ANNUITIES OF FORMER GOVERNMENT EMPLOYEES ARE AVAILABLE FOR SET -OFF TO LIQUIDATE A LOAN INDEBTEDNESS DUE THE HOME OWNERS' LOAN CORPORATION, AND UNPAID TAXES WHICH THE CORPORATION HAS BEEN OR WILL BE REQUIRED TO PAY TO PROTECT THE GOVERNMENT'S INTEREST IN THE PROPERTY INVOLVED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, JUNE 22, 1937:

YOUR LETTER OF JUNE 2, 1937 (FILE CSR-408365), IS AS FOLLOWS:

THE GENERAL MANAGER OF THE HOME OWNERS' LOAN CORPORATION HAS SUBMITTED TO THIS COMMISSION FOR CONSIDERATION A COMMUNICATION IN CONNECTION WITH A DIFFICULTY WHICH HAS ARISEN INVOLVING THE ACCOUNT ACCUMULATED UNDER THE PROVISIONS OF THE RETIREMENT ACT OF MAY 29, 1930, OF WILLIAM PETERSON, 715 WATERS AVENUE, SAVANNAH, GEORGIA, A FORMER EMPLOYEE OF THE VETERANS' ADMINISTRATION FACILITY AT TUSKEGEE, ALABAMA. THERE IS TO THE CREDIT OF MR. PETERSON IN THE RETIREMENT FUND THE SUM OF $610.01. IT APPEARS THAT WILLIAM PETERSON AND GENEVA PETERSON RECEIVED A LOAN IN THE AMOUNT OF $2,036.05 FROM THE HOME OWNERS' LOAN CORPORATION ON THEIR HOME, LOCATED ON THE OLD MONTGOMERY HIGHWAY AT TUSKEGEE, ALABAMA, AND AT THE PRESENT TIME THEIR LOAN ACCOUNT IS DELINQUENT TO THE EXTENT OF $358.61 WITH TAXES FOR 1936 REMAINING UNPAID. THE CORPORATION HAS REQUESTED THAT THE MONEYS TO THE CREDIT OF MR. PETERSON IN THE RETIREMENT FUND BE APPLIED IN PART TO THEIR DELINQUENT LOAN ACCOUNT IN ORDER TO PLACE IT IN A CURRENT CONDITION.

THERE IS ALSO WITH THE FILE IN THIS CASE A LETTER FROM THE DIRECTOR OF FINANCE, VETERANS' ADMINISTRATION, STATING THAT A FEDERAL GRAND JURY IN SESSION AT MONTGOMERY, ALABAMA, DURING JULY 1936, RETURNED AN INDICTMENT AGAINST MR. PETERSON AND OTHER EMPLOYEES AT THE TUSKEGEE FACILITY FOR CONSPIRACY TO DEFRAUD THE UNITED STATES, ETC., AND THEIR CASES WERE EXPECTED TO COME TO TRIAL AT THE TERM OF COURT AT OPELIKA, ALABAMA, BEGINNING APRIL 5, 1937. THE DIRECTOR OF FINANCE SUGGESTED FURTHER THAT CORRESPONDENCE BE HAD WITH THE DEPARTMENT OF JUSTICE PRIOR TO RELINQUISHING THE RETIREMENT DEDUCTIONS CREDITED TO MR. PETERSON'S ACCOUNT. THIS WAS, APPARENTLY, FOR THE PURPOSE OF DETERMINING WHETHER THE GOVERNMENT HAD SUSTAINED A FINANCIAL LOSS INCIDENT TO THE CONSPIRACY CHARGES. THE COMMISSION HAS ADVISED THE DIRECTOR OF FINANCE THAT SETTLEMENT OF THE CLAIM WILL BE HELD IN ABEYANCE PENDING THE OUTCOME OF THE TRIAL, AT WHICH TIME ANY CLAIM PRESENTED BY THE VETERANS' ADMINISTRATION OR DEPARTMENT OF JUSTICE FOR A CERTAIN FIXED AMOUNT DUE THE GOVERNMENT WILL BE ENTERTAINED FOR CONSIDERATION IN MAKING ADJUSTMENT UNDER MR. PETERSON'S APPLICATION FOR REFUND AND THE RULES GENERALLY APPLICABLE TO THE SUBJECT OF SET OFF WILL BE APPLIED. THIS ACTION, HOWEVER, MAY BE COMPLICATED DUE TO THE CLAIM OF THE HOME OWNERS' LOAN CORPORATION, PARTICULARLY SO IN CASE THE RETIREMENT CREDIT STATED AS $610.01 PROVES INSUFFICIENT TO MEET BOTH OBLIGATIONS.

I TRANSMIT HEREWITH THE PAPERS IN THE CASE FOR INSTRUCTIONS AND SUGGEST FOR YOUR CONSIDERATION WHETHER ANY PORTION OF THE AMOUNTS IN QUESTION MAY BE TRANSFERRED FROM THE RETIREMENT FUND AND CREDITED TO THE HOME OWNERS' LOAN CORPORATION IN ORDER TO BALANCE THE LOAN ACCOUNT HEREINBEFORE MENTIONED, AND, IF SO, WHETHER SUCH TRANSFERS SHOULD BE MADE PRIOR TO FORMAL PRESENTATION OF ANY OTHER ANTICIPATED GOVERNMENT CLAIM AGAINST THE MONEYS STANDING TO MR. PETERSON'S ACCOUNT.

THE COMMISSION HAS ALSO BEEN REQUESTED BY THE HOME OWNERS' LOAN CORPORATION TO ASSIST IN THE COLLECTION OF A SIMILAR DELINQUENCY AMOUNTING TO $240.13, PLUS CERTAIN STATE, COUNTY, AND CITY TAXES IN THE CASE OF AN ANNUITANT UNDER THE RETIREMENT LAW WHO IS RECEIVING ANNUITY BENEFITS OF $100.00 PER MONTH. YOUR INSTRUCTION RELATIVE TO THIS MATTER IS ALSO REQUESTED.

KINDLY RETURN THE RECORD WITH YOUR INSTRUCTIONS IN THE PREMISES.

IT HAS BEEN HELD THAT THE AMOUNT TO THE CREDIT OF A FORMER EMPLOYEE OF THE GOVERNMENT IN THE RETIREMENT FUND IS AVAILABLE TO LIQUIDATE A LOAN INDEBTEDNESS DUE THE HOME OWNERS' LOAN CORPORATION. DECISION OF DECEMBER 14, 1936, A-75158 IN THE CASE OF DIXON DOVE. SEE, ALSO, DECISIONS OF JUNE 16, 1936, A-75158, AND MAY 26, 1937, A-86139, WHEREIN THE PROCEDURE TO BE FOLLOWED IN SUCH CASES WAS STATED.

HOWEVER, WHERE THE GOVERNMENT HAS OTHER CLAIMS, OR THE PROBABILITY OF OTHER CLAIMS AS IN THE FIRST CASE PRESENTED IN YOUR LETTER, AGAINST THE RETIREMENT FUND, FOR THE COLLECTION OF WHICH THERE IS NO REMEDY OTHER THAN BY APPLICATION OF THE AMOUNT TO THE CREDIT OF THE DEBTOR IN THE RETIREMENT FUND, PRIORITY SHOULD BE GIVEN TO SUCH OTHER CLAIMS OVER THE CLAIM OF THE HOME OWNERS' LOAN CORPORATION, UNLESS THE CORPORATION HAS EXHAUSTED ITS REMEDY BY FORECLOSURE AGAINST THE PROPERTY AND THERE REMAINS A BALANCE DUE FROM THE FORMER EMPLOYEE. OTHERWISE, THE FORMER EMPLOYEE WHO IS IN DEFAULT ON A LOAN WOULD BE GIVEN THE ADVANTAGE OVER THE GOVERNMENT BY APPLICATION OF HIS RETIREMENT FUND CREDIT TOWARD THE PAYMENT OF HIS LOAN. WHERE THE HOME OWNERS' LOAN CORPORATION HAS EXHAUSTED ALL OTHER REMEDIES TO COLLECT THE INDEBTEDNESS BY FORECLOSURE, ETC., ANY BALANCE DUE ON THE LOAN IS A DEBT DUE THE GOVERNMENT WHICH MAY BE CONSIDERED ON A PARITY WITH ALL OTHER CLAIMS THE GOVERNMENT MAY HAVE AGAINST THE RETIREMENT FUND CREDIT.

ACCORDINGLY, YOUR ACTION WAS PROPER IN DELAYING SETTLEMENT OF THE CLAIM OF THE HOME OWNERS' LOAN CORPORATION AGAINST THE RETIREMENT FUND CREDIT OF WILLIAM PETERSON PENDING THE OUTCOME OF THE INDICTMENT BROUGHT AGAINST HIM, AND CORRESPONDENCE SHOULD BE HAD WITH THE DEPARTMENT OF JUSTICE AS SUGGESTED BY THE VETERANS' ADMINISTRATION TO DETERMINE WHETHER THERE ARE ANY CLAIMS AGAINST THE RETIREMENT FUND GROWING OUT OF THE CRIMINAL PROCEEDING.

REFERRING TO THE PENULTIMATE PARAGRAPH OF YOUR LETTER, A RETIREMENT ANNUITY IS AVAILABLE AS A SET-OFF TO LIQUIDATE AN INDEBTEDNESS TO THE GOVERNMENT FROM THE ANNUITANT (DECISION OF MAY 20, 1937, A-85797, 16 COMP. GEN. 1017), INCLUDING AMOUNTS IN DEFAULT ON A LOAN OBTAINED FROM THE HOME OWNERS' LOAN CORPORATION, AND UNPAID TAXES WHICH THE CORPORATION HAS BEEN OR WILL BE REQUIRED TO PAY TO PROTECT THE GOVERNMENT'S INTEREST IN THE PROPERTY.